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Sector Focus: Chlor Alkalies

Chlor alkalies: State of the industry (00-01)

Chlor alkalies: Tariffs, prices and landed costs

	Tariffs (per cent)				Prices (Jan 01)			Landed costs (Rs/tonne)
	Customs		Excise		Domestic		Intnl	Pre- budget	Post budget
	00-01	01-02	00-01	01-02	(Rs/ton)		($/ton)
Caustic soda	44.0	40.0	16.0	16.0	15,000	1	250	23,841	20,835
Soda ash	44.0	24.8	16.0	16.0	8,050		110	10,961	9,877

1 Delivered price

Source: CRIS INFACŪ

• In 2000-01, demand for soda ash is expected to increase by 8 per cent as compared with that in 1999-2000. Demand for caustic soda is expected to increase by 2 per cent during the same period.
• In 2000-01, supply of caustic soda and soda ash is expected to increase in line with the increase in demand.
• in the first half of 2000-01, soda ash prices were 15 per cent lower as compared with the average prices in 1999-2000. However, prices increased significantly during September January 2000- 2001 period. In 2000-01, average price realisations of soda ash are expected to be at 1999-2000 level.
• During first half of 2000-01, caustic soda prices declined due to an oversupply situation in the market and no significant increase in demand. However, during the September-January 2000-01 period, prices increased as producers lowered operating rates. In 2000-01, average price realisations of caustic soda and chlorine are expected to be 10 per cent higher as compared with those in 1999-2000.
• · In 2000-01, margins of soda ash producers are expected to decline marginally.
• · In 2000-01, margins per tonne of caustic soda producers are expected to increase.

Chlor alkalies: Budget Impact

Impact factors

Company name	Impact	Impact factors
Gujarat Alkalies and chemicals limited	neut	A,B
(21.80, 21.70)
Gujarat Heavy Chemicals limited	neut	A,B
(13.35, 12.40)
Punjab Alkalies and Chemicals Limited	neut	A,B
(7.80, 7.40)

Notes:
Figures in brackets indicate the closing share prices, on February 27, 2001 and February 28, 2001, respectively.
neut= neutral Source: CRIS INFAC

A: The reduction in effective customs duty on soda ash is expected to have a marginally negative impact on soda ash producers. The Government of India has fixed the minimum landed cost for soda ash, imported from China at $ 197 per tonne. However, domestic prices could be under pressure, as consumers of soda ash could import soda ash from the US and Kenya. The reduction in effective duty on caustic soda, as a result of the removal of surcharge, is not expected to have a significant impact on domestic producers due to the existing antidumping duties. The government of India has fixed the landed cost of caustic soda at $ 247-$ 340 per tonne.

B: The reduction of surcharge on corporate tax, from 13 per cent to 2 per cent and the expected decline in interest rates, is expected to have a positive impact on producers.

Rediff-CRISIL Budget Impact Analysis
Budget 01

Disclaimer: CRISIL has taken due care and caution in compiling this report. Information has been obtained by CRISIL from sources which it considers reliable. However, CRISIL does not guarantee the accuracy, adequacy or completeness of any information and is not responsible for any errors or omissions or for the results obtained from the use of such information. CRISIL is also not responsible for any errors in transmission and especially states that it has no financial liability whatsoever to the subscribers/ users/ transmitters/ distributors of its web site.

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