Price trend for specialty chemicals in Nov 20: ICICI Securities

BOPET-PTA/MEG has been softening from peak, and was Rs72 in Q3FY21, down 10.7% QoQ, but BOPP-PP spreads have been strong at Rs67 (vs Rs60 in Q2FY21).

R-22 export realisation dipped further to Rs148 in Nov’20 (down 15.6% QoQ for Q3FY21), which is the lowest price since Sep’17. This has come despite phase-down 2, which has cut production by 25% from base line from 1st Jan, 2020. R-22 export volumes were down 26.6% in 11MCY20, which should have hurt SRF ref-gas revenues in Q3FY21. BOPET-PTA/MEG has been softening from peak, and was Rs72 in Q3FY21, down 10.7% QoQ, but BOPP-PP spreads have been strong at Rs67 (vs Rs60 in Q2FY21). Lauryl alcohol prices have been stable at Rs92. Pigment volumes have been picking up smart with 8.4% YoY growth in Q3FY21, which should benefit Sudarshan Chemical, in our view.

(Note: All prices stated are in Rs/kg; Q3FY21 data is for Oct’20 and Nov’20)

SRF Ltd: R-22 realisation under pressure; BOPET spread dips, but at slower pace

· R-22 prices dipped 15.6% QoQ and 15.3% YoY to Rs156 in Q3FY21. Export volumes were down 24% YoY to 2,925te. Phase-down 2 (25% cut in quote) has hurt volumes, and in 11 months (CY20), volumes were down 26.6%. We expect volumes in Q3FY21 also to be down by >20%. Fluorspar (acid spar) price is down 3.4% QoQ / 13.8% YoY to Rs29. R-22 spread (to fluorspar and chloroform) was Rs97 vs Rs117 in Q2FY21.

· MDC (methylene chloride) prices shrunk 7.3% QoQ / 18.7% YoY to Rs31, while chorine and methanol prices have increased. This means spreads / margins in MDC have shrunk for SRF.

·  NTCF prices dipped 30.5% QoQ / 23.4% YoY to Rs129. Caprolactam prices were down 1.2% QoQ and 27.0% YoY to Rs79. NTCF-caprolactam spread fell to Rs49 vs Rs105 in Q2FY21. NTCF margins as a % of revenue would optically look higher due to lower realisations on NTCF, but stable spreads. Our calculated spreads have limitation of matching sales and COGS. India NTCF volume imports have increased by 41% YoY to 5,514te in Q3FY21.

·  BOPET prices were down 5.3% QoQ, while they were up 0.4% YoY at Rs113. PTA prices rose 3.8% QoQ / down 28.0% YoY to Rs34 while MEG prices rose 13.2% QoQ / down 15.8% YoY to Rs33. BOPET-PTA/MEG spread fell 10.7% QoQ while it was up 23.9% YoY to Rs72 (vs Rs81 in Q2FY21). BOPET-PTA/MEG spread has hit Rs85 in the month of Jun’20, and thus, it is down 16% from the recent peak. However, MoM fall in spreads has decelerated to 2.5% in Nov’20 vs 7.5% in Oct’20.

·   BOPP prices rose 6.9% each QoQ / YoY to Rs134 while polypropylene prices rose 3.3% QoQ / fell 3.7% YoY to Rs69. BOPP-PP price spread was at Rs67, up 20.3% YoY / 10.6% QoQ. BOPP-PP spread rose to the peak of Rs71 in Apr’20, and thus, it is down 9.6% from the recent peak. BOPP-PP spread rise QoQ is offsetting some BOPET spreads shrink for SRF thus showing better margins in Q3FY21.

NFIL: We see downside risk to R-22 realisation and profits in FY21

· R-22 prices fell 15.6% QoQ and 15.3% YoY to Rs156. Fluorspar (acid spar) price was down 3.4% QoQ and 13.8% YoY to Rs29. R-22 spread (to fluorspar and chloroform) was Rs97 vs Rs117 in Q2FY21. We see risk to our assumption of R-22 realisation and profits in FY21 on softening of prices.

Sudarshan Chemical (SCIL): Organic pigment prices dipped 1.8% QoQ

· Organic pigment prices were down 1.8% QoQ and 1.1% YoY to Rs480 vs Rs489 in Q2FY21. Organic pigments are inclusive of all colours including CPC. Their export volumes were up 8.4% YoY to 19.7kte.

· Azo pigment mixture prices fell 6.2% QoQ and 22.0% YoY to Rs392 vs Rs417 in Q2FY21. Its volumes were down 2.3% YoY to 8.8Kte.

· Inorganic pigment prices were up 0.8% QoQ and 5.6% YoY to Rs94 vs Rs93 in Q2FY21.

Galaxy Surfactants (GSL): Lauryl alcohol prices stable

·   Lauryl alcohol prices were at Rs92, down 0.2% QoQ but up 10.9% YoY, vs Rs92 in Q2FY21.

Vinati Organics

·   Ibuprofen prices dipped 39.6% QoQ and 40.1% YoY to Rs1,574 (vs Rs2,605 in Q2FY21).

·   IBB prices were down 10.5% QoQ and 15.1% YoY to Rs121 vs Rs135 in Q2FY21.

Atul Ltd

· 2,4-D prices were down 0.6% QoQ and 2.8% YoY to Rs154 (vs Rs155 in Q2FY21). Export volumes were down 13.6% YoY at 2,970te

· Para cresol prices were down 16.3% QoQ and 25.2% YoY at Rs143. Export volumes fell 33.8% YoY to 1,597te.

· Epoxy prices rose 8.9% QoQ and 5.9% YoY to Rs170. Export volumes dropped 38% YoY to 2,745te.

· Resorcinol prices were down 5.3% QoQ and 2.4% YoY to Rs646. Export volumes were up 58% YoY to 593te.

Gujarat Fluorochemicals

·   PTFE prices dipped 0.7% QoQ and rose 2.9% YoY to Rs679 (vs Rs683 in Q2FY21). PTFE (to fluorspar) spread dipped 0.3% QoQ while it rose 5.4% YoY to Rs603 (vs Rs605 in Q2FY21). Export volumes were down 11.3% YoY to 1,730te.