Chemicals Monthly Update – December 2024

Chemical prices showed a mixed trend in December, with most remaining stable or rising slightly due to higher crude prices. Prices are expected to stay within a range, following the peaks seen during the Covid era. However, specific segments in pharmaceutical APIs and CDMOs are showing strong growth. In early 2025, the Directorate General of Trade Remedies (DGTR) began anti-dumping investigations on three chemicals imported from China, filed by companies like Alkyl Amines, NOCIL, and Deepak Nitrite, indicating potential trade remedies ahead. Additionally, the DGFT set a minimum import price (MIP) for soda ash at ₹20,108/mt until June 2025 to protect domestic manufacturers from unfair pricing practices.

Globally, chemical demand in the US has slightly increased, though new order growth remains slow. Destocking cycles have ended, with re-stocking expected depending on demand recovery. Geopolitical tensions, Red Sea disruptions, and logistic issues have pushed up freight costs. Labor strikes in the US and container shortages have delayed shipments, raising product costs. Despite weak global demand, China’s chemical production grew by over 10% in H1 2024, compared to the same period in 2023.

For Indian chemical companies, 2025 looks brighter as production is expected to increase with improving demand and the end of destocking cycles. Price trends for most chemicals remain subdued, but some recovery is visible. Phthalic Anhydride and Acetic Acid prices rose 6% and 9% MoM, respectively, while Methanol prices spiked by 25% MoM, benefiting key manufacturers. Toluene and MEG prices increased, but Benzene and Phenol prices declined. Acetone prices showed modest recovery, while Vinyl Acetate Monomer (VAM) rose 6% MoM, impacting paint and adhesive manufacturers. Refrigerant prices like R-22 fell, while R-32 remained stable.

The chemical industry expects better performance in H2 FY25, driven by production growth and fading destocking worries. Indian companies are boosting R&D, adopting new chemistries, and diversifying products, aligning with global trends in supply chain diversification. China’s focus on value-added chemicals for EV batteries, solar cells, and semiconductors may intensify competition, posing risks to generic players. However, Indian firms with niche offerings and backward-integrated operations could gain market share from China and Europe through strategic capex, higher volumes, and new product launches. Companies like Aarti Industries, Clean Science, Deepak Nitrite, GHCL, and Tata Chemical are well-positioned to benefit from these trends.