Textile manufacturer Alok Industries plans to increase focus on polyester in FY14. In the current financial year, the company expects to have 41 per cent of the company's revenue from manmade fibre, up from 38 per cent in FY13. In FY12, this was 35 per cent and revenues from cotton has fallen to that extent.
Alok is not the only company which is increasing focus on the manmade fibre business. In fact, there is a systematic shift happening from cotton to manmade fibres.
Production of manmade textiles has gone up over the past few years. The demand is expected to go up further over the next few years, thanks to rising demand from home textiles, technical textiles and apparel.
"Demand for home textiles and technical textiles is on the rise and hence, the demand for manmade fibre will go up in the coming years; also, demand for blended cotton fabrics is on the rise, which in turn is increasing the demand for synthetic fibre," said Dilip Jiwrajka, managing director of Alok Industries.
Spotting the trend, rating agency CARE Research has said there is a shift towards increasing use of manmade fibre in textiles. Care said, "With increase in disposable income, growing numbers of consumers, rising urbanisation, increasing retail penetration and increased usage of plastic money, manmade fibre is expected to grow at 5.2 per cent CAGR during the FY12-16."
The rating agency added that globally, use of manmade fibre is around 65 per cent. In India, the share of cotton is 66 per cent expected to fall in the coming quarters in favour of polyester.
In FY13, cotton use increased due to lower prices and higher prices of raw material for polyester fibre. Prices of purified terephthalic acid and monoethylene glycol, the raw materials used in manmade fibre - were up two to five per cent.
In the last financial year (FY13), demand for manmade fibre was down seven per cent from the previous financial year. This is due to the fact that cotton was available at cheaper rates and also the slowdown in the economy, as well as weak industrial production.
However, the demand for manmade fibre seems to be picking up. In some segments, the trend is visible. For example, in FY08, viscose staple fibre production was 279.9 tonnes, which moved up to 829.7 tonnes in FY12, almost a 200 per cent jump. Exports also saw a rise from 26.4 tonnes in FY08 to 78.6 tonnes in FY12, which is again a jump of nearly 200 per cent.
CARE's observation is important because in the recent past, crude oil prices have fallen and its derivatives and raw material for manmade fibre have also started falling. With crude oil prices expected to remain subdued in the coming months, price of raw materials is also expected to remain low. Against this, the International Cotton Advisory Committee has projected a fall in cotton planting globally and a rise in cotton prices.
According to the Comm-ittee, an estimated 34.1 million hectares of cotton are being harvested in 2012-13 (July-June), five per cent below the previous season, and another five per cent drop to 32.2 million hectares is forecast in 2013-14.
"Global cotton production is estimated down five per cent from 27.8 million tonnes to 26.3 million tonnes this season, and world production is forecast to drop another six per cent to 24.6 million tonnes during 2013-14," it said.
The Committee also projected an increase in cotton prices. It said, "The Cotlook A Index (representing global cotton prices) is projected to average 88 cents and 122 cents per pound in 2012-13 and 2013-14, respectively."