Sanmar flags price volatility, warns of inflationary pressures

Chennai: The ongoing conflict in West Asia has begun to weigh on India's chemical industry, with major players like the Sanmar Group flagging heightened price volatility and the possibility of broad-based cost increases across product categories.The immediate impact of the conflict is being felt through sharp fluctuations in feedstock prices, Vijay Sankar, chairman of Chemplast Sanmar, a leading manufacturer of chemicals and allied products, told TOI."It's very difficult to predict how things will evolve, but the volatility we are seeing is unprecedented. If the war continues, prices will go up all through the chain," he said.The surge in crude oil prices is at the heart of the disruption, given that many chemical products are derivatives of oil. As a result, rising input costs are expected to cascade through the value chain, pushing up prices of finished goods."Virtually every product is likely to see an inflationary impact," he said, citing higher costs of energy inputs such as LPG and power, along with rising feedstock prices.Comparing it to past disruptions such as the Covid-19 pandemic, Sankar said it was too early to assess whether the current situation could have a more severe impact. "Covid was a prolonged event. One hopes this does not last as long," he added.Sankar said the group had invested Rs 2,500 crore over the past five years in its supply chain. "If you look at all our businesses—engineering, shipping, foundry, specialty chemicals, and commodity chemicals—all five have enough demand growth for different reasons. So, we believe that if we grow across these five businesses, we will do a good job," he said.He further noted that the company is looking to grow one-and-a-half to two times the GDP growth rate (6%–7%).