ET NEWS

ET Intelligence Group: Chemical companies are likely to report a mixed performance in the September quarter, as volume recovery in some segments is being offset by weak pricing, oversupply, and subdued demand, resulting in modest top-line gains and largely flat net profits. While specialty and fluorine-based companies are expected to fare better due to higher margins, commodity and agrochemical producers are likely to face earnings pressure. Aggregate estimates from brokerages point to year-on-year sales growth of about 5%, a 4% increase in earnings before interest, taxes, depreciation, and amortisation (EBITDA), and net profit growth of roughly 1% for the sector. While volumes have improved, particularly in specialty chemicals, weak spreads and pricing pressure are likely to limit profitability. EBITDA margins are estimated to contract both sequentially and annually as product prices such as benzene, toluene and acetone have remained significantly lower compared with last year. According to Motilal Oswal Financial Services, most organic compound prices fell sharply in September with butadiene down 31%, benzene 19% and aniline 22% year-on-year, reflecting continued weakness in global demand. Brent crude prices fell to $69 per barrel in the September quarter, down from $80 per barrel a year earlier.124774383 Front-loading of orders ahead of potential US tariffs may have temporarily supported sales, but a slowdown in ordering may emerge in the coming quarters. "A slowdown in ordering by customers after the front-loading that occurred in the past two-three quarters will start to impact the results of some companies this quarter and may become more prominently visible starting the December quarter," noted Kotak Securities in a preview report. Refrigerant gas players such as SRF and Gujarat Fluorochemicals, are expected to do well. Their margins could expand and operating profit may rise in double digits, aided by healthy pricing of R-32 refrigerant gas and robust demand in specialty verticals. "Fluorine-based companies may witness a 13-86% growth in EBITDA, led by higher margins," said Elara Capital. The agrochemicals segment is set for a weaker-than-expected quarter. Axis Securities and Elara have highlighted that excess rainfall across major states has severely disrupted the season, leading to damaged crops and missed spraying rounds. This has impacted the on-ground consumption of herbicides, insecticides, and fungicides, dimming prospects for a strong recovery. Fertiliser makers, however, may record mild growth supported by steady consumption. In the near term, investors will keenly watch the pace of new project launches, trends in refrigerant and fluorine prices, and US tariff decisions.

The U.S. and Abu Dhabi governments will invest $1.8 billion into mining and refining projects across the globe with private equity fund Orion Resource Partners to bolster Western access to lithium, rare earths and other critical minerals. The investment plan, announced on Thursday, comes as market leader China crimps access to critical minerals even as demand jumps globally across the economy, forcing manufacturers and others to jostle for fresh supply. The U.S. International Development Finance Corp (DFC), which is controlled by Washington, Orion, and the Abu Dhabi sovereign wealth fund ADQ, have contributed $1.8 billion - $600 million each - to the newly formed Orion Critical Mineral Consortium. The consortium, which hopes to grow to $5 billion with funds from others across the globe, aims to quickly get minerals supply to market and plans to avoid exploration-stage projects. "What we're focused on is projects that are in production or can be put into production in the very near term to get material back to the U.S. and allied nations," said Frank Fannon, the consortium's managing partner who served as U.S. assistant secretary of state for energy resources during President Donald Trump's first term. For other potential investors, Fannon said Orion would seek those with a "shared value and shared understanding" of the need to boost Western access to critical minerals. Orion's announcement comes two days after private equity firm Appian Capital Advisory and the International Finance Corporation launched their own $1 billion fund to invest in minerals projects in Africa and Latin America. Orion plans to "go where the rocks are" and invest in mines across the globe as well as the processing facilities needed to turn metals into the building blocks for batteries and other equipment, Fannon said. "We are absolutely committed to funding the supply chain to the extent necessary to secure end-stage product for customers and consumers," said Oskar Lewnowski, Orion's founder and CEO. Orion will focus its investments on minerals considered critical by the U.S., Canada, the European Union and Australia, as well as copper and uranium, both executives said. The DFC, which also holds a stake in mining firm TechMet, will be involved in investment decisions and that involvement should help reduce any project's geopolitical risk, the executives said. "The (U.S.) government certainly brings a lot to bear, particularly in emerging market contexts, and that makes investments that much more tenable for us," Lewnowski said. When asked if Orion was interested in Ukraine's mining sector, Lewnowski said: "Ukraine has some very interesting rocks. And let's leave it at that." The Trump administration has taken equity stakes directly in MP Materials, Lithium Americas, and others, underscoring Washington's increasing willingness to directly involve itself in the private mining sector. Critical mineral companies have also boosted U.S. lobbying efforts, hoping to share in the ambitious investments that Trump has pledged to firms deemed essential to national security.

Mumbai: India's stock indices ended higher for the sixth straight session on Thursday, after giving up most of the near 1% gains earlier in the day, sparked by optimism around reports that India is negotiating with the US to bring down tariffs to 15-16% from 50%. While Information Technology (IT) stocks led the upward move on expectations of a trade deal and relaxation in H-1B visa rules, the decline in Reliance Industries shares put a lid on upside. The NSE Nifty finished at 25,891, up 0.1% or 22 points. The BSE Sensex ended at 84,556, 0.2% or 130 points higher. Both indices are nearly 1.5% away from their record closing levels hit in late September last year. "The markets rallied based on the positive sentiment on reports of India and the US being close to finalisation of the trade deal and correction in precious metals," said Rajesh Palviya, head of Technical and Derivatives, Axis Securities. Elsewhere in Asia, markets were mixed. Japan dropped 1.4% while South Korea and Taiwan declined 1% and 0.4% respectively. Indonesia climbed 1.5% and Hong Kong rose 0.8%. China ended 0.2% higher.124774052 At home, the Nifty IT index jumped 2.2% while the Nifty Private Bank index rose 0.5%. The Nifty Oil & Gas index slid 0.6% lower, and the Auto index ended marginally lower. "All export-based sectors with a high exposure to the US witnessed a short squeeze on Thursday, after the good momentum in the past few sessions," said Sunny Agrawal, head of Fundamental Equity Research, SBI Securities. Agrawal expects the Nifty to face a hurdle at the 26,300 levels. The index's current all-time closing high is 26,216.05. The Nifty Midcap 150 and the Smallcap 250 indices declined 0.2% each. Out of the 4,389 shares traded on BSE, 1,809 advanced, while 2,464 declined. In the past week, the mid-cap and small-cap indices climbed 0.2% and 0.8%, respectively. Palviya said once the benchmark reaches a new high, the broader market is expected to participate in the rally. Foreign portfolio investors (FPIs) sold shares worth a net ₹1,165.9 crore on Thursday. Their domestic counterparts bought shares worth ₹3,893.7 crore crore. In October, global investors bought shares worth ₹969.8 crore. "Overseas investors are buying gradually but the buying is in selective pockets as they are not in a hurry to cover short positions and turn until there is a concrete outcome of the trade deal," said Palviya. "Nifty is trading a few hundred points shy of its all-time high but the set up indicates that call writers are already in place for October expiry. The index is expected to pause briefly and then resume an upward trajectory to cross record highs in November."