The man-made fibre industry has flayed the anti-dumping duty levied on import of purified terephthalic acid (PTA) from China, Korea, Thailand and the European Union.
Hearing a petition filed by Reliance Industries and Mitsubishi Chemical Corporation PTA India, the Ministry of Commerce and Industry last week notified anti-dumping duties ranging from $117 at the highest level to a low of $19, depending on material quality.
Pulkit Agarwal, Manager (Corporate Ratings), Care, a research agency said the duty came at a time when the industry was showing signs of revival after suffering weak margins last fiscal.
Except for small companies, the industry at large would be able to pass on the incremental cost to end consumers, as demand has been strong, he added.
The polyester sector is exposed to fluctuating raw material prices. Polyester fibre makers import fair quantities of PTA, as there is a gap between demand and supply.
Raising its voice against the duty, Indo Rama Synthetics said since there are no large, integrated polyester fibre players in India, except for Reliance Industries, which would be the sole beneficiary of the duty, the duty was uncalled for.
“The provisional anti-dumping duty is uncalled for, and would be a death blow to over 20,000 small and medium polyester fibre and products manufacturing units in the country,” the company said in a statement.
“It seems that the recommendation to impose anti-dumping duty was done in hurry, without understanding and proper calculations, as the margin from PX (paraxylene) to PTA is hardly $100 a tonne,” noted Indo Rama in the statement.
Domestic PTA players are already charging a premium of $30-40 a tonne over the FOB (free on board) price in view of the provisional anti-dumping duty, which is not healthy for the downstream industry, the company added.
The move may hurt the positive sentiments in the textile industry and impact companies such as Indo Rama Synthetics, Filatex, JBF and Wellknown, which are facing high raw material costs.
Polyester making companies pay about $100 a tonne in addition to buy PTA, than their global competitors do. The additional charges include $50 a tonne as Customs duty, $35-40 as freight differential, and $10 as other levies, such as port handling charges.