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FUTURE OUTLOOK OF POY/PFY INDUSTRY

Global Textile Market Overview

The global textile market value is estimated to be US$ 4.50 trillon during the year 2008. It is observed that clothing accounted for about 60% of the market, while textile accounted for the balance 40%. The global textile industry grew at an estimated average annual rate of about 2.5% during 2000-2008. The global slowdown has also affected Textile industry adversely. The global fibre demand has decreased by one percent in 2008. It is also observed that the global textile and clothing industry can be broadly divided into Natural Fibre and Manmade Fibre industry. The Natural Fibre industry includes Cotton, Wool, Silk and Jute; while the manmade Fibre Industry includes Polyamides, Polyester, Polyethylene, Viscose and Acrylic to name a few.

Global Fibre Scenario

The global fibre demand in 2003 was 641 Lacs MT. The demand for fibre grew at a CAGR of 5.05% to reach an estimated 807.50 Lacs MT during 2008. It is noted that during the same period, demand for natural fibre grew at a CAGR of 4.65%, while the demand for manmade fibre grew at CAGR of 5.38%.

Future Outlook of POY / PFY Industry
PFY Demand in India
The domestic demand for PFY stood at 10,14,755 Tons during the year 2003. The demand for PFY grew at CAGR of 4.21% to reach an estimated 12,88,523 Tons by the years 2008.

PFY industry, as we know, had faced difficult market conditions during the years 1999-2002 due to excess capacity over demand which lead to cut throat unhealty competition causing substantial erosion in profitability of these companies. However, as now new capacities came up during this period, the gap between supply and demand got gradually bridged up and POY manufacturing units/companies are doing reasonably well since beginning of 2002 and are expected to do much better during the next few years in view of the sustained demand growth.

As per detailed survey conducted by 'CRISINFAC' the domestic Polyester industry is likely to witness robust demand growth and higher profit margins in the next five years due to the following positive factors favouring Polyester industry.

Price Competitiveness of Polyester viz-a-viz other substitutes like cotton, silk and woolen yarns.
Excise duty reduction to encourage demand :- Excise duty on POY has been progressively reduced over the previous few years to 16% and is expected to be reduced further which will further increase the price compititiveness of POY.
Increase of PFY in non-appael segments :- In India, fibre is mostly used for textile applicaions i.e. 93% and only 7% for non-apparel applications like home textiles, automotive an industrial segments as against 59% worldwide. The demand of non-apparel segment is expected to grow @ 20% p.a. as Polyester offers high tenacity an strength which is most suitable for such applications.
Lower per capita consumption :- The averageper capita consumption (PCC) of fabric in India is much lower than in its neighbouring countries. India has a huge potential market, given that its PCC is as low as 1.4 kg as compared China (5 kgs), Pakistan (3 kgs) and Indonesia (5 kgs). India has the advantage of a large an growing domestic market, and a good GDP growth.
Rapid urbanization :- higher spend on clothing :- In India, out of the total population, about 70% is rural. Behaviour patterns suggest that most of the fabrie demand in this segment is need-based. The urban demand, on the other hand, is also driven by fashion trends and favours more sophisticated textiles, and variety in designs and colours. The average urban spend on apparel is higher than rural spend.
However, over the years, the clothing pattern in India has shifted. Men's clothing consumption has moved from the traditional cotton based wear to synthetic fabrics. Cotton dhoti are giving way to trousers (mostly made of polyester or polyester blends). Likewise, women are moving from cotton saris to synthetic saris/dresses.
Levy of Anti-dumping duty on import of POY to lower threats of import leading to availibility of better contribution to domestic manufacturers.
Rapid additions in downstream processing facilities leading to incremental demand.
Manufacturing of manmade fibres globally is getting shifted mainly to China and India. As China's domestic comsumption almost matches its production, India will be able to increase its presence in the International market.

Keeping in view the strong fundamentals mentioned above, CRISINFAC has projected th POY industry grow at a healthy 7.8% Compounded Annual Growth Rate (CAGR).
 
 
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