China’s energy crisis is expected to give a cost and production advantage to India’s chemicals and steel companies in the domestic as well as international markets, with the order books of Indian manufacturers will witness growth on account of lower supplies from their Chinese counterparts, a report of India Ratings and Research (Ind-Ra) said on Tuesday, October 19.
Notably, China’s worsening energy situation has impacted its industrial segments and forced factories to cut production. It is also threatening to impact the growth of the country’s vast economy and to place increased strain on global supply chains, the Ind-Ra report said.
Globally, increased coal prices, high logistics costs and logistical challenges have led to a rise in raw material costs across sectors.
“The increase in raw material prices has led to a rise in the prices of exported goods, and the resultant adverse impact on the terms of trade (export price to input price) is one of the reasons for the dollar strengthening against the rupee. The weakened rupee coupled with China’s production crunch will give a boost to Indian exports,” the report said.
According to the report, China’s energy crisis and the resultant likelihood of shutting down of Chinese companies or intermittent curbs on manufacturing would prove advantageous to Indian companies, as the demand for their products is bound to rise in both the domestic and international markets.
The fall in China’s steel output and India’s imports of intermediate steel products would benefit Indian steel players by way of lower import risks and greater export opportunities, Ind-Ra said.