FY2026 agrochem margins seen subdued amid US tariffs on China: ICRA

The Indian agrochemical industry has begun to recover in fiscal 2025 (FY2025) after a challenging fiscal 2024 (FY2024), which was marked by inventory destocking, supply-side pressures from China, and depressed global prices.

Profitability has shown signs of improvement in the year-to-date period, supported by stabilising agrochemical prices and a rebound in export demand, as channel inventories across global markets have returned to more normal levels, ICRA said in a press release.

India’s exports to the US and Brazilian markets recorded strong volume growth in the first half of FY2025. This was largely driven by the tailwinds of inventory destocking and more stable pricing. According to ICRA, export volumes are expected to grow by 5 to 6 per cent over the full fiscal.

However, the domestic market experienced muted volume growth during the same period. An extended monsoon season and lower pest infestation led to fewer pesticide applications, with some instances of missed sprays when compared to the first half of FY2024.

Looking ahead, ICRA expects that strong rabi crop output will positively impact farm incomes in the near term. This is likely to support a recovery in agrochemical offtake in fiscal 2026 (FY2026). Nonetheless, industry margins are expected to remain subdued during that period. Rising competition, compounded by higher tariffs imposed by the US on Chinese agrochemical products and only mid-single digit growth in volumes, is likely to weigh on profitability despite the improved demand outlook.

Fibre2Fashion News Desk (HU)