Global fibre industry sailing on volatility boat

10 Feb '10

9 min read

Mr Dharmesh Mishra, Export Manager, Modern Petrofils, attunes the similar kind of notes by saying - “The yarn prices ended at its highest in 2009. US, Gulf prices increased to some extent, while prices in Europe gained sharply. With American prices surging, market indicated that the arbitrage window between the USA and Asia would open soon. A few Asian producers were optimistic about market sentiment, and opined that supply would tighten in first quarter of 2010. With crude prices inching up further, demand was stable as filament yarn prices were also ticking up. Filament yarns were dearer in Asian markets under severe cost pressure. The cost pressure on filament industry was mounting fast amidst weak demand at the year.”

However, he further added that he finds economy getting even and the bad phase is over but the yarn industry shall continue under pressure and players may not witness 'all is well' times so soon. In his views, coming time can possibly see a drop in prices and increase in demand.

From India Mr Tibrewala, VP(Mktg)- NRC Limited, notices filament yarn market to be on improvement side. In his opinion prices are little bit firm and the reason for that is due to limited manufacturers of this product in the industry. In India, out of six major manufacturers of filament yarn, three have already closed down their units, and thus only three companies belonging to Birla Group are operating at present, he informed.

He also apprised that production of Viscose Filament Yarn, in the country is around 40,000 tons per annum, and the industry is carrying stock of approximately 2400 tons at the moment which is equal to 20 days of production. “Apart from this, cost of the production is varying from time to time as the raw material cost prices are raising. For example, wood pulp which is major raw material is manufactured only by two companies in India rest is imported, causing price rise,” he illustrated his point.

“Price of Sulphur, which is another major raw material for VFY. In last July-Aug-2009 price was $55 per ton and now in Jan-2010 is $150 per tone, similarly wood pulp in July-Aug 2009 was Rs 43,000 per metric ton and now in Jan 2010 is increased to Rs 55,000 per metric ton. Thus cost of production is increasing. Of course, the price of VFY is more or less stable. In the attempt, when the price of VFY is increasing, the consumption is not increasing in the same ratio. The burden of this increase in prices is coming only on the producer, and day by day profit margin is shrinking. If they try to pass on cost to consumers, the consumption goes affected negatively,” he lamented.

He also shared- “Around 1500-2000 tones filament material is being imported every month despite anti dumping duties on it, out of which major share is fromChina. In addition to this, industry is not yet actually free from recession. However, because of limited number of producers the industry is surviving. Since there is limited producers of VFY the requirement is being catered from these producers and rest is being imported from China, apart from local consumption these manufacturers are also exporting around 12 to 13 percent of their production.”

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