Coromandel, Chambal Fertilisers surge over 5% in early deals. Here's why fertilizer stocks are in focus

Fertilizer stocks in focus after some of China's key fertiliser companies said they would temporarily suspend exports to assure supplies in the domestic marketPremium
Fertilizer stocks in focus after some of China's key fertiliser companies said they would temporarily suspend exports to assure supplies in the domestic market
 2 min read . Updated: 30 Jul 2021, 10:36 AM IST Livemint

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 state planner said in a statement that it had summoned the fertilizer firms for a discussion against hoarding and speculation. However, it did not identify the companies, Reuters report stated.

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.

Coromandel International shares have been gaining in the past few sessions after it reported a strong operating performance in Q1FY22 on the back of gross margin expansion, due to diversified sourcing, backward integration, cost efficiency, and inventory gain. Domestic brokerage Motilal Oswal in a note on July 28 on Coromandel said that its structural story remains intact with regard to increasing awareness among farmers about having balanced nutrients in crops. Though, sustainability of the company's gross margin and volume growth remains a key monitorable going forward.

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.

(With inputs from Reuters)


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