Polyester producing companies have cut production by 40 per cent in last three months due to acute shortage of key raw material PTA (purified terephthalic acid) supplied by oil refining companies such as Reliance Industries and Indian Oil Corporation besides MCC PTA India which shut production in some of their units for various reasons.

MS Bagheria, Chairman, Filatex India said Reliance Industries, the largest producer of PTA had cut production between March and May for two weeks each and it is allocating only 50 per cent of demand to all its customers since April.

Similarly, he added, IOC supplied only 70 per cent of its customers demand since February before taking a complete shut down in April for 15 days while MCPI took month long shut down in February and supplied less than 50 per cent of the contracted volume to each customer.

Interestingly, the polyester manufacturers require 5.3 million tonnes of PTA per annum, while the country has production capacity of 6 million tonne with Reliance Industries itself commanding annual production capacity of 3.2 million tonne.

Reliance is the largest producer of polyester fibre and yarn in the world, with a capacity of 2.5 million tonnes per annum.

Reliance said it has suspended PTA production at its Dahej unit due to water shortage.


The anti-dumping duty of 15 per cent levied in December has made import of PTA unviable for the polyester industry, said Bagheria.

Unlike other PTA users, the polyester companies, which is among the largest employment generators, cannot afford imports after the anti-dumping duty as they are operating at wafer-thin EBITDA margin of 6-7 per cent, he added.

RK Vij, General Secretary, PTA Users Association said with the domestic PTA in short supply and anti-dumping duty on imports, the polyester industry is struggling for survival with levy of $108 a tonne on PTA import price of $600 a tonne works out to about 18 per cent.

“The industry is facing two-prong problems. On one hand, it is not getting enough domestic supply of raw material and on the other the Government has imposed anti-dumping duty on imports from Thailand, Korea, China, Iran, Indonesia, Malaysia and Taiwan,” he added.

Bagheria said a steady supply of raw material is key for operating a polyester plant as it is a continuous process and cannot be shut and restarted at once will.

“To shut and restart a polyester plant with daily capacity of 200-300 tonnes would cost about Rs 1 crore. It is high time the Government removes the anti-dumping before things go out of hand,” he said.

Of the annual installed polyester production capacity of 8.4 million tonnes, companies have produced only 5.8 million tonnes due to raw material shortage. Currently, Vij said industry has idled about 1000-1500 tonnes of daily production capacity due to non-availability of PTA.

Highlighting the undue protection to large PTA producers, Vij said while import of PTA attracts a duty of 15-20 per cent, the government allows duty free import of paraxyle, which is raw material for producing PTA.

Due to the inverted duty structure, Indian polyester products have become costlier by 15-20 per cent making exports unviable. The current situation has led to import of fabrics and yarn are going up.

Last fiscal cumulative imports of polyester fibre and yarn had gone up 13 per cent to 139,909 tonnes (123,993 tonnes).