MMF sector expected to attract more investments

The removal of anti-dumping duty on PTA (Purified Terephthalic Acid) in the Union Budget is expected to bring in investments in the Manmade Fibre (MMF) sector and benefit the entire value chain.

Madhu Sudhan Bhageria, Chairman and Managing Director of Filatex India, told The Hindu that so far availability of raw material was expensive. It will be lower now. And this will lead to higher availability of PTA too. The entire MMF value chain will benefit. Indian weavers will be able to compete with imported fabric. The yarn producers were not planning expansion because of uncertainty on fibre availability. Now they will look at expansions. Growth in global textiles in the last 10 years, was mainly (98 %) in MMF, he said.

Mr. Bhageria added that Filatex will invest ₹100 crore next financial year to recycle PET bottles. The company plans to develop in-house technology for chemical recycling of the PET bottles.

According to a study of 45 CRISIL-rated polyester yarn manufacturers, the operating profits of the yarn producers are set to rise 15 % to 20 % next financial year because of a 150 basis points to 200 basis points spurt in operating margins due to lower raw material prices, healthy demand for polyester, and higher blending in garments and other products.

The report says that raw material cost has started moderating because the outbreak of Coronavirus is likely to impact demand for polyester yarn in China, which accounts for nearly 65 % of global demand. As a consequence, the price of PTA, a key raw material that accounts for more than half of the sales price of polyester yarn, is expected to be under pressure in the near term. Moreover, PTA capacities in Asia are set to rise 20 % over the next couple of years, which will keep prices in check.

Further, the removal of anti-dumping duty announced in the Union Budget this year will make India’s PTA imports cheaper by $ 25- $ 30 per tonne, as there will be more avenues for sourcing. Consequently, input cost for polyester yarn manufacturers will be 3 % to 4 % lower, according to the study.