Chemical Sector's Stress To Continue Unabated, Says PL Capital; Positive Take On Navin Fluorine Among Others

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PL Capital Report

Chemical companies across the globe saw moderate growth or de-growth in CY24, post bumper earnings in CY22 and CY23. Global chemical output was up by 3.9% in CY24, driven by 6.8% growth in China, which constituted 86% of the global chemical production.

Production in the EU was largely stagnant. Demand continues to remain weak in other key markets, leading to pressure on realizations, especially for agrochemicals. Recent commentaries and outlook of global chemical giants suggest that that recovery is not expected in CY25.

We continue to maintain our cautious stance on the sector considering muted demand recovery and pricing pressure, especially for agrochemicals.

Out of our coverage universe, we remain positive on Fine Organics, Navin Fluorine and Vinati Organics due to their lower exposure to agrochem.

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