Raw jute prices, which have come down by Rs 150/quintal over the last one month, might inch down further on account of subdued demand and poor sentiments.

Price of raw jute which was hovering around Rs 2,750 a month ago, has now come down to Rs 2,600. The fall in prices is on account of a weak demand particularly from the sugar industry.

“There has been practically no demand for jute bags for packaging from the sugar industry so far,” said Manish Poddar, chairman, Indian Jute Mills’ Association.

Typically close to 40 per cent of the sugar industry’s total demand for packaging comes in by this time of the year. “Price of raw jute will depend on how the demand situation is,” he added.

Dilution

The Cabinet’s recent nod for 60 per cent dilution in the mandatory Jute Packaging Materials Act (JPMA) of 1987 for packing sugar and 10 per cent dilution for packing food grains in 2012-13 has affected the sentiments, said a senior official in the jute industry.

The JPMA directs all sugar factories to use jute bags for packing sugar to the extent of 100 per cent.

“Fluctuating market tendency continues, though arrival is poor to average. Previously it was presumed that market may get steady after this month. But the present situation leads to some sort of uncertainty in the consumption level. If the consumption level falls subsequently due to dilution, it will have some impact on the price situation,” the official said.

The jute industry is estimated to suffer a blow of nearly Rs 1,500 crore on account of the dilution.

According to Subrata Gupta, Jute Commissioner, the dilution has been announced keeping in mind the demand-supply situation and will not impact the industry.

The total requirement for rabi marketing season stands at 18 lakh bales (of 180 kg) and the jute industry might find it difficult to meet this demand even if it operates at 100 per cent capacity, he said. “With bag requirement firming up we expect prices to remain stable,” he added.

shobha.roy@thehindu.co.in

(This article was published on November 12, 2012)
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