With the prices of raw materials such as paraxylene (PX), PTA and MEG dropping over two months, polyester yarn makers are heaving a sigh of relief.
PX prices have fallen 11 per cent-- from $1,611 a million tonne (mt) on March 1 to $1,432.5 a mt. During the same period, PTA and MEG prices have dropped from $1,150 a mt to $1,051 a mt and $1,046 a mt to $997 a mt, respectively. The fall in PX prices was primarily due to the fall in crude oil prices.
"Currently, prices have stabilised. From here, the situation would be better. Last year, we utilised about 65 per cent of our total capacity; this year, we hope to utilise more than 80 per cent of capacity, as there is a revival in demand," said O P Lohia, chairman and managing director, Indo Rama Synthetics. For the quarter ended March, the company had recorded a net loss of Rs 38 crore, owing to high raw material prices.
According to a recent press release from Indo Rama Synthetics, earlier, PTA and MEG prices were high because of the tight PX environment. Also, as the high prices weren't passed to customer, the margins were low.
The domestic polyester yarn industry is facing tough competition from China. "The industry is facing demand issues, as China's synthetic yarn prices are lower than India's. Due to this, the Indian synthetic yarn industry is suffering," said Jayesh Pathak, president of the Bombay Yarn Merchants Association.
Polyester yarn makers are also struggling with over-capacity. "This is because of reduced demand in polyester products -right from fabric to raw materials," said Chiripal. Also, cotton prices have been low, while supply has been high. Due to this, demand for cotton has been higher than demand for polyester.
PX prices have fallen 11 per cent-- from $1,611 a million tonne (mt) on March 1 to $1,432.5 a mt. During the same period, PTA and MEG prices have dropped from $1,150 a mt to $1,051 a mt and $1,046 a mt to $997 a mt, respectively. The fall in PX prices was primarily due to the fall in crude oil prices.
"Currently, prices have stabilised. From here, the situation would be better. Last year, we utilised about 65 per cent of our total capacity; this year, we hope to utilise more than 80 per cent of capacity, as there is a revival in demand," said O P Lohia, chairman and managing director, Indo Rama Synthetics. For the quarter ended March, the company had recorded a net loss of Rs 38 crore, owing to high raw material prices.
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The price of texturised polyester yarn, the benchmark yarn variety, has fallen from Rs 120 a kg in March to Rs 105 a kg, owing to the drop in the prices of PX, PTA and MEG. "Paraxylene prices have fallen in the last two months. This has led to a fall in PTA and MEG prices as well. This has helped us reduce our raw material costs and pass it to our users," said Jyotiprasad Chiripal, director of Chiripal Industries, which manufactures 200 tonnes of polyester yarn a day at its Ahmedabad plant.
According to a recent press release from Indo Rama Synthetics, earlier, PTA and MEG prices were high because of the tight PX environment. Also, as the high prices weren't passed to customer, the margins were low.
The domestic polyester yarn industry is facing tough competition from China. "The industry is facing demand issues, as China's synthetic yarn prices are lower than India's. Due to this, the Indian synthetic yarn industry is suffering," said Jayesh Pathak, president of the Bombay Yarn Merchants Association.
Polyester yarn makers are also struggling with over-capacity. "This is because of reduced demand in polyester products -right from fabric to raw materials," said Chiripal. Also, cotton prices have been low, while supply has been high. Due to this, demand for cotton has been higher than demand for polyester.