Dip in demand for industrial chemicals expected as economic crisis continues: Chemanex

Chemanex, one of the leading producers and importers of industrial chemicals and intermediates in Sri Lanka, said its prospects in the local market are looking grim at present, as the country is grappling with an unprecedented economic crisis.

The CIC Holdings subsidiary, although “optimistic” about its prospects, said it expects a dip in activity in the coming months, which would add to the already existing challenges.

“Going ahead, we anticipate a reduction in demand for some months in the year, as our customers will feel the pressure from the ongoing economic crisis. 

Rising inflation however will prove challenging, as it will likely stem consumer demand. The shortage of diesel is also expected to lead to a dip in industrial production, which would have a direct impact on the uptake of chemicals,” said Chemanex Chairman P.R. Saldin in his message in the company’s latest annual report.

Chemanex is also expecting a dip in industrial production, due to the diesel shortage, which will have a direct impact on the uptake of chemicals. The contraction in industrial production will also be contributed by the non-availability of foreign exchange for imports and the country’s adverse credit rating. The company acknowledged that the future for the economy looks bleak, considering the foreign exchange crisis and inability to obtain dollars for imports, which would have a severe impact on industrial production and hamper growth in the immediate short term.

The steep inflation and shortage of diesel, fuel and cooking gas, coupled with political upheaval, are combined risk factors that could have an even more negative impact on the economy going ahead, it added.

As a result, confidence in the local market is expected to remain volatile and there could be a decrease in the demand, due to the economic downturn. 

“Chemanex will leverage on its strength to handle the situation,” said Saldin. 
The company plans to consolidate its performance in 2022/2023 by forging new relationships with reputed global suppliers, while increasing stocks to maintain its position as a reliable supplier.