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ICICI Securities Report
In the month of April, chemical plants were shut for seven-15 days, and thereafter, plants' utilisation level were much below normal. Further, logistical challenges and weak underlying demand has impacted volume offtake.
However, price trends have been stable, and we see spreads benefit for many products on lower raw material prices on dip in crude oil prices. R-22 prices were up 6.8% QoQ, finally showing the impact of cut in supply, and as anticipated, export volumes dipped 46%.
Caprolactum price increase should help through inventory gain (versus inventory losses in past two quarters for SRF Ltd.). Packaging films spread are encouraging and indicate a quarter of super-normal margins versus our estimate of a slight dip. We see an upside risk to SRF Q1 FY21 estimates. Galaxy Surfactants Ltd. margin will benefit from higher lauryl alcohol prices. Atul Ltd.'s key products 2,4 D, epoxy, para cresol and resourcinol export volumes are down 40-75% YoY.
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