The raw material price rise has impacted export margins of synthetic yarn makers in the April-June quarter. Results of this quarter were impacted by the volatility in the Indian rupee resulting in forex loss due to the mark-to-market adjustment. Raw material prices, especially for synthetic yarn such as PTA and MEG, have risen by more than 20 per cent in some cases.

While the rupee depreciation has helped cotton yarn exporters reap benefits, synthetic yarn exporters have failed to do the same due to price pressure in raw materials. The rupee depreciation should have rung cash registers for yarn exporters. But in polyester, the raw material prices have increased by more than 20 per cent, thereby impacting the margins that one could have earned in exports due to rupee depreciation.

Currently, the Indian economy is passing through a difficult phase with business activities at a lower side for most sectors due to depreciation in the value of rupee, rising crude oil prices and increasing raw material costs. However, the market conditions for manmade fibres are showing signs of improvement.  Demand for polyester is expected to pick up in the months to come. With demand going up in the domestic and international market, manufacturers are hopeful they will be able to utilize higher production capacity in the following quarters.