The main reason for this crisis, according to him, is that the price for POY, the main raw material for this industry has jumped since March last by nearly 18 per cent. Along with taxes etc the cost of this raw material thus comes to Rs 82-83 per kg while the price which texturisers can fetch for their roto yarn is around Rs 89 per kg.

This leaves conversion charge of just Rs 6 per kg which, according to the spokesman of the industry, might not cover even electricity costs. Out of desperation, texturisers, according to him, have decided not to lift any more POY at present. They hope that as a result of this strategy, either prices for POY might come down to a reasonable level, or those for texturised yarn may move up suitably.

It might be interesting to note that until March last domestic prices bothfor polyester staple fibre (PSF) and partially-oriented yarn (POY) remained depressed in the domestic market as foreign suppliers were resorting to cut-throat competition when they found their markets disrupted in the wake of currency crisis in South East Asia.

They started slashing their prices in order to keep the wheels of their plants moving. In the process, they brought down the PSF price as low as US $0.52 to 0.55 per kg from the earlier rate of about US $1.00 per kg. Even POY prices were likewise slashed.

This forced domestic producers also to prune their prices. The PSF price was thus brought down as low as Rs 40.50 per kg by major suppliers and to about Rs 38-39 per kg by others. POY was also brought down to Rs 52 per kg. Some offered it at still lower prices. The situation has undergone a sea-change in May and June. Major domestic producers are now quoting as much as Rs 52 per kg for PSF and Rs 64 per kg for POY. The increase in these prices since March last has been of the order of 28 per centand 18 per cent respectively.

Just as overseas prices were earlier exerting downward pressure on domestic prices, they are not facilitating an upward push. Foreign suppliers who were earlier slashing their prices have suddenly started jacking them up. They are quoting as much as US $0.84 to 0.88 per kg for their PSF and US $1.5 to 1.10 per kg for POY.

Two factors are said to be mainly responsible for this spurt in prices abroad. When international competition was too fierce some polyester producers had started cutting back their production. This has enabled them to bring down their inventories. Secondly, the rise in crude oil prices has led to in increase in the prices for both PTA and MEG, main raw materials for the polyester industry.

For instance, PTA which had earlier gone as low as US $370 per tonne is said to be now priced around US $420 per tonne. Likewise, MEG is said to have shot up to about US $500 from US $360 per tonne. Domestic producers of polyester are facing another problem as well.Those who have been depending on outside supply of MEG, are now experiencing difficulties in getting adequate supply of this raw material.

They fear that if the supply position of this raw material becomes tighter, production of both PSF and POY, particularly by those who are depending for this raw material on outside supply, might be adversely affected leading to a further spurt in polyester prices.