Coromandel, Chambal Fertilisers surge over 5% today. Here’s Why Fertilizer Stocks are in Focus

  • Shares of Coromandel International, GSFC, Chambal Fertilizers, Deepak Fertilizers and others surged in the range of 5-10% in early deals

Fertilizer companies’ stocks are in focus after China’s latest move on suspending exports for some key fertilizer companies in its domestic market. Shares of Coromandel International, GSFC (Gujarat State Fertilizer and Chemicals), Chambal Fertilizers, Deepak Fertilizers and others surged in the range of 5-10% in early deals on Friday.

Some of China’s key fertiliser companies said they would temporarily suspend exports to assure supplies in the domestic market, according to a statement on the website of the National Development and Reform Commission (NDRC) on Friday, as reported by news agency Reuters.

The move is the latest by Beijing to tackle soaring prices of major raw materials. Fertiliser prices in China, which is both a major consumer and producer, have hit records this year amid stronger demand from overseas, lower production domestically and high energy costs.

”This comes as no surprise. China is clearly trying to tame inflation through means of export duties. We have seen this with steel and now with fertilisers. Our agrochemical companies rely heavily on Chinese imports for raw materials, especially Urea. Even though this will cause disruption to Indian importers, companies that have and are working on backward integration with high export concentration like Meghmani OrganoChem will emerge as key beneficiaries,” said Divam Sharma, Co-founder of Green Portfolio, SEBI registered Portfolio Management Services.

Separately, metal stocks have also been in focus recently, as China is considering imposing more restrictions on steel products and raise export tariffs, which analysts believe, will help Indian steelmakers gain in terms of market share as well as profits. The Chinese government recently announced imposing a tax on steel exports to cool export, and domestic steel prices.

China is the world’s top exporter of phosphate, and shipped 3.2 million tonnes of diammonium phosphate fertiliser in the first half of this year to major buyers such as India and Pakistan as well as 2.4 million tonnes of urea, according to customs data.