Psf Makers Urge Big Guns To Cut Back Production

The Indian Fibre Manufactu-rers Association has invited polyester staple fibre (PSF) majors Reliance Industries and Indo Rama Synthetics to join the body in a desperate bid to check the slide in PSF prices. The association has also requested the duo to reduce their production by at least 20 per cent.

Association president and JCT Ltd joint managing director Sameer Thapar said Reliance and Indo Rama, which between them cater to almost the entire domestic demand for PSF, have forced PSF prices down. This has made the operations of other manufacturers like JCT and JK Synthetics unviable, he added.

The two majors together produce about 33,000 tonnes of PSF annually, while the total demand for the product stands at 32,000 tonnes. However, the domestic aggregate installed PSF capacity is close to 45,000 tonnes per annum after taking into account the output of all the other producers.

 

The huge PSF overcapacity has weakened the influence of producers like us on the price, said a senior executive of a synthetic fibre company. And the undercutting of price by Reliance and Indo-Rama has squeezed our margin to practically nil, he added.

Reliance and Indo Rama have succeeded in cutting prices owing to the economies that large-scale production provide them. Sources said the duo is unlikely to accept the associations request to join it and fix a unanimous price for PSF.

Thapar pointed out that the margins of most PSF makers are under pressure since the gap between the price of PTA, (purified terephthalic acid), the raw material and PSF, the end product, is narrow.

The price of PTA is currently about Rs 30 per kg while the selling price of PSF is around Rs 42 per kg. This margin is squeezed considerably by the cost of converting PTA into PSF, said Thapar.