(1888PressRelease)
July 31, 2007 - Rising cotton prices along with falling area under sowing for cotton is further expected to result in improved margins for the polyester business. This along with rejuvenation of downstream textile industry and a greater thrust towards value added exports will improve margins for the polyester business.
In the last one year global cotton prices have moved up by 23% to US$1574 per tonne and expected to rise further. Higher cotton prices, historically have resulted in a shift in consumption pattern towards polyester, resulting in better margins for the latter.
Also in the lat few years there has been a greater thrust on increasing exports from countries like India and China. Both the countries are looking at increasing high value added exports of textiles and here too they will have to rely of polyester exports as rising cotton prices will make it un competitive.
What will work in Reliance’s favour is a slow down in the Chinese addition of polyester capacity. Since RIL is a integrated player and virtually controls the entire value-chain and hence costs.
These factors will drive polyester demand and push up prices of polyester further, thus improving RIL’s margins in the polyester business.
