Operating profits of polyester yarn manufacturers in India are set to rise next fiscal. Reason: a rise in operating margins, healthy demand for polyester, and higher blending in garments and other products.
The price of purified terephthalic acid (PTA) – a key raw material that accounts for more than half of the sales price of polyester yarn – is expected to be under pressure in the near term. Moreover, PTA capacities in Asia are set to rise 20 per cent over the next couple of years, which will keep prices in check. The removal of the anti-dumping duty will make India’s PTA imports cheaper, given more avenues for sourcing. Consequently, the input cost for polyester yarn manufacturers would be three percent to four per cent lower. Falling prices and adequate availability of PTA will, in turn, help polyester yarn manufacturers step up production and utilisation levels, too, given the healthy demand and better export competitiveness.
Given the high degree of competition, polyester yarn manufacturers will have to pass on a part of the cost savings to end consumers. However, their operating profits should get a 15 per cent to 20 per cent boost even if they retain half of it.