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Polyester: Will the cycle turn? - Views on News from Equitymaster
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  • Mar 28, 2001

    Polyester: Will the cycle turn?

    The polyester industry, which saw double digit growth in FY99 is now witnessing a slide in growth. In FY00 the industry grew by an estimated 6.5% and for the current year it is expected to fall into the negative territory.

    For the first six months of the current fiscal, Polyester Staple Fibre (PSF) ans Polyester Filament Yarn (PFY) have registered negative growth of 4.8% and 0.8% respectively. Imports meet less than 5% of the domestic demand.

    (MMTPA) Incremental Demand - Supply
    Global Capacity Additions 2001 2002 2003 Total
    POY 0.8 0.8 0.8 2.4
    PSF 0.5 0.6 0.7 1.8
    Total 1.3 1.4 1.5  
    Global Demand Growth        
    POY 1.1 1 1 3.1
    PSF 0.5 0.7 0.6 1.8
    Total 1.6 1.7 1.6  
    Source: Reliance Industries Ltd

    Nevertheless, Reliance Industries has stated that it will double its polyester capacity over a period of three years. This could be due to the per capita consumption of polyesters, which still is significantly lower than other countries like China. India consumes one third of China's polyester consumption.

    The global outlook though for polyester could improve over the next two years, as the demand - supply gap reduces with incremental demand growing in excess of incremental capacity addition. Further, in the domestic scenario, India is likely to witness a capacity shortfall in FY02. With demand exceeding supply by 1.3 MMTPA by 2010. This could be the trigger for boosting demand.



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