The profitability of basic chemical players remains moderate with continued oversupply and global demand headwinds. Despite a steady domestic demand, dumping of some of these chemicals by major overseas producers due to continued weak demand prospects in the other markets is likely to keep the margins under pressure in the near term.

Exhibit: Trend in industry revenues and revenue growth

Source: Financials of 6 companies comprising over 50% of industry capacity – Deepak Nitrite Limited, Tata Chemicals Ltd, Thirumalai Chemicals Ltd, IG Petrochemicals, DCM Shriram Ltd and Gujarat Alkali Chemicals Ltd