Dye making units face deceleration in exports

October 16th, 2008 - 3:50 pm ICT by IANS  

Ahmedabad, Oct 16 (IANS) Celebration time is over for India’s dyestuff industry. Dyestuff units had made big profits in the last six months following a temporary absence of the commodity from China in the global market, thanks to production curbs imposed in that country.

However, with Chinese players back in the business after Beijing lifted the production curbs last month, local units are now facing a deceleration in exports.

The production curbs were imposed to ensure clean air during the August Olympic meet.

“Production in Chinese firms, especially those located in Tianjin and Beijing are now in full swing and their resurgence in overseas markets is making an impact,” said Manish Kiri, president of the Gujarat Dyes and Dyestuff Manufacturers Association (GDMA).

The Chinese ban has proved to be a bonanza for Indian dyestuff units, majority of which are Gujarat-based. In the absence of the dominant suppliers, Indian firms’ exports suddenly surged, setting their cash registers ringing. But now the scene is changing.

“Detailed data on exports is not yet available, but the trends indicate that export earnings during the second quarter of current fiscal may not be in line with what was in the first half. There will be a deceleration in exports,” Kiri said.

Industry sources said while the reduction in raw material prices could help the export efforts, the industry has to contend with other factors like excess global capacity for dyestuff.

Also, many buyers are resorting to production rationalisation by focusing on core competencies.

This apart, the US market, the biggest buyer of dyestuff, is now outsourcing the production of fabrics, particularly of cotton goods, in which dyes are used. This trend could in the long run reduce the demand for Indian dyestuff in the US market.

In India, the aggregate annual installed capacity of dyestuff industry (dyes, pigments and intermediates) is 150,000 tonnes a year, according to Chemixil annual report for 2005.

Exports of dyes and dye-intermediates from India which was Rs.15.2 billion in 2001-02 has increased to Rs.55.2 billion in 2005-06. The worldwide demand for organic colorants (dyes and organic pigments) is estimated at $10.6 billion in 2008.

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