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Dyes & chemical companies in deep trouble

02
Dec '08
Chemicals and auxiliaries manufacturers of India are in trouble due to the sharp drop in prices of final products. These products have been manufactured from high priced raw materials, and now since prices have bottomed out, they are facing prospects of huge losses on the stocks. In Gujarat alone, around 2,500-3,000 chemical companies are on the verge of closure due to critical situation of the market.

The prices of major dyes and other key chemicals in China, Korea, Japan, Taiwan, Hong Kong, Malaysia, and other countries have gone down sharply and suddenly. The effects of this development has also been felt in India, due to which, textile auxiliaries' manufacturers in India are bearing huge losses on carried forward inventory of final products. Prices of major key chemicals and intermediates have gone down by as much as 40–50 percent.

US is the largest consumer of Dyes and Textile chemicals; however they have started outsourcing processed fabrics itself, due to which demand for dyes and chemicals in the markets of the US has gone down drastically. Indian dyes and textile chemicals industry is no more insulated from the global meltdown. Industry sources say, that the exports of Indian dyestuff is expected to go down sharply in the second half as compared to the first half of this year due to tough competition from China and also because of slowdown in demand.

Indian dyestuff industry faced less competition during the pre-Olympics period, because some of the Chinese companies were shutdown temporarily due to the environmental laws introduced by Chinese Government. However the Chinese companies are back in business now, which is believed to have affected the Indian exports to a great extent.

It is believed that, 2009 will be a far more worse year for the industry than what it cumulatively faced in 2008.

Fibre2fashion News Desk - India


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