Polyester sector expects better year

Companies in segment are not expecting much from exports

After tough competition from cotton last year, the manmade yarn and fabric industry is expected to grow at a higher rate of five to seven per cent in 2015-16, on the back of stable crude oil prices. However, it is the domestic market that will see the larger growth, as Indian synthetic yarn and fabric performance has not been one of the best internationally.

So, while companies in the segment are not expecting much from exports, the domestic market might bring back some sheen, they say. “While normal growth of five to seven per cent is anticipated, if the economy does well, this could go up to double-digit growth,” said O P Lohia, chairman, Indo Rama Synthetics (India) Ltd.

In 2014-15, demand for most manmade filament & fibre was subdued due to a decline in prices of cotton yarn. Also, says a report, the levy in July 2014 of anti-dumping duty on import of purified terephthalic acid (PTA), a major input, further hit domestic production of polyester filament yarn.

Unlike the seasonality for cotton, synthetic textile products can be produced through the year. Also, there is expected to be more consumer demand for woven and non-woven synthetic textiles, and the industry anticipates equal growth in the synthetic yarn and fabric market in both segments, said Sanjay Jain, managing director of TT Ltd and vice-president, Federation of Hosiery Manufacturers Association of India.

Demand recovery for manmade filament, fibre, yarn and fabric in 2015-16 is likely to be backed by an increase in offtake by apparel manufacturers, says a CMIE report. The apparel segment consumes a little more than half of the total synthetic fibre produced by the industry. Manufacturers of home textiles and technical textiles are also expected to increase the usage of synthetic fibres during the year. Also, with crude oil prices expected to remain stable, PTA and mono-ethylene glycol prices are likely to come down, too, leading to a decline in polyester prices by eight to 12 per cent this year. Domestic and international prices of both the polyester raw materials had plunged in the latter half of 2014-15, led by a steep decline in crude oil prices. So, polyester prices had corrected sharply during the period.

"This year, however, crude oil prices are expected to remain stable at $60-70 a barrel.  Also, market demand for polyester is likely to rise by five to seven per cent," said Jyotiprasad Chiripal, director at Chiripal Group, which has a polyester yarn manufacturing capacity of 200 tonnes a day.

But, exports could play spoilsport this year. “With markets like Brazil, Turkey and Egypt under pressure for several reasons, demand for polyester yarn and fabric will be under pressure this year. Also, under the government's new import/export policy, while there is a push for polyester exports, almost all forms of exemptions have been removed, making polyester exports uncompetitive,” Lohia added.