The chemical companies stocks rose amid the geopolitical tensions related to the war of Israel-Hamas. Shares of companies such as Tata Chemicals Ltd., Aarti Industries Ltd, Atul Ltd, SRF Ltd., Vinyl Chemicals Ltd., GHCL Ltd rose 1% to 4%. The prices of chemicals like Benzene, toluene and bromine rose rapidly.
The escalation was also due to the fact that Israel is the globe’s largest manufacturer of elemental bromide.
An uncertainty due to the strikes between Israel and Hamas in the production, export and sales from the dead sea has led to the rise says a report of JM Financial. The dead sea is one of the globe’s biggest salt pans and has about 50-55% world capacity of bromine. Also since June 2023, bromine prices have increased by 40%
The exports are also likely to have an adverse effect as supplies from Israel is about 30% of the world’s bromine. This can lead to prices increasing from the present price of USD3.5 per KG.
JM Financial stated, “We believe that any increase in bromine prices bodes well for Archean given it produces bromine from Rann of Kutch and is also set to introduce certain bromine derivatives in 2HFY23. Our sensitivity indicates that every USD 0.4/kg movement in bromine price results in an 8% increase in our target price”.
Bromine is an essential raw material for chemical firms like Aarti Industries, Atul and Deepak Nitrite etc. whose price climbed about 20% on October 23. Moreover, another chemical’s price toluene has risen about 6%.
Another raw material is toluene for firms such as Aarti Industries, Deepak Nitrite, Atul etc. Further, during the past quarter, phenol-acetone spreads over benzene-propylene rose by 38% due to a rise in phenol and acetone prices which is about 30% compared to a rise of 15% in the prices of propylene.
JM Financial further added that “We continue believe that Deepak’s phenolics business could show positive surprises from 2QFY24 onwards as phenol spreads likely to have troughed, in our view.”
