Synthetic fabric and textiles in India are likely to become costlier as the raw materials used in their production, petrochemicals like DMT, PTA, have become more expensive. The steep depreciation in the rupee against the dollar is set to make imports of raw materials costlier, leaving no room for synthetic textiles manufacturers but to raise their product prices.
The synthetic textile industry already works on wafer thin margins. But given the forecast that crude oil price will remain firm, synthetic fiber and yarn prices may also remain firm. An improvement in cotton price to polyester staple fiber price spread is likely to result in volume growth of synthetic textiles and support the profitability of the synthetic value chain.
Pink bollworm attack is set to affect India’s cotton crop area by ten to 20 per cent. Demand from China is set to increase in favor of India following a heavy import duty levied on cotton imports from China and as cotton output in Pakistan is expected to decline by a fourth, fiber prices are likely to remain elevated.
The benchmark Brent crude oil prices have jumped by a staggering 12.9 per cent in the previous one month. Also, the rupee has depreciated by 4.1 per cent in the last one month.