New Delhi, July 13 -- Continued supply restraint by Chinese manufacturers could keep chemical prices elevated for longer, supporting India's specialty chemical sector, while faster-than-expected normalisation in pricing and profit spreads remains the key downside risk, according to a report by Systematix Institutional Equities.

The report said prices of benzene, toluene and other crude-linked feedstocks rose sharply during the quarter. Prices of R-32 and other refrigerant gases also remained firm, benefiting major chemical companies.

Systematix expects chemical manufacturers to post healthy revenue growth during the quarter, driven by strong demand for fluorochemicals, capacity additions and an improved product mix.

Operating margins a...