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Following Nirma's Price Cuts, Other Players In The Soda Ash Market Are Expected To Do The Same

Nirma, a well-known manufacturer of detergent in India, slashed its soda ash prices by INR 2,000 per metric tonne (MT), which translates to a price cut of 6%.

The commodity prices were lowered three times during Q1 FY2024. In general, the price reductions in Pan-India presently stand at INR 1,200 per tonne.

This prompt cut by Nirma will likely influence other market players to slash prices as well, which comes as a result of assuaged coal prices. The companies are thus looking to relay the gain to the end-users.

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The recent price reduction of nearly 6% by Nirma is expected to have an impact on the operating profit or EBITDA per metric tonne (MT) for domestic soda ash players during the April-June period.

As a result of Nirma's downward price revision, Tata Chemicals and GHCL may also be compelled to implement price cuts of their own. However, such actions would have a negative effect on the domestic soda ash business of both Tata Chemicals and GHCL.

Recent Soda Ash Price Palliation

In light of the recent price revision, other giants like GHCL and Tata Chemicals have also cut prices. But, in hindsight, this action could actually be bad for the domestic Soda Ash business of both companies.

A month ago, Tata Chemicals turned its soda ash prices from INR 35,100 per MT to INR 33,900 per MT. The price cut came into effect in the states of Maharashtra, Andhra Pradesh, Karnataka, Telangana, Chhattisgarh, Jharkhand, and Bihar.

April 2023 saw Tata Chemicals witnessing a significant decline in its stock, plunging by as much as 6.5% during the day on the NSE. Heavy trading activity was observed, with over 6.8 million shares being traded on both the BSE and NSE, a stark contrast to the average daily volume of 500,000 shares over the past month.

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The stock ultimately closed at ?932.80 per share on the NSE, registering a 5.86% decrease from the previous closing price. Among the BSE 500 stocks, Tata Chemicals emerged as the top loser on Tuesday.

According to the article by Procurement Resource, a well-known detergent manufacturer in India recently cut the prices of soda ash by 6%. Moreover, the prices of the commodity were slashed three times during the first quarter of the forecast year 2024, Bringing the price reductions of pan India at ?1200 per tonne.

The decision by Nirma might also influence other companies, such as Tata Chemicals and GHCL, to reduce prices of the commodity, which in general could be bad for the regional soda ash business segment of both companies.