Mideast, climate woes hit India's dye sector

The perfect storm of the Middle East crisis and the El Nino climate pattern is significantly impacting India's $7 billion dye and pigment industry, industry insiders and experts said.

This volatility is set to send further shock waves through the sector, a critical subset of the global $46.6 billion dye and pigment market, they predicted.

The ongoing United States-Iran conflict has seen rising feedstock costs, slashed natural gas allocations, and soaring maritime logistics expenses squeezing near-term profit margins and dampening sentiment across the chemical sector.

With input costs shooting up, businesses are feeling the heat of margin squeeze, said Ankit Shankerbhai Patel, managing director of Ahmedabad-based Ami Phthalo Pigments in India's western state of Gujarat. He described the situation as "very, very grave".

Ankit Patel, who is also a former president of the Vatva Industries Association, the largest industrial association in Gujarat, said he has seen massive price hikes for essential processing elements such as sulfuric acid and coal.

"Many units, including mine, are facing losses and running at 50 percent capacity. This is impacting the labor force as well. And it seems there is no end to it, and survival becomes a challenge," he said.

Ramesh Patel, deputy general manager at Ahmedabad-based Meghmani Industries Limited, a prominent chemical company, told China Daily that uncertainty from the Iran conflict has dealt a severe blow to businesses.

"As our supply routes have been choked, the damage it has wrought to the industry is enormous," he said.

Supply routes for sulfur — a critical raw material for cotton and denim dyes — have been severed. Qatar, the United Arab Emirates, and Oman account for roughly 76 percent of India's sulfur imports and, with these routes disrupted, Middle East sulfur prices have spiked.

Crude-derived aromatics have also jumped sharply. Benzene is up 20 percent, alongside steep rises in toluene and naphthalene. Sulfuric acid has climbed roughly 30 percent.

Govind Salian, vice-president at Mumbai-based Artek Surfin Chemicals Ltd, told China Daily that product prices have risen.

Some unscrupulous businesspeople have also started hoarding and resorting to several unfair practices, he said, adding that others are selling previously produced products at exorbitant prices.

Rupee weakening

"On top of that, there has been a steady weakening of the rupee against the US dollar. On average, there has been a 10 percent increase in input costs for products. Overall, it's a depressing situation," he noted.

"I only hope the (Middle East) crisis doesn't linger long," Ramesh Patel said. "We have become a lot more circumspect, and risk-taking has become a lot more difficult than before," he said.

Meanwhile, India's Ministry of External Affairs has sought an immediate de-escalation of tensions to safeguard commercial shipping corridors as economic damage to downstream manufacturing continues to mount.

However, El Nino has also had a direct impact on India's dye and pigment industry as the sector depends heavily on water, stable energy supply, and predictable logistics, said analysts.

The naturally occurring weather pattern is only expected to peak in November.

"For India's dye and pigment industry, El Nino is not just a weather event — it is a business stress test. It can disrupt water supply, raise energy costs, tighten pollution risks, and ripple through global textile supply chains," said Plato Yip, chairperson of the nonprofit Friends of the Earth (Hong Kong).

Dye and pigment production requires water for processing, washing, cooling, and wastewater treatment, he said. When El Nino disrupts rainfall patterns or weakens monsoon reliability, factories may face higher costs, tighter water access, and greater operational uncertainty.

Arunava Das is a freelance writer for China Daily.