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Indian agrochemical manufacturers could benefit from recovering volumes, patent expiries and global outsourcing, but weak generic pricing and intense competition are likely to keep margins under pressure, according to a report by the Capital 360 ONE.
According to the report, the global agrochemical market remained under pressure in the second quarter of 2026, as weak farmer economics, intense competition from generic products, lower pest pressure and adverse weather weighed on demand and prices. Meanwhile, channel inventories have largely returned to normal after remaining elevated during 2024-25. The report said the current weakness is increasingly structural, driven by global excess capacity, aggressive competition from Chinese generic players and weak farmer profitability, rather than another major inventory destocking cycle. High fertiliser, fuel and other input costs alongside subdued crop prices are encouraging farmers to trade down to generics, reduce applications and control discretionary spending. Low insect/disease pressure, particularly in North America and Europe, has further reduced application intensity. Pricing remains the key industry challenge, with limited ability to pass-through higher input costs and excess supply, the report said, adding, Pricing pressure is particularly strong in Latin America and Asia, while Brazil continues to show healthy underlying demand and strong hectares treated but remains highly competitive. It further noted, industry is increasingly divided between mature and off-patent products, which are facing sharp price declines, and differentiated products such as specialised formulations, mixtures, resistance-management solutions and new active ingredients, which offer better growth and stronger pricing. It highlighted, Patent expiries are accelerating generic competition, but differentiated formulations can retain premiums and capture share from older chemistries. Looking ahead, the report said the outlook remains cautiously positive on volumes but still weak on pricing, while El Nio poses a further risk to agrochemical demand, particularly across Asia and Latin America, as hotter/drier conditions and weaker or uneven rainfall can delay sowing, reduce acreage/yields and shorten application windows. A meaningful recovery in prices, however, may require rationalisation of Chinese production capacity, tighter global supply or stronger demand. For Indian agrochemical manufacturers, recovering volumes, patent expiries, global outsourcing and portfolio optimisation could provide growth opportunities, particularly in Latin America. However, Chinese/Indian competition and weak generic pricing will constrain margins. Further, Companies with low-cost manufacturing, differentiated formulations, new registrations and exposure to newer molecules should be better positioned, it said. (ANI)
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