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Falling polyester prices damp Reliance's plans

Reliance Industries would probably be one of the world’s top five petrochemicals producers by the end of the financial year. When the group kicked off a $14 billion project in 2012-13 to pump up capacity at its Jamnagar unit, the target was to raise aggregate capacity of its 20 petrochemicals by 66 per cent. For polyester alone, it would be an 84 per cent jump, reaching a capacity of 3.5 million tons.

But falling crude oil prices have dragged down petrochemical prices particularly polyester. Polyester prices are still below five year averages and this is expected to continue over the next few years. Since polyester is essentially a derivative of crude oil, a fall in the price of crude oil has an impact on polyester prices, although with a lag of six to nine months. After almost a year, prices of polyester have started coming down. The average price of polyester products has come down by almost 25 per cent.

With weak demand from China, the world’s biggest polyester consumer, Reliance will be entering the market at a time when demand and margins are subdued. Polyester, a category of petrochemicals, is a by-product of the crude oil refining process. Polyester products such as polyethylene terephthalate, polyester filament yarn, polyester texturised yarn and polyester staple fiber are used to make textiles, bottles and industrial products.

www.ril.com/

 
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