Reliance the world`s largest yarn producer to benefit immensely from the change in business cycle
Released on = July 30, 2007, 4:40 am
Press Release Author = Richa /Newage Multimedia
Industry = Retail
Press Release Summary = Polyester margins expected to move up as high cotton prices will divert demand to synthetic fibers
Press Release Body = Rising cotton prices along with falling area under sowing for cotton is further expected to result in improved margins for the polyester business. This along with rejuvenation of downstream textile industry and a greater thrust towards value added exports will improve margins for the polyester business.
In the last one year global cotton prices have moved up by 23% to US$1574 per tonne and expected to rise further. Higher cotton prices, historically have resulted in a shift in consumption pattern towards polyester, resulting in better margins for the latter.
Also in the lat few years there has been a greater thrust on increasing exports from countries like India and China. Both the countries are looking at increasing high value added exports of textiles and here too they will have to rely of polyester exports as rising cotton prices will make it un competitive.
What will work in Reliance's favour is a slow down in the Chinese addition of polyester capacity. Since RIL is a integrated player and virtually controls the entire value-chain and hence costs.
These factors will drive polyester demand and push up prices of polyester further, thus improving RIL's margins in the polyester business.
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