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Time to increase PSF manufacturing capacity

  1. The need for expansion in PSF sector
  2. Budget based on optimistic estimates
  3. The power generation dilemma
  4. Quality Steel on right track
  5. Agricultural constraints and prospects
  6. The LPG terminal of Engro Paktank

Ibrahim Fibres has the potential to expand its capacity at optimum cost

August 16 - 22, 1999

Lately capacity utilization of local polyester staple fibre (PSF) manufacturers has improved. It is the result of increased demand by local spinners and upward trend in the prices of fibre in the international markets. While the profit margin of all the local PSF manufacturers in the country is expected to improve, Ibrahim Fibres seems to be the only company capable of expanding the installed capacity. The industry sources say that the Company has already prepared the blue print to double its capacity and plans to commence commercial production by year 2002.

Till recently the industry was suffering, due to capacity under utilization, downward trend in PSF prices and alleged dumping by Far Eastern manufacturers on account of global glut of supply. With the beginning of 1999 the offtake by local spinners has improved, prices have gone up and international prices are also on continuous increase. Prices of PSF in the international market are linked with the price of crude oil which has also registered an upward trend lately. As a result, from a low of 60 cents in March, prices have moved to over 85 cents per kg. Domestic prices which closely track international prices have jumped from Rs. 50 per kg in November last year to Rs 62 per kg in July this year.

The last few months have seen an improvement in PTA prices which have moved from a low of US$ 300 per tonne in February to US$ 450 per tonne upto July this year. However, further increase in PTA prices is not expected as the demand/supply scenario is still not favourable and supply pressure will continue to cap prices. At the same time MEG prices have reached US$ 475 per tonne in June this year. Prices of MEG are expected to continue to increase till new facilities start commercial production by the year 2000.

According to the recent estimates the domestic annual demand has exceeded 320,000 tonnes. Whereas the production capacity has remained flat at 310,000 since 1996. Therefore, a need has been felt that PSF production capacity in the country should be expanded. At present ICI Pakistan is engrossed in its own problems, mainly due to massive losses of PTA facility. Dewan Salman has decided to diversify into production of acrylic fibre and no other manufacturer, except Ibrahim Fibre, enjoys better fundamentals to expand its capacity.