Low Demands Result In Delayed Payments In Chemical Units

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Low Demands Result In Delayed Payments In Chemical Units

| Updated: January 11, 2023 11:43

Gujarat’s chemicals industry is going through one of its toughest periods right now, which has industry analysts concerned. Stakeholders claim that many businesses would even find it challenging to adhere to their payment schedules.

There are few export orders, and payments from international buyers are building up. Units are typically operating at 40% of capacity, and Chinese competition is also harming the sector.

Yogesh Parikh, vice-president of Gujarat Chamber of Commerce and Industry (GCCI), said, “The chemicals sector has been under pressure for more than six months, and this has been the worst phase the industry has seen in many decades. There is very low demand from the textile sector across the world and thus a recovery in the chemicals industry is not happening. Ahmedabad has more than 1,000 dyes and intermediates chemicals factories and most have been running at an average capacity of 40% only for many months. This has created a financial burden on units and most industry payments are delayed. If things do not improve, some units may struggle to fulfil their financial commitments. We feel situation may improve after January 15.”

The Gujarat chemicals industry is also suffering from the effects of cheap Chinese goods, and several intermediates factories have been closed for more than six months as a result of local goods’ much higher prices than those of Chinese goods.

Ramesh Patel, former president of The Gujarat Dyestuffs Manufacturers’ Association (GDMA), said, “Export demand of dyes is very low and payment cycles have been extended. Our manufacturers get delayed payments from foreign buyers and it is affecting the business.”

According to sources in the chemical sector, international purchasers place orders as and when necessary, which results in delayed payments, which will also influence the payment cycles of producers. The cotton industry expects that a stable price for cotton will stimulate the textile market and give the chemicals sector some relief.

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