Rising crude oil costs, along with the depreciation of the Indian rupee, worries industries reminiscent of polyester movies that depend upon crude oil derivatives, one of many main producers of value-added polyester movies mentioned. from the nation.
“The rise in crude oil costs had an affect on firm margins within the final quarter,” mentioned CJ Pathak, director of Garware Polyester Ltd.
Benchmark Brent crude oil costs have risen about 42 p.c for the reason that begin of this 12 months. On Friday, it was listed at $ 73.47 a barrel.
Fundamental uncooked supplies
Pathak mentioned the promoting costs of polyester movies fluctuate, taking into consideration the rise or lower within the costs of purified terephthalic acid (PTA) and mono ethylene glycol (MEG), the fundamental uncooked supplies. for the manufacture of polyester chips derived from crude petroleum.
Crude oil costs and trade charges (currencies) play a serious function within the costs of PTA and MEG. The Indian rupee has been risky this 12 months. At present, it’s down practically 2% year-to-date to the greenback at 74.44.
Going ahead, the director of Garware considers the habits of crude oil costs to be unpredictable. “The value of crude oil depends upon a number of elements reminiscent of the rise in provide from the Group of the Petroleum Exporting Nations (OPEC) and different oil producing international locations, the opening of economies after the Covid, which in flip will generate extra demand for oil, in addition to foreign money fluctuation, ”he mentioned.
Shoppers of polyester movies appear to just accept the fluctuating worth pattern. Any worth motion – upward or downward – is straight away handed on to the shopper within the type of items. In distinction, whereas in specialty merchandise reminiscent of value-added polyester movies, the rise or lower is handed on with a time lag relying on the contracts, Pathak mentioned.
As these prices are handed on to the top client with a sure delay, this has no affect on the producers within the medium and long run. “Nevertheless, this sadly ends in unstable completed product costs for customers, inflicting inconvenience to finish customers as larger uncooked materials prices are recovered from finish clients,” he mentioned.
India’s polyester movie business has confronted different challenges, primarily as a result of closures from the Covid pandemic. “The blockages posed a problem when it comes to manpower and logistics, placing stress on gross sales and costs. In exports, ocean freight has doubled over the previous 12 months with rare crusing schedules and delayed deliveries to clients, ”mentioned the top of Garware.
Booming sea freight
Nations all over the world are fearful about ocean freight prices in addition to container unavailability and ship departure delays. The Freightos Baltic index practically doubled this 12 months to six,505 from 3,448 on January 1.
The Covid pandemic has additionally resulted in irregular crusing schedules and delayed deliveries to clients, Pathak mentioned, including that GHFL, alternatively, has been working at full capability for the reason that curbs had been relaxed.
“We now have (since) seen a rise in demand with the opening up of world economies,” he mentioned.
GHFL housed most of its workforce with all of the facilities to benefit from its area, Garware chief government mentioned.
With a grocery store and packaged meals sectors gaining a foothold, the polyester movie business is anticipated to develop 9-12% in main Asian economies reminiscent of India and China over the following few years, Garware chief government mentioned. .
“Skinny movie functionality continues to be added in India by many firms because the grocery store and packaged meals business is gaining floor,” Pathak mentioned.
Garware, which produces value-added polyester movies by means of Garware Hello-tech Movies Ltd (GHFL), added a brand new line of paint safety movies in December of final 12 months,
Whereas most Indian firms deal with skinny movies all the way down to 50 microns, Garware focuses on value-added strains that produce thick movies all the way down to 350 microns.
“Thick movies are the value-added ones which are used for a wide range of makes use of like insulation in hermetically sealed compressors, sturdy packaging, sunscreen movies and laminates,” Pathak mentioned.
GHFL, the specialty movie manufacturing pioneer and largest exporter, has centered on value-added strains to beat these international points. The corporate added a brand new line of paint safety movies in December final 12 months, whereas rising the capabilities of its lamination movie line, demonstrating good demand within the international market.
GHFL produces 76% of the worth added movies exported to over 80 international locations and is the one producer of sunscreen and paint safety movies in India. Globally, it is among the prime three gamers in solar safety movies, along with having a 90 p.c market share within the manufacture of shrink movies used for label utility.