Thread by @CapOrbit

Thoughts on impact of nCov on chemicals sector in India.

1. One cannot use a broad brush approach. Many companies have diversified revenue streams. They sell many different chemicals.

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2. To make a chemical here you need the RM, which could be imported from China. Does the listco in India have access to alternate sources? At what cost?

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3. A Chinese plant may be shut down because of restrictions. World-level supply comes down for that chemical. In this case, the Indian company can benefit it it did not have RM dependency on China (a good chance of that happening in chemicals, not in the pharma sector though)
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4. A Chinese chemical plant is not affected. It's domestic market gets affected due to weaker demand/shutdowns at customer end. This surplus can get imported into India and depress local prices and hurt a local company.

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5. Many Indian cos. chemical-wise production data is not disclosed. There is that much more uncertainty in the analysis.

6. All of Chinese output is not affected as of yet. Do you know which plant is shutting down in China and what it produces?

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7. There are more nuances than saying chemicals will do well.

8. A company may do very well (Chinese output is taken out) or even be hurt badly (if there is dumping in to India)

9. No recos made. Only questions that can help one think through.

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