Chinese Economy seems to be tumbling due to multiple factors, among which, the most prevalent is the current power deficit condition of the CCP-led nation. China has been experiencing severe blackouts, with power falling short of satisfying the mechanics of production.
The Chinese chemical industry has taken an equally hard blow, with many production plants being temporarily closed or completely shut. The overall impact has affected more than 25 per cent of the production output.
Indian Chemical Products See A Hike In Price
According to a CNBC report, with the effects administered by the power shortage on Chinese chemical manufacturers, the Indian chemical sector is also affected. For instance, many basic chemicals have seen a spike in prices.
The reason for the proliferative trajectory of prices is the raw materials that are sourced from China. With manufacturing plants in China shutting off permanently or temporarily, the raw material has lost its torrential character, and as a result, Indian chemical manufacturers are bound to increase the prices of their products.
Hopeful And Profitable Wave For Indian Chemical Players
Although the prices have increased, there seems to be a hopeful wave for the Indian chemical companies after the Chinese power fiasco. Deepak Nitrite, one of the fastest-growing chemical manufacturers in India, saw a sky-rocketing spike of 9 per cent to Rs 2,594.40 per share on Monday, reports Business Standard.
Maulik Mehta, CEO, Deepak Nitrite, in an interview with CNBC-TV18, said, “We do source some raw materials from China, but we are not at all dependent on China. We focus on de-risking our raw material supply from China, and that has been our strategy for the last two years.” Aarti Industries, another major player in the chemical industry with a global footprint in pharmaceuticals, too, saw a sudden rise in their market cap after the power outage predicament. Aarti Industries covered a journey from penny stock to a four-digit stock in just six years.
Experts believe that the companies that can survive this raw material price hike and maintain equilibrium throughout will come out with flying colours. But, unfortunately, the small players will have to bear the cost of inflation.
China’s Power Outage
As the pandemic-wounded world opened arms and stretched to gain back the momentum, China saw a sudden surge in the demands of Chinese Products. Moreover, the country has professed to become carbon-neutral by 2060, while currently, 60 percent of production’s mechanics are dependent on coal for power. As a result, China is facing an acute shortage of power and is compelled to direct companies towards a low power-consuming method.
With China experiencing power outages and the UK experiencing a fossil-fuel drought, the world seems to be stuck in a quicksand of global energy drought. However, the Indian companies, for now, are at a sweet spot, as per graphs and numbers.
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