Even as global PFY market faces headwinds, India shows resilience
The global Polyester Filament Yarn (PFY) market is facing a slowdown, with subdued demand and pricing pressures impacting the industry. However, India, the second-largest producer and consumer of PFY, is demonstrating resilience, driven by domestic demand and moderate export growth.
Impact of demand and prices fluctuations
The first half of 2024 saw a decline in PFY prices due to weak demand from the textile industry and seasonal factors globally. As per ChemAnalyst, prices decreased by 5 per cent quarter-on-quarter, with the price of Polyester Filament Yarn 150D/48F FOB-Shanghai standing at $1040 per metric ton by the end of Q2 2024. India however, while facing global headwinds, saw domestic demand for PFY remain strong, driven by rising disposable incomes, urbanization, and a growing textile industry. This has led to high capacity utilization (over 90 per cent) in the Indian PFY industry.
Meanwhile, China, the largest producer of PFY, increased production by 15 per cent in 2023 to meet rising domestic demand. This led to a fall in exports from China, impacting global supply dynamics. India's PFY exports witnessed moderate growth, supported by competitive pricing and government initiatives to promote textile exports. However, the country continues to rely on imports to meet its growing domestic demand. As per studies India's insufficient production capabilities and domestic supply chain constraints necessitate imports to bridge the gap between demand and supply.
Factors affecting PFY market
The global economic slowdown has impacted consumer spending, leading to lower demand for textiles and apparel, which in turn affects PFY demand. Then there are the seasonal factors like demand variations as per season, with Q2 2024 witnessing lower transaction volumes and increased price pressures due to seasonal factors.
Supply chain disruption is another factor impacting the market. The Russia-Ukraine conflict and other geopolitical events have caused supply chain disruptions, impacting the availability and prices of raw materials like PTA and MEG, which are crucial for PFY production. Government initiatives in India to promote textile exports and support domestic manufacturing too are influencing the export and import dynamics of PFY. No wonder, Reliance Industries, one of the largest PFY producers in India, has been investing in expanding its production capacity and enhancing product quality to meet the growing domestic and international demand. The company's focus on innovation and sustainability is expected to further strengthen its position in the PFY market.
Thus the global PFY market is expected to remain subdued in the near term due to ongoing economic uncertainties and geopolitical tensions. However, India's PFY market is poised for strong growth in the coming years, driven by robust domestic demand and a growing textile industry. TechSci Research projects the Indian PFY market to reach 3063.07 thousand metric tons by 2030, with a CAGR of 3.24 per cent. However, addressing supply chain constraints and increasing domestic production capacity will be crucial for India to fully capitalize on this growth potential.