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Rising oil prices do not translate into high prices of derivatives

11
Dec '09
Clothing fabrics based on synthetic fibers are made from petroleum products, so they are much closely associated with oil prices. The rise or fall in oil prices affects prices of fabrics and clothing made from these raw materials.

International oil price has increased from US $30 per barrel, by the end of last December to about $80 per barrel at present. This increase in oil price has resulted in prices of man-made fibres, yarn, fabrics and in turn of clothing to surge.

In the chemical fibre industry, raw material costs account for a major proportion. Among polyester fibres, the proportion of raw material costs such as PTA (Purified Terephthalic Acid) or MEG (Ethylene Glycol) accounts for over 80 percent. Therefore, as oil prices mount, PTA and MEG prices too shoot up.

An expert says that spot prices of raw materials used in manufacturing of chemical fibres has increased from about 5,200 Yuan per ton earlier this year to about 7,800 Yuan per ton now, up nearly 50 percent.

While the price of finished products produced from these chemical fibers has increased by just 40 percent, which means that the chemical fiber enterprises have to bear the differential caused by rising cost.

Fibre2fashion News Desk - India


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