The domestic starch manufacturers have heaved a sigh of relief as surge of demand from the end users has boosted the market sentiments over the last one month. The industry players are optimistic about the sustainability of the demand and said that prices of starch may go further up.
The end consumers of starch-a finished product made mainly from maize - include textile industry, pharmaceutical sector, paper industry and liquid glucose makers. The starch industry was witnessing slump in demand last year which resulted in reduction of capacity utilisation. Moreover, the strong price of maize due to the higher minimum support price was squeezing the starch makers from both the ends.
During slump in demand, starch prices had slipped to as low as Rs 650 for a 50 kg bag. “However, now the prices have surged to Rs 750 per bag (ex-factory price),” said Vishal J Majithia, managing director of the Mumbai-based Sahyadri Starch. We expect prices to cross Rs 800 a bag by April, he added. The industry has a total maize crushing capacity of 5,000 tonnes per day at present. With demand surge, the capacity utilisation which dipped to as low as 75 per cent has again come on track with present industry utilisation hovering around 90 per cent.
Navin Vij, general manager (marketing) of the Delhi-based Bharat Starch Industries, said, “Food industry (including confectioneries) and paper sector has shown good demand for starch. With this, in the northern market, the starch prices jumped by Rs 100 a bag or Rs 2,000 a tonne. Textile sector is still a laggard as demand is not pouring in for starch.”
In the coming months, demand for starch from paper industry will rise further on the back of forthcoming elections, which will either push up starch rates or keep it firm, added Vij. Amol S Sheth, president of the All India Starch Manufacturers’ Association, also opined that demand outlook seems to remain strong.
The other major companies in starch manufacturing are Riddhi Siddhi Gluco Biols, Gujarat Ambuja Exports and Sanghvi Foods. Meanwhile, prices of maize - the raw material for starch making - is stabilising between Rs 820-840 a quintal.