Tata Chemicals shares fell 5.5 percent in early trading on April 18 after the company decreased pricing for light and dense soda ash by three to four percent across India on Monday. The price fall comes amid a drop in soda ash prices in China since mid-March as the market reacts to news of an unexpected significant capacity increase happening in the country's Inner Mongolia region by Yuan Xing Energy beginning in May 2023.

Lower coal costs and a rise in North American pricing, according to Kotak Institutional Equities, could compensate for some of the price decreases. "Though such variables should cushioning the immediate impact of price cuts on overall profits, the medium-term risk is that the market softness indicated in these cuts extends to other regions, particularly exports out of the United States and Kenya," the brokerage firm said.

Tata Chemicals shares reacted poorly to the news as well, and were trading 4.07 % lower at Rs 950.50 on the NSE at 9.49 a.m. On the markets, seven lakh equities of the company changed hands, compared to the one-month daily traded average of 5 lakh shares.

STOCK MARKET UPDATES

The capacity expansion at Yuan Xing Energy was supposed to be completed later. According to recent information, the factory will begin capacity expansion in May, beginning with a capacity of 1.5 million tonnes per annum (TPA). This capacity is scheduled to progressively rise over the year, reaching 5 million TPA by the end of 2023.

"Although the reliability of these capacities claims is not yet measurable, recent price movement in China points to worries of local oversupply," noted brokerage company Kotak Institutional Equities in a research.

Tata Chemicals expects high fourth-quarter profits due to higher revisions to the United States local contract costs for 2023 and solid realizations on US exports. "However, the outlook for the second half of the year of 2023 is less clear, given slowing demand from the construction and automotive sectors in the United States, as well as the influx of additional capacity from China and the United States," the brokerage said.