India's Polyester Raw Material Landscape: A tightrope walk between domestic supply and imports.
India's polyester industry heavily relies on two crucial raw materials: Monoethylene Glycol (MEG) and Purified Terephthalic Acid (PTA). While domestic production attempts to keep pace with growing demand, a considerable gap necessitates substantial imports, influencing prices and impacting the industry's overall dynamics.
Domestic demand
India's polyester requirements driven by growing textile and packaging industries, has led to a steady rise in demand for MEG and PTA. While precise domestic consumption figures for are challenging to obtain, industry estimates suggest an upward trend. In fact, India's polyester consumption has been steadily rising, with population growth, increasing urbanization, and evolving fashion trends. This translates into a robust demand for MEG and PTA. MEG demand exceeding 2.9 million metric tons and PTA demand surpassing 5.4 million metric tons in 2023.
Table: Domestic demand for MEG, PTA
|
Year |
Estimated MEG demand (metric tons) |
Estimated PTA demand (metric tons) |
|
2021 |
2,500,000 |
4,800,000 |
|
2022 |
2,700,000 |
5,100,000 |
|
2023 |
2,900,000 |
5,400,000 |
And despite being a major polyester producer, India's domestic production of MEG and PTA falls short of meeting the surging demand.
Table: Domestic production of MEG, PTA
|
Raw material |
Domestic production (metric tons) |
|
MEG |
Approximately 1 million |
|
PTA |
Approximately 3.5 million |
Source: Industry estimates and various reports
Major domestic producers include Reliance Industries Limited (RIL), which holds a dominant position in the market. However, limited production capacities and feedstock availability constrain a complete reliance on domestic sources.
Bridging the gap with imports
The shortfall between domestic demand and production necessitates significant imports of MEG and PTA.
Table: India’s PTA, MEG imports
|
Year |
Estimated MEG imports (metric tons) |
Estimated PTA imports (metric ton) |
|
2021 |
700,000 |
1,300,000 |
|
2022 |
700,000 |
1,300,000 |
|
2023 |
700,000 |
1,300,000 |
India sources MEG manly from Saudi Arabia, UAE, Singapore, the US and PTA from China, Taiwan, South Korea, Thailand. Import prices often fluctuate based on global supply and demand dynamics, crude oil prices and freight costs. Generally, import prices for both MEG and PTA tend to be slightly lower than domestic prices, though this gap can vary considerably.
Table: Price range
|
Raw material |
Domestic price (Rs/kg) |
Import price (Rs/kg) |
|
MEG |
Rs 50 – Rs 60 |
Rs 45 - Rs 55 |
|
PTA |
Rs 85 - Rs 95 |
Rs 80 - Rs 90 |
(Source: Plastics Today, ICIS, and market reports)
While a precise average price comparison is challenging due to fluctuations, industry sources suggest that import prices for both MEG and PTA have generally been on par with or slightly lower than domestic prices in recent years. However, domestic prices tend to be more stable, offering some predictability to the industry.
India's polyester industry faces the challenge of balancing its raw material needs with cost-effective sourcing strategies. Increasing domestic production capacity is crucial to reducing import reliance and mitigating price volatility. Furthermore, diversification of import sources can enhance supply chain resilience. The government's role in promoting investments in domestic production and facilitating favorable trade agreements can contribute to the sustainable growth of India's polyester sector.
