Sunflower Oil Refiners Expected to See 8-10% Decrease in Volume, But Operating Margin Forecasted to Improve in FY25

Indian refined sunflower oil refiners are bracing for a challenging year ahead as volumes are projected to witness a decline of 8-10 per cent in FY25. This decline is attributed to a shift in consumer preference back to soybean oil following a decrease in prices after a successful soy harvest.

According to a report by CRISIL Ratings, despite the decrease in demand, sunflower oil refiners are expected to see a 50-60 basis points expansion in profitability. This is due to stable prices, effective hedging policies, and the government’s commitment to duty-free imports.

Jayashree Nandakumar, Director at CRISIL Ratings, stated, “With a bumper crop, the price of soybean oil is likely to correct by USD 100 per tonne on-year and be on par with sunflower oil in fiscal 2025.” This shift in consumption towards soybean oil is expected to lower sunflower oil volume to 28-29 lakh tonnes in FY25 from 32 lakh tonnes in FY24.

Despite the anticipated decline in volumes, the prices of refined sunflower oil are expected to remain steady due to high shipping and freight costs amid ongoing geopolitical uncertainties in the Middle East. Rishi Hari, Associate Director at CRISIL Ratings, mentioned, “Despite the degrowth, profitability of refiners would improve 50-60 bps supported by favourable spreads on robust demand and no anticipated sharp fluctuations in prices.”

India’s edible oil landscape is primarily dominated by palm oil, followed by soybean oil and sunflower oil. Sunflower oil demand is closely linked to the pricing dynamics of its substitutes, particularly palm oil and soybean oil. India imports over 95 percent of its sunflower crude requirement, and the movement in prices largely depends on imported crude.