Raw materials have become costlier by two to five per cent over the past month for synthetic textile manufacturers due to a sharp increase in global crude oil prices recently.
Brent crude rose by 15.2 per cent in a month to its current US$ 64.12 a barrel for spot delivery after recent political developments in Saudi Arabia and a rise in US-North Korea geopolitical tensions.
Purified terephthalic acid (PTA), which is a crude oil derivative and an input for polyester fibre touched US$ 692 a tonne on Tuesday, rising by 4.5 per cent in November alone. MEG (mono-ethylene glycol) has become costlier by 2.8 per cent in November, with its price touching US$ 928 a tonne, even as other raw materials also become costlier.
According to a senior official of Sutlej Textiles & Industries, which is India’s largest manufacturer of coloured yarn, prices of polyester staple fibre have risen by 10 per cent over the past two months to Rs 82 a kg, due to an increase in crude oil prices.
He stated that China, which is a large producer for recycled polyester staple fibre produced from PET (polyethylene terephthalate) bottles, has stopped procurement of such bottles, resulting in a shortage of raw material for their fibre manufacturing plants. Hence, prices of recycled polyester staple fibre have gone up.
India’s largest polyester only manufacturer, Indo Rama Synthetics, had a net loss of Rs 17.7 crore in the September quarter, compared to a loss of Rs 14.7 crore for the same quarter a year before.
According to a top official of Indo Rama Synthetics, goods and services tax (GST) rates on some products were cut from 18 per cent to 12 per cent, which came as a relief for the company.
However, raw material prices have jumped by two to five per cent, due to rising crude oil prices due to which the company expects a further increase in prices of raw materials in the short term, he stated.