Dyestuff Mak­ers Rally on Crack­down in China

Firms like Shree Hari and Aarti Inds have risen sharply, but some ex­perts say gains may be tem­po­rary

The Economic Times - - Smart -

Mum­bai: Dyestuff mak­ers in In­dia have caught the fancy of mar­ket traders in re­cent weeks. Shares of nearly two dozen dyestuff man­u­fac­tur­ing com­pa­nies have wit­nessed a rally of 10-57% since early March fol­low­ing China’s crack­down on lo­cal in­dus­try to lower pol­lu­tion. Shree Hari Chem­i­cals, Kiri In­dus­tries, Bhage­ria In­dus­tries, I s h a n Dye s a n d Che mi c a l s, Chro­matic In­dia, Aarti In­dus­tries, Vipul Dyechem, NOCIL, Nitta Gelatin, Pod­dar Pig­ments, Asahi Song­won and Nar­mada Ge­latines , among oth­ers have wit­nessed a sharp up move in share price in just over a month.

China’s top dyestuff maker Hubei Chuyuan, which has a 30% mar­ket share in the sec­tor, was re­cently shut down by the gov­ern­ment on en­vi­ron­men­tal con­cerns. “Hubei Chuyuan’s shut down has given im­pe­tus to the re­cent rally in share price of In­dia’s dyestuff mak­ers but it could be tem­po­rary,” said Dal­jeet Singh Kholi, head of re­search at In­di­aNivesh. “Hubei Chuyuan could restart op­er­a­tions in the next few months af­ter chang­ing the plant lo­ca­tion or en­vi­ron­men­tal upgra­da­tion and so on. In In­dia, dyestuff mak­ers have shown good num­bers re­cently and over­all there is a view that China may fur­ther crack down on the ac­tiv­ity.”

In­dia is the sec­ond-largest man­u­fac­turer of H-Acid, glob­ally af­ter China. H-acid is the chief dye in­ter­me­di­ate used in man­u­fac­ture of black dyes. How­ever, H-acid is the most pol­lut­ing in­dus­trial ef­flu­ent that gen­er­ates 50 kg of waste for ev­ery one kg of us­able ma­te­rial. It is toxic and non-biodegrad­able.

Ac­cord­ing to data from Direc­torate General of Com­mer­cial In­tel­li­gence and Sta­tis­tics, In­dia alone man­u­fac­tures around 24,000 tonnes of dyestuff ev­ery month. Man­u­fac­tur­ing in China is more than dou­ble of In­dia.

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