Jute mills fear more order dilution as balers flag tight raw fibre supply

Kolkata, Dec 17 (PTI) Jute mills have raised concerns over the possibility of further dilution of statutory packaging demand after indications from the Jute Balers’ Association (JBA) pointed to a sharper-than-expected crunch in the availability of the golden fibre, industry sources said.

The apprehensions surfaced following a meeting of the Jute Advisory Group (JAG), chaired by the jute commissioner, where the supply-demand situation in the current jute year was reviewed on Tuesday.

Sources said the group discussed the likelihood of additional dilution of 3-5 lakh bales, mainly in the wheat procurement segment, with a working estimate of around 4.75 lakh bales emerging during the deliberations.

Mill representatives said the prospect of further dilution has heightened uncertainty at a time when mills are already grappling with reduced offtake visibility under the ongoing Rabi procurement plan.

During the meeting, the JBA presented a conservative assessment of raw jute availability, pegging the domestic crop at around 52 lakh bales, significantly lower than other projections.

JBA also indicated that imports from Bangladesh and exports to Nepal are broadly neutralising each other, offering little net addition to domestic supply.

Officials acknowledged that such assessments help explain the persistent firmness in raw jute prices, which have recently climbed to around Rs 10,000 per quintal in major markets.

The Indian Jute Mills Association (IJMA), meanwhile, estimated total availability at around 80 lakh bales, including carryover stock of about 18 lakh bales, a domestic crop of roughly 60 lakh bales and around 2 lakh bales of imports. Even under this estimate, the mills argued that supply remains tight relative to statutory demand.

As part of Rabi season planning, authorities have already moved towards dilution of about 11 lakh gunny bales, equivalent to nearly 5.5 crore jute bags. Industry estimates suggest this translates into roughly 3.2 lakh tonnes of jute goods, or about 17 lakh bales of raw jute, which is nearly three months of normal industry consumption.

Mill officials cautioned that dilution of this scale, if extended further, could force mills to operate at around 50 per cent capacity, affecting working days, employment and cash flows.

While the issue of gunny bag price fixation could not be taken up formally as it was sub-judice, mill representatives flagged that the widening gap between elevated raw jute prices and frozen finished bag prices is already pushing several units into losses.

With inter-ministerial consultations underway, industry stakeholders said the government's final decision, expected shortly, will be crucial in determining mill operations and market sentiment for the remainder of the Rabi season. PTI BSM MNB