In the last two camphor cycles, prices of camphor usually followed prices of gum turpentine – a strong year for gum turpentine has lead to inventory gains for camphor companies.
Right now, people like Oriental have spoken about more camphor supply that has come in. After speaking to a couple of unlisted players in camphor, it looked like supply and demand for camphor in the country was balanced despite the new supply coming in.
My understanding is that the major demand season for camphor happens in the festive seasons of Q2 / Q3. Right now, the RM prices have run up, but camphor prices are soft because we’re not in this window. My plan is to wait and see if prices pick up in September / October.
The clearest way to play this cycle is Privi. They have long term contracts for both RM and FG. So they’re buying RM at much lower prices right now despite the shortage, but consequently, their FG prices are also lower than the spot market. However, a quarter of their sales are in the spot market where they should make a killing. This said, Privi is the most expensive in the space.
Hi Satyajit, I don’t own Valiant.
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