February 8: The series of events in south-east Asia has started having its effect on the Indian textiles industry. This is likely to have a major impact on the overall industrial growth rate, which itself has been riding on the back of growth in the textiles and fertilisers industry. This had made many observers believe that there has been an overall revival of the economy.The industrial growth rate has been nine per cent in September and 6.4 per cent in October.The textile industry has been severely affected by the depreciation of currencies in the south-east Asian market. Not only have exports of textiles taken a beating, but even domestic industry has been affected. Market sources say that companies have cut down production by as much as 30 per cent for the months of November and December.
The drop in production started from September onwards. Polyester filament yarn (PFY) production had declined from 58,352 tonnes in August to 53,369 tonnes in September while polyester staple fibre (PSF) dropped from39,574 tonnes to 35,520 tonnes during the same period. Exports of polyester fiament yarn have, in fact, dropped by 32 per cent in November 1997, while that of polyester cotton blends and polyester viscose blends have dropped by 21 per cent and 26 per cent respectively.
But there is something even more serious happening. Though growth has been observed in the earlier months in the production of fibre the same is not being reflected in the production of fabrics. Market observers say that grey market inventory pileup has been on the rise for some time in anticipation of an improvement in prices. However, the south east Asian fiasco has put an end to their dream. Considering the fact that companies are currently underutilising their capacities and the south-east Asian crisis is here to stay and also that there has been a pileup of inventory, there is a general belief that prices are likely to remain depressed for some time.
Apart from these factors there are no signs of an improvement in the prices ofsynthetic fibre intermediates. Leaving prices of caprolactam, monoethylene glycol (MEG) and acrylonitrile, prices of all other commodities have declined substantially.
Copyright © 1998 Indian Express Newspapers (Bombay) Ltd.
