Chemical Sector Growing Stronger: IndiaRatings

The domestic chemicals industry has surpassed Ind-Ra's expectations for FY21, and the agency believes the sector fundamentals would remain strong over the medium term. Ind-Ra believes the demand environment would remain favourable for the sector, with volume uptick across end-user industries from rising domestic demand, push for self-sufficiency leading to import substitution potential and higher exports as global participants look for supply chain diversification away from China. Most companies benefited from stable and lower feedstock prices, even as the prices of final products increased during 2HFY21, supporting margins.

The improved demand outlook and favourable commodity cycle are enabling large capex, which remains a monitorable. India Ratings and Research (Ind-Ra) has published the first quarterly edition of its credit news digest on the chemical sector.

The report provides a review on the sector's FY21 performance and expectations for the upcoming year for specialty chemicals and bulk chemicals. The report also analyses the quarterly performance on the basis of chemistries and end-user industries, pricing and production trends, export-import data trends and peer comparison. In the subsequent editions, the agency will continue to monitor the performance of the sector on a quarterly basis, while outlining the key trends and risks that are expected to play out and their impact on the credit profile of the sector participants.