Huge Price Differential Seen In Dmt

The landed price of dimethyl terephthalate (DMT), after the imposition of the eight per cent non-modvatable special additional duty, is expected to go up to Rs 36,792 per tonne from the pre-budget level of Rs 34,066 per tonne. In contrast, the current domestic price of DMT is ruling at Rs 24,485 per tonne.

According to Jigar Shah, analyst, K R Choksey Share and Securities Pvt. Ltd, the additional custom duty imposed on imports during the last one year, along with the depreciation of the rupee, would increase the landed prices of most of the imported commodities. This would make it difficult for other countries to dump commodities in the Indian market.

 

According to the data provided by the KRC Share and Securities, prices of other fibre and fibre intermediates like purified terephthalic acid (PTA), mono ethylene glycol (MEG), polyester staple fibre (PSF) and polyester filament yarn (PFY) have enough scope to move upward in the domestic market. The prices of polymers such as high density polyethylene (HDPE) and Polypropylene (PP) are also likely to roll upwards in the domestic market.

The landed price of PTA is seen going up to Rs 31,021 from Rs 28,733 per tonne whereas the domestic price is ruling around Rs 26,196 per tonne. Imported MEG will be costlier by Rs 3,814 to Rs 35,350 (Rs 28,320). PSF prices would harden by Rs 4,804 to Rs 64,861 (Rs 54,320), and PFY tag would move up by Rs 6,239 to Rs 84,235 (Rs 78,010).

Reliance Industries, with a capacity of 9.75 lakh tonne of PTA, three lakh tonne of MEG, 2.35 lakh tonne of PSF and 1.52 lakh tonne of PSF, has the maximum advantage. The company has already revised prices of polymers and polyester yarns upward after the rise in custom duty.

RIL has jacked up the prices of PSY by Rs 3 per kg to Rs 60 per kg and PSF price from Rs 45 to Rs 48 per kg. PTA price was revised to Rs 24.6 per kg, up by Rs 1.5 per kg while MEG was up 60 paise to Rs 24.60 per kg.

In polymers, the landed price of HDPE and PP (co-polymer) is likely to go up by Rs 3,697 and Rs 3,758 per tonne respectively on the imposition of the additional custom duty.

RIL, after the budget announcement, has hiked the basic average price of polymers by Rs 1.25 per kg. HDPE grades have been priced between Rs 40 -42 per kg, LLDPE special grade at Rs 45.50 per kg and normal grade at Rs 41 per kg. PP was quoted between Rs 38-42 per kg.

IPCL, taking a clue from RIL, has also increased the prices of polymers. While the price of PP was raised by Rs 3,100 to Rs 40,000 per tonne, PP co-polymer price was hiked by Rs 4000 to 42,200 per tonne. The price of HDPE was increased by Rs 1600 to Rs 40,000 while HDPE (raffia grade) has been increased by Rs 2,500 to 42,375 per tonne.

Bombay Dyeing, which manufactures 1,43,286 tonne of DMT, also stands to benefit from the hike in import duty, and a reduction in duty on imports of paraxylene, its main raw material. Imports account for 45.38 per cent of the company's raw material cost, and the bottomline is expected to get a shot in the arm with the cut in import duty of paraxylene from 15 per cent to five per cent.