In the domestic market, producers increased the list price of POY by Re 1 per kg, to Rs 55 per kg, in early May 1999. Prices increased in line with higher feedstock costs (PTA and MEG prices increased by Rs 1.5 per kg each) and steady offtake from texturisers. Producers continued to offer discounts of Rs 2-3 per kg, resulting in a net price of Rs 52-53 per kg.

According to initial estimates, POY offtake remained firm at 60,000-62,000 tonnes in April 1999.However, production was estimated to be lower due to lower operating rates at Indo Rama Synthetics and Sanghi Polyester (both plants had a shut-down one of their continuous polymerisation (CP) units). Operating rates at Raymond Synthetics' plants were also low due to technical problems at its plant. According to company sources, the production loss was not significant. Baroda Rayon's plant remained shut in March, April and early May 1999, as the company reportedly had certain liquidity problems.

Hence, according to initial estimates, domestic production has been estimated at around 60,000-61,000 tonnes in April 1999. Exports have been estimated to be higher, at around 4,000-4,500 tonnes, as compared with less than 3,000 tonnes in March 1999.

According to sources, texturisers had lowered prices due to the availability of a small consignment of low-priced POY imports. However, in view of the firm trend in POY prices in the international and domestic market, and steady offtake of PFY from weavers,texturisers increased prices in early May. The increase in POY and PFY offtake is likely to be sustained in the first half of May 1999. Despite May being a traditionally slack month, producers expect strong offtake as the marriage season, which usually ends in May, has been extended up to June this year. Prices are likely to be steady during the month due to the firm trend in the international market and steady offtake of POY in the domestic market. In June, prices in the domestic market could decline, depending on the offtake levels, feedstock costs and the international prices.

In addition, in 1999-2000, exports of POY/PFY are likely to increase due to the withdrawal of the European Union's anti-dumping, subsidy duty on POY/PFY exports from India.

(This report is a part of `Pricewatch', a monthly commodity report prepared by INFAC, a leading Indian industry information research firm. For further information on the subject visit: www.infac.com)