AHMEDABAD: Spiralling coal prices have pushed up the prices of basic raw materials used to make
dyestuff
and dyes.
Costly coal along with the reduction in imports from China have caused dye and dyestuff raw material prices surge 50 per cent to 400 per cent during April-October period.
With coal prices increasing nearly two-times over a six-month period and a consequent increase in cost of basic chemicals, dyes and intermediates makers have downsized production by an estimated 80 per cent, according to Gujarat Dyestuff Manufacturers’ Association (GDMA), as their production costs have gone up.
Coal prices have increased by 191 per cent over the past six months. Chemicals including aniline, acetic anhydride,
naphthalene
, sulphuric acid,H-Acid,
J-Acid
,
K-Acid
and vinyl sulphone, among others, which are used for manufacturing dyes and intermediates are become costlier in the range of 50-400 per cent.
Coal plays an important part in chemical processing and production. Chemical factories use boilers to manufacture these raw materials,which are used in making dyestuff and intermediates. While gas and electricity-run boilers are also used to make these raw materials, coal-fired boilers are mostly used by manufacturing units as they are cost effective as compared to gas or electricity fuelled boilers.
“The prices of basic raw materials have gone up substantially because of the steep surge in prices of coal. High coal prices have increased the production cost of factories which produce basic raw materials for dyestuff and intermediates. Reduction in supply from China further added to the pressure,” said
Bhupendra Patel, chairman, Gujarat Region, Basic Chemicals,Cosmetics & Dyes Export Promotion Council (Chemexcil).
“As a result, dye manufacturers have been forced to raise the price of finished products they produced using these basic raw materials,”added Patel.
Dyes and intermediates makers are also dependent on imported chemicals from China. “The power outage in China and consequent force-shutting of production has led to a 25 per cent short-supply of some of the basic chemicals. Supply constraints against a high demand is also responsible for raw material prices to go up,” said Natubhai Patel, managing director,
Meghmani Organics
, which manufactures these chemicals.
A hike in raw material prices came at a time when the cost of gas,plastic packaging material and even freight charges are running high due to which MSMEs are facing dire working capital constraints. This has forced dyes and intermediates manufacturers to downsize production. “Dyestuff manufacturers are barely utilising 20 per cent of their installed capacities are manufacturers are unable to absorb the dramatic rise in production costs, which have increased by at least 50 per cent. Our clients refuse to bear the increased cost of dyes and intermediates and therefore, we’re only manufacturing enough to fulfil existing order commitments,” said Yogesh Parikh, president, GDMA.
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