Notes from kotak report:
Agrochemical inventories at elevated levels after kharif season due to lower demand by erratic rainfall leading to crop damage, low levels of fest infestation and loss of sprays.
Channel checks suggest correction in prices of vegetables and fruits has led to weak demand during Rabi season.
Agrochemical industry faces the risk of sales returns by channel partners or need to compensate channel partners by offering discounts which could impact Q3 margins.
Agrochemical export also impacted due to high channel inventories in Europe, North America and Latin America due to lower than expected demand and supply chain uncertainties.
Ongoing correction in prices of agrochemicals is leading to reluctance among buyers. Ordering from Indian suppliers appears to have slowed for a broad range of products.
Price correction is some of the agrochemicals in last one year in % terms(in China)
Glyphosate corrected by 40%
2,4-D down by 33%
Azoxystrobin reduced by 38%
Tebuconazole down by 57%
Bifenthrin down by 38%
Imidacloprid down by 57%
Outlook for 2023 still looks positive due to remunerative crop prices even after correction, input costs like fertilizers are falling which should help in farmers profitability. Global agrochemical companies are still guiding for health growth in 2023.
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