Business

Rising Global Crude Oil Price Pushes Up Costs Of Synthetic Textile Raw Materials

Raw materials have become costlier by two to five per cent over the past month for synthetic textile manufacturers due to a sharp increase in global crude oil prices recently.

Brent crude rose by 15.2 per cent in a month to its current US$ 64.12 a barrel for spot delivery after recent political developments in Saudi Arabia and a rise in US-North Korea geopolitical tensions.

Purified terephthalic acid (PTA), which is a crude oil derivative and an input for polyester fibre touched US$ 692 a tonne on Tuesday, rising by 4.5 per cent in November alone. MEG (mono-ethylene glycol) has become costlier by 2.8 per cent in November, with its price touching US$ 928 a tonne, even as other raw materials also become costlier.

According to a senior official of Sutlej Textiles & Industries, which is India’s largest manufacturer of coloured yarn, prices of polyester staple fibre have risen by 10 per cent over the past two months to Rs 82 a kg, due to an increase in crude oil prices.

He stated that China, which is a large producer for recycled polyester staple fibre produced from PET (polyethylene terephthalate) bottles, has stopped procurement of such bottles, resulting in a shortage of raw material for their fibre manufacturing plants. Hence, prices of recycled polyester staple fibre have gone up.

India’s largest polyester only manufacturer, Indo Rama Synthetics, had a net loss of Rs 17.7 crore in the September quarter, compared to a loss of Rs 14.7 crore for the same quarter a year before.

According to a top official of Indo Rama Synthetics, goods and services tax (GST) rates on some products were cut from 18 per cent to 12 per cent, which came as a relief for the company.

However, raw material prices have jumped by two to five per cent, due to rising crude oil prices due to which the company expects a further increase in prices of raw materials in the short term, he stated.