Page 1

Issue 10 – May 2010

The Fiber Year 2009/10 A World Survey on Textile and Nonwovens Industry


Dear Readers, After an historic downturn trend in the textile industry never experienced before, along with the global recession, we are now confidently looking forward to the near future. To start with, the manmade fibres plant markets picked up considerably in the second half of 2009. The economic stimulus packages started to kick in, most importantly in our Asian market where the effect released investment for the future.

Thomas Babacan

In addition, Oerlikon Textile was already registering an increase in demand for our high-tech components during this period. This clear trend signalled that spinning mills around the globe are cranking up their production to meet an ever increasing demand. By the end of 2009, this positive trend also extended into other areas of technology offered by Oerlikon Textile. This upturn helped Oerlikon to record a marked increase in orders for systems from staple fibre yarn to BCF carpet yarn by the start of 2010.

CEO Oerlikon Textile and Chief Operating Officer, OC Oerlikon Management AG, Pfäffikon/Switzerland

We have made good use of the difficult global economic downturn that hit us all hard but has left us best placed to emerge re-invigorated from the crisis. We have maintained our investment in research and development that compares with the steady level seen through the boom year of 2007 and in some cases Oerlikon Textile has even managed to increase it. We will present the results of our commitments by innovating successively to the market in 2010 and 2011 through new, highly efficient products that we will launch. We are convinced that with Oerlikon Textile’s leading innovations we have been able to anticipate the needs of our customers much better than we ever did in the past. We want to inspire all our customers to achieve another substantial increase in added value for their own companies as well as contributing to the protection of the environment. Through investing in new technologies, the new developments are subject to the e-save energy efficiency programme, by ensuring a significant reduction in energy consumption compared with rival machines and preceding models. Oelikon’s path has been set for the future. You can continue to rely on Oerlikon Textile and its five business units Oerlikon Barmag, Oerlikon Neumag, Oerlikon Saurer, Oerlikon Schlafhorst and Oerlikon Textile Components as a responsible, dependable, innovative and forward looking partner to the textile industry. Yours sincerely,

Thomas Babacan CEO Oerlikon Textile and Chief Operating Officer, OC Oerlikon Management AG, Pfäffikon/Switzerland


Foreword The information in this report is mainly based on the global network and in-house experience. Special thanks go to all companies and institutions below mentioned for their precious contribution. ABRAFAS

International Federation of Organic Agriculture Movements

Airbus S.A.S.

International Wool Textile Organisation (IWTO)

All Pakistan Textile Mills Association (Punjab Zone)

Japan Chemical Fibers Association

Asian Development Bank

Lenzing AG

Association of the Nonwoven Fabrics Industry

Malaysia Trade and Industry Portal

Autoliv Inc.

Malaysian Textile Manufacturers Association

Bangladesh Garments Manufacturers and Exporters Ass.

Mexican Clothing Industry (CNIV)

Bangladesh Textile Mills Association

Ministry of Economic Affairs, R.O.C.

Bank of Thailand

Ministry of Textiles (India)

Better Factories Cambodia

Ministry of Economy, Trade an Industry (Japan)

Boeing Co.

National Bureau of Statistics of China

Brazilian Textile and Apparel Industry Ass. (ABIT)

National Council of Textile Organizations (NCTO)

Camara Industrial Argentina de la Indumentaria

National Society of Industries (SNI)

Central Bank of the Republic of Turkey

OPEC

China Chemical Fibers Association

Organic Exchange

China Chemical Fiber Economic Information Network

Polyamide High Performance GmbH

China Cotton Textile Association

Polyester High Performance GmbH

China Nonwovens & Industrial Textiles Association

Proexport Colombia

China Textile Information Center

Spinners & Weavers Association of Korea

Dralon GmbH

State Committee of the Republic of Uzbekistan

EDANA

Taiwan Textile Research Institute

Federal Bureau of Statistics (Pakistan)

The World Bank Group

Fiber Economics Bureau

Trevira GmbH

Food and Agriculture Organization of the United Nations

Turkey State Institute of Statistics

General Aviation Manufacturers Association

Turkish Clothing Manufacturers Association

German Association of the Automotive Industry (VDA)

United Nations Conference on Trade and Development

Global Organic Textile Standard (GOTS)

United States Agency for International Development

Global Wind Energy Council

United States Department of Agriculture

Hexcel Corp.

United States Department of Commerce

INDA

U.S. Census Bureau

Indonesian Synthetic Fiber Makers Association

Vietnam Textile Association (Vitas)

International Cotton Advisory Committee (ICAC)

World Trade Organization

© OC Oerlikon Corporation AG, Pfäffikon 2010 The content of this report is protected by copyright. Oerlikon permits recipients of this report to make copies of Oerlikon’s copyright material in this report for their own use. Further distribution and/or publication is permitted provided that the source is acknowledged and no changes to the content are made. However, Oerlikon reserves the right to withdraw any of these permissions in relation to any particular user at any time. The information provided in this report has been investigated and compiled with reasonable care. However, the information is provided “as is” without warranties of any kind, expressed or implied, including accuracy, timeliness and completeness.

The Fiber Year 2009 / 10

03


Table of contents 1.

Fiber Year 2009/10 celebrates tenth anniversary.............................................................05

2.

World Economic Outlook 2010/2011...................................................................................09

3. 3.1 3.2 3.3

Raw Material Industry...........................................................................................................012 Cotton......................................................................................................................................012 Wool..........................................................................................................................................016 Crude Oil.................................................................................................................................019

4.

Fiber Consumption in 2009.................................................................................................021

5. 5.1 5.2 5.3 5.4 5.5 5.6 5.7 5.8

Manmade Filament Yarn and Staple Fibers......................................................................023 Polyester.................................................................................................................................025 Polyamide................................................................................................................................029 Polypropylene.........................................................................................................................033 Acrylic......................................................................................................................................034 Cellulosics...............................................................................................................................035 Carbon Fibers.........................................................................................................................038 Aramids....................................................................................................................................040 Spandex Yarns........................................................................................................................041

6.

Spun Yarn................................................................................................................................042

7.

Organic Textiles.....................................................................................................................078

8.

Nonwovens and Other Unspun End-Uses.........................................................................083

9.

Statistical Appendix..............................................................................................................088

“The Fiber Year 2009/10” is the tenth issue to describe in detail developments in the world’s manmade fiber, spun yarn and nonwovens industry. Its target is to provide a comprehensive picture on the textile industry. Statistical information is instrumental in achieving an overall impression and inevitable to disclose the story behind the figures. However, it cannot explain the fundamental changes that have been taking place, as politics explain much activity in this industry today and have consequences far beyond the boundaries of the industry.

For further information: Andreas Engelhardt Oerlikon Saurer Arbon Ltd. Textilstrasse 2 CH-9320 Arbon Tel. +41 - 71 - 447 51 89; Cell. +41 79 571 34 33 andreas.engelhardt@oerlikon.com or aw_engelhardt@yahoo.de

04

The Fiber Year 2009/ 10


1. Fiber Year 2009/10 celebrates tenth anniversary The report “The Fiber Year” is the next generation of a service that the Dutch manmade fiber manufacturer Akzo had provided for more than three decades. It started under the umbrella of Saurer AG. Since 2007, Saurer AG has been integrated into OC Oerlikon Corporation AG, Pfäffikon.

“Despite a 4.2% growing fiber demand in 2009, textile industry has lost a volume in the last two years of more than 15 million tonnes. Leading exporters of textiles and clothing have lost a volume of almost US$40 billion last year.”

Andreas Engelhardt Senior Manager Oerlikon Textile International Business, Arbon Switzerland www.oerlikontextile.com

Ten years of reporting about the world textile industry have come along with several memorable, headline events. The past decade will be briefly summarized. World Fibers Supply 80 70

mill. tonnes

60 50 40 30 20 10 0

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

Manmade Fiber Cotton/Wool/Silk

The Fiber Year 2009 / 10

05


The global supply of manmade fibers and major natural fibers has increased from 52.6 million tonnes in 2000 to 70.5 million tonnes last year. This corresponds to an average annual growth rate of 3.3%. During that period, the share of manmade fibers managed to increase from 59% to 63%. Although the fiber growth rate had outpaced the growth momentum of population, accounting for an average annual growth rate of almost 1.2%, the financial crisis has left its mark and is still taking their toll on manufacturers, brands and retailers. Even before Lehman Brothers, the U.S.’ fourth biggest bank, collapsed, plummeting consumer confidence and depressed clothing retail sales in the United States had negatively impacted the global textile and fashion sector. The entire textile and apparel industry has lost a huge processing volume in the last two years of between 15 and 19 million tonnes. The below chart shows the trend in U.S.’ clothing sales, already worsening at the turn of the year 2007. Clothing expenditure in the United States dropped from US$734 per capita in 2007 to US$679 in 2009. This has resulted in a sharp reduction of textile and clothing imports into the United States, falling from US$96.4 billion in 2007 to US$81.0 billion last year. U.S. Monthly Retail Sales: Clothing & Clothing Accessories Stores 15% 12%

Change Y-O-Y in %

9% 6% 3% 0% -3%

'00

'01

'02

'03

'04

'05

'06

'07

'08

'09

-6% -9% -12% -15%

* Sales not adjusted for seasonal variations, holiday and trading-day in clothing and clothing accessories stores

The entire market was mainly driven by manmade fibers, of which synthetics enjoyed an average annual growth rate of 4.0% and cellulosic achieved a 3.6% growth rate. On the other hand, natural fibers just provided below-average rates. In particular, wool has declined to levels from the 1950s. Cotton has benefited from increasing approval and cultivation of genetically modified crops, lifting cotton yields from 600 kg per hectare in 2000 by more than 20% to 730 kg in the actual season. Fiber Growth Rates 2000 - 2009 6% 4% 2% 0%

Cotton: +2.6% 25.2m tonnes

-2% -4%

06

The Fiber Year 2009/ 10

Cellulosics: +3.6% 3.8m tonnes

Wool: -2.2% 1.1m tonnes

Synthetics: +4.0% 40.3m tonnes


The Chinese industry has drastically increased its manufacturing volumes, surging by 16.3% to 26.3 million tonnes manmade fibers and by 12.2% to 18.5 million tonnes cotton yarn. This stunning growth has led to a global market share of about 60% in both sectors. In general, market forces have drastically changed in favor of Asian low-cost countries. India has also enhanced its position along the textile chain like several other Asian countries. Pakistan’s growth was limited to the cotton industry, on smaller scale in Bangladesh and Syria as well. Meanwhile, the cotton and manmade fiber industry in Vietnam has been benefiting from foreign investments, mainly from Taiwan. Manmade Fiber Production 2000 vs 2009 30

mill. tonnes

25 20 15 10 5 0

PR China

USA

India

Taiwan

Korea

ROW

Pakistan

Turkey

ROW

2000 2009

Cotton Yarn Production 2000 vs 2009 20

mill. tonnes

15

10

5

0

PR China

Indila

USA

2000 2009

The defining moment for apparel sourcing happened on December 31, 2004, when quotas between member countries of the World Trade Organization (WTO) were lifted. Even the limited in time imposition of special textile safeguard provisions by the United States and the European Union could not prevent surging shipments from PR China. In contrast, the developed countries have increasingly relied on textile and apparel imports from Asia. Last year’s leading exporters of textiles and clothing are shown below.

The Fiber Year 2009 / 10

07


Top Ten Textile and Clothing Exporters 200

-7.4%

US$ billion

150

100 -18.3%

50

0

China

EU(27)

-13.4%

HK

-4.3% India

-18.7% -16.0% +15..4% -12.6% Turkey

USA

-9.6% -14.3%

Bangl. S. Korea Pakistan Taiwan

2008 2009

The past decade has already witnessean ecological clean-up and development plan in an attempt to cope with the growing consumers’ demand summarized in the buzzword “sustainability”. The use of pesticide and herbicide in cotton, the usage of chemicals in manmade fibers and the composition of textile dyes have increasingly come under scrutiny. As organic cotton actually accounts for 0.8% of global cotton production, the consistent conversion still seems to be a long way off. Mainstream consumers are demanding that clothes are sourced ethically and within labor standards. A growing number of people want their clothing produced close to home, reflecting the far flung transport chain that links the value chain together. An average consumer, however, appears to be overextended in the tangle of labels. The introduction of the Global Organic Textile Standard (GOTS) in 2006 may be promising “with the aim to define worldwide recognised requirements that ensure organic status of textiles, from harvesting of the raw materials, through environmentally and socially responsible manufacturing up to labelling in order to provide credible assurance to the consumer.”

08

The Fiber Year 2009/ 10


2. World Economic Outlook 2010/2011 “World trade is the motor of the world economy. Following the dramatic downturn in winter 2008/2009, when the collapse of Lehman Brothers was sending the global economy into the abyss, world trade contracted by one-fifth and many of the big national economies experienced their most pronounced recession since World War II. Even countries and regions that had no direct exposure to the financial crisis – such as China, Japan and Eastern Europe – suffered from an abrupt cyclical downturn. The global economy plunged into its most dramatic post-war crisis.

“World economy seems to be recovering from the slump in almost as synchronized a manner as it experienced the downturn, but the obvious risk to the cyclical improvement is the probable exit from expansionary monetary and fiscal policy.” Prof. Norbert Walter former chief economist of Deutsche Bank from 1990 to 2009 Managing Director and Founder of Walter & Daughters Consult, Bad Soden Germany www.walterundtoechter.de

On a historical comparison, this synchronized decline into a deep recession is unique. During the Asian crisis of 1997 and during the recession at the turn of the 1990s, a number of countries, and even regions, were not part of the downturn and thus were factors in pulling the world economy out of recession. This time, particularly in winter 2008/2009, none of the major nations in the global economy escaped the downturn. It is no surprise that the textile industry had no chance of escaping the crisis. In Germany, textile production plunged a dramatic 18% in 2009. Much of the domestic demand for textiles can easily be postponed (purchase of carpets or other textiles used in households). Technical textiles fell of the cliff, as did manufacturing output in general. On top of this, the decade-long trend of offshoring production continued unabated. The German clothing industry is not very cyclical. Structural problems continue to dominate development. The bulk of production facilities have already been relocated to foreign countries, mainly as a result of their much more favourable wage costs. Such a set-up with production mainly in low-wage countries and value-added functions retained domestically in a mature and rich country made German companies quite successful in a liberalized global market.”

The Fiber Year 2009 / 10

09


International recovery synchronized? The world economy seems to be recovering from the slump in almost as synchronized a manner as it experienced the downturn. Practically everywhere the downturn in production and demand is coming to an end. Almost everywhere an increase in economic activity can be observed. Quite a number of banks are back in the black. Asia’s factories are beginning to run red hot and even the US, the epicentre of the crisis, is posting impressive rates of GDP growth. In most European countries, too, the recession is over, and some can see a silver lining. Reasons for the recovery. The subprime crisis and particularly the collapse of Lehman Brothers have made central banks exceptionally willing to provide emergency liquidity in unknown quantity and at almost zero cost. Conditions for the quality of collateral have been watered down to unknown minima. This willingness has averted systemic difficulties and provided cheap finance, thus helping to rescue banks and making corporate financing affordable. This has made a major contribution to the soft landing. Since this crisis was not just a liquidity crisis, but a solvency crisis as well, Keynesian fiscal stimulus plus industrial policy by governments to bail out ailing firms were important elements of the rescue operations. The G20 have allowed their deficits to soar by some USD 1500 billion. This has promoted public infrastructure investment and has bolstered private demand via temporary tax cuts. Most impressive was the V-shaped recovery in much of Asia (ex Japan). China, which was not directly hit by the financial crisis in the first place, implemented gigantic fiscal packages (amounting to at least 15% of its GDP) that not only propped up domestic demand but also gave a considerable boost to intra-Asian trade. As a result by the end of 2009 exports from countries such as Singapore, Indonesia, Malaysia, Taiwan and even Japan were already growing at double-digit rates. This helped to offset the weak demand from other continents. Asia’s good recovery served as a locomotive for the world economy. Is the recovery on a solid footing? Since much of the recovery is policy-induced, the obvious risk to the cyclical improvement is the probable exit from expansionary monetary and fiscal policy. While analysts with Keynesian leanings stress the need to carefully base the decision on when to exit from stimulus measures on a sober assessment of whether an endogenous upswing has been set in motion, other observers stress the need to avoid inflationary risks from monetary accommodation and the risk of overindebtedness of states as a result of costly fiscal rescue policies. Cases like Iceland, Ireland or Greece provide ample evidence that such risks are anything but theoretical. Debt defaults and runaway inflation are obviously on the minds of financial market agents. Thus the exit from monetary/fiscal stimulus poses a risk to domestic demand, directly for government spending and indirectly for private consumption and investment, with neither yet on a solid path to improvement, and certainly not in most European countries. Labour markets are at the heart of all this. Some countries have already seen unemployment rising substantially, thus jeopardising personal incomes and consumption, while others, particularly Germany, have averted redundancies by subsidizing short-time working solutions. This, however, causes unit labour costs to rise and government debt to balloon. If this recovery is not V-shaped, job losses may be unavoidable and private consumption might weaken as a consequence. A more long-term structural risk to the recovery is a resumption of protectionist policies. During the recession, such tendencies flared up time and again and they have not yet been finally laid to rest. It is not only any of the “Buy American” slogans, but also policies of providing massive subsidies to weak firms that pose formidable risks to international free trade. The tussle between the US and China over tyres and chicken was just one example of such attitudes. Restarting the Doha negotiations is of the essence. To do this effectively, the countries hit hardest by the downturn in international trade must make a special effort to get the proceedings going again. Germany must use its weight to imbue EU trade policy with new momentum. And it is in Germany’s and Japan’s interest to more fully integrate emerging and developing 010

The Fiber Year 2009/ 10


countries into the fold. These countries are the appropriate candidates to run current account deficits in order to get their young economies going more dynamically via the provision of better soft and hard infrastructure. One big step in this direction has been made with the signing of the ASEAN-China free trade deal. The turn of the year saw the creation of the world’s biggest free trade zone – at least in terms of the combined population involved of 1.8 billion. China and the six leading nations of South-East Asia have decided to eliminate 90% of their customs’ tariffs. In terms of trade volume, this deal has created the third-largest free trade zone worldwide. Trade volume is running at USD 200 billion, whereas 10 years ago it was only some USD 40 billion. China is now a bigger trading partner to South-East Asia than the US, surpassed only by Japan and Europe. Where to look for strong and sustainable growth? 2010 will be no guide to which countries have built up sustainable momentum. Too many economies are still “on drugs”. Not until 2011 – by which time almost every country will most probably have exited from monetary/fiscal stimulus – will we know where growth is sustainable. Still, even the growth numbers in 2010 will be in line with the differing growth momentum to be expected as of 2011. The least developed countries (LDCs) and the emerging markets (EMs) will outgrow the rest. The US will grow by 2 1/2%. Japan, like Europe, may grow at 1 to 2%. Growth will largely be determined by monetary/fiscal stimuli for the first half of 2010. In a number of countries, much of the momentum will also come from exports (US, Japan, Germany). Neither will this momentum continue, nor is it certain that other endogenous forces will come into play. Hopes today are pinned on EMs and LDCs becoming the engines of international growth. Thus companies in the old world (Japan, US, Europe) are well advised to look for dynamic market growth in this part of the world. Within Europe, it is quite obvious that some countries – and by no means only the PIIGS (i.e. Portugal, Italy, Ireland, Greece and Spain) – are lagging behind, due to structural problems and to the need for restrictive fiscal and wage policies, but there are quite a few others as well (the UK and Hungary, for example). Thus Europe – and not just the euro area – is a potential weak spot for the international recovery. However, the US and Japan, two other heavyweights of the global economy are anything but out of the doldrums. Thus at this time it is the EMs, Asia and probably Latin America that are required to provide the momentum to get the global economy up and running again.

The Fiber Year 2009 / 10

011


3. Raw Material Industry 3.1 Cotton Latest estimates for current season’s world cotton production account for 22.3 million tonnes. This would be a decline of 4.8% over the last season or about 3.8 million tonnes lower than 2007/08 season. World consumption is projected to increase by 5.4% to 25.2 million tonnes.

Cotton Production 1977/78 – 2009/10 28'000 26'000 1,000 tonnes

24'000 22'000 20'000 18'000 16'000 14'000 12'000 1977/78

2003/04

2009/10

The cotton production used to grow according to the brown trend line until 2002/03. The increasing approval and cultivation of genetically modified cotton has resulted in soaring cotton yields. In the season 2003/04, the actual cotton production started to outpace the longterm trend. Current season’s output returned to the long-term trend due to 3.5% lower yields per hectare in the actual season Country PR China India United States Pakistan Brazil Uzbekistan Australia Turkey Turkmenistan Rest of the world World

Production (mill. t) 6.9 5.1 2.7 2.1 1.3 0.9 0.4 0.4 0.3 2.3 22.3

± in % vs prev. year -14.2% +4.0% -3.2% +8.9% +4.9% -10.9% +16.5% -11.9% -11.2% -7.7% -4.8%

Yield (kg/ha) 1,358 499 868 711 1,527 687 1,954 1,321 475 404 734

Remarkable is the much lower cotton crop in PR China where the cotton area declined by 15.8% in the actual season. Farmers reduced the cotton area in 2009 in response to high production costs, serious labor shortages, disappointing cotton prices, higher government subsidies for grain and the weak global demand for textiles at the end of 2008. Another steep cotton area reduction of a major growing nation has taken place in Turkey. Despite government’s announcement of a 28 US cents per kg production bonus, many farmers switched to wheat, corn, soy and vegetables in anticipation of better income.

012

The Fiber Year 2009/ 10


The Cotlook A Index moved in the range from 50 US cents per pound to 79 US cents. After hitting rock bottom in March, cotton prices steadily increased to reach a temporary high at the end of the year. Market fundamentals have been pushing up prices to higher levels as the world cotton production has been downwardly revised every single month from 24.3 million tonnes in December 2008 to 22.4 million tonnes in December 2009. This 7.9% shortfall of supply may result in significantly lower inventory as cotton consumption expectations were lifted from the middle of the year onwards. Furthermore, much lower Chinese cotton crop this season and a rebound in textile production will compel PR China to buy more foreign cotton. Cotlook A Index Far East, 2004 - 2009 95

US$ cent per pound

90 85 80 75 70 65 60 55 50 45

2004

2005

2006

2007

2008

2009

World cotton area for 2009/10 continues declining at 30.4 million hectares, marking the fifth consecutive seasonal decline. Almost 80% of the global cotton area is located in six countries - India (10.3 million hectares), PR China (5.3 million hectares), United States (3.1 million hectares), Pakistan (3.0 million hectares), Uzbekistan (1.3 million hectares) and Brazil (0.8 million hectares). World Cotton Growing Farmland 40

million hectares

35 30 25 20 15 10 5 0 '80

'90

India

China

Pakistan

ROW

'00 USA

It has been quite normal in the past to experience changes in the world cotton growing area. However, the future looks rather gloomy as several leading growers have reduced cotton growing farmland. Nevertheless, there are also encouraging developments of expanding cotton area like in Argentina (+47%), Australia (+19%) and Mozambique (+16%). In general, as cotton would not be grown other than for use by the textile and clothing industry, the ongoing decline in cotton cultivation area is a direct response to softening textile demand and higher returns from other crops. The Fiber Year 2009 / 10

013


“Cotton sector gives livelihood to more than 300 million people. Three quarters of cotton production located in just four countries.”

Terry Townsend Executive Director Secretariat of the ICAC Washington DC www.icac.org

“International Cotton Advisory Committee (ICAC) is an association of governments of cotton producing, consuming and trading countries. The Committee was formed in 1939, and the Secretariat was established in 1946. The ICAC currently has 41 members. Cotton and cotton textile industries are central to the economic growth of both developed and developing countries and contribute to sustainable and socially responsible development. Cotton is one of the most important and widely produced agricultural and industrial crops in the world. Cotton is grown in more than 100 countries on about 2% of the world’s arable land, making it one of the most significant in terms of land use after food grains and soybeans. Cotton is also a broadly traded agricultural commodity, with over 150 countries involved in exporting or importing cotton. More than 100 million family units are engaged directly in cotton production.1) When family labor, hired-on farm labor and workers in ancillary services such as transportation, ginning, baling and storage are considered, total involvement in the cotton sector reaches an estimated 300 million people.2) Cotton also provides employment to additional millions in related industries such as agricultural inputs, machinery and equipment, cottonseed crushing and textile manufacturing. Cotton cultivation contributes to food security and improved life expectancy in rural areas of developing countries in Africa, Asia and Latin America. Cotton played an important role in industrial development starting in the 19th century and continues to play an important role today in the developing world as a major source of revenue. The value of 22 million tons of world cotton production in 2009/10 at an average world price of about 72 U.S. cents per pound of lint, or US$1.60 per kilogram, amounts to about US$35 billion.

Cotton is the raw material of development, industrialization and wealth. It is a vital cash crop providing income for food, education, health, housing and transportation and often serves as a catalyst for industrialization and rising social welfare. FOOTNOTE: 1) Paola Fortucci, Director, Commodities and Trade Division, FAO, 2002. 2) ICAC Secretariat estimate, 2009.

014

The Fiber Year 2009/ 10


Following a period of accelerated expansion during the first five years of the 21st century, coincident with high rates of adoption of biotech cotton varieties and sustained world economic growth, world cotton production and consumption seem to have entered a period of slow growth. World cotton production peaked at 27 million tons in 2004/05, and has since retrenched to lower levels. The rate of adoption of biotech cotton varieties is slowing as biotech varieties already accounted for almost half of world cotton area by 2007/08. Cotton production takes place in about one hundred countries but has traditionally concentrated in a few. Over the last three decades, the four leading producing countries have accounted for an increasing share of world production. China, India, the United States and Pakistan accounted for 48% of world production in 1970/71 and 75% in 2009/10. In particular, increases in production in China and India resulted in an increased share of Asia in world production, from 35% in 1980/81 to 65% in 2009/10. Since the 1950s, cotton yields have experienced periods of slow growth alternating with periods of rapid growth. Yields seem to have entered a period of slow growth since 2005/06, as the rate of expansion in biotech cotton area has slowed. It is likely that over the next several decades, new advances in technologies could trigger another period (or two) of rapid growth in cotton yields. The incoming technological innovations are expected to have greater impacts on production costs than on cotton yields. However, their expected arrival date and adoption process remain unknown. World cotton area is expected to continue varying from year to year, as it did in the last several decades, although the range of variation is expected to shift to lower levels due to increased competition with food and fuel crops and tighter resource constraints. In particular, constraints in water supply to irrigated cotton areas will likely limit irrigated cotton area, at least until droughtresistant cotton varieties are developed and introduced on a commercial scale. Driven mainly by population growth, cotton consumption tripled between 1950 and 2009. Other factors affecting cotton consumption were higher income per capita, declining or stable long-term prices of cotton relative to other fibers, and promotional efforts. However, while world cotton consumption per capita has been stable since 1960, total textile fiber consumption per capita has more than tripled, resulting in a declining share of cotton in world textile fiber demand. For cotton, competition with chemical fibers is a constant challenge. During the 1990s, mill use of cotton became more concentrated in the largest processing countries. In 1980/81, the six countries that are the largest processors today, China, India, Pakistan, the United States, Turkey, and Brazil, accounted for 51% of world mill consumption. These countries accounted for 58% of world mill use in 1990/91, and 78% in 2008/09. Over the last decade, China has been the driving force of the world textile industry. Between 1998/99 and 2007/08, the increase in mill use of cotton in China accounted for 86% of additional mill use worldwide. Cotton mill use in China fell substantially in 2008/09 due to decline in demand for textiles in its main importing markets. However, Chinese cotton mill use rose again in 2009/10 and is expected to continue to account for the largest share of global cotton mill use in the longterm. World textile fiber consumption is projected to expand at an annual average rate of 3.5% to reach 80 million tons by 2015. This projected rate of growth is lower than the 4.1% rate observed between 2000 and 2007 but it is higher than the long-term average 3.0% growth rate observed between 1960 and 2008. This projection is consistent with expected moderate global economic growth and slower world population growth. World cotton consumption and production are projected to expand at an annual average rate of 1.8% to reach 27 million tons in 2015. This average growth rate is about the same as the rate observed between 1960 and 2008, and substantially lower than the 3.6% rate observed between 2000 and 2007. The market share of cotton in world textile fiber demand is expected to continue its long term decline to 33% in 2015. Cotton trade is expected to continue growing over the next few decades, its share of world cotton production and mill use remaining around one-third, as it did over the past six decades. However, the origin and destination of cotton trade will likely experience variations over time, as cotton mill use will continue to migrate to regions with the lowest costs of yarn production.� The Fiber Year 2009 / 10

015


3.2 Wool World wool production fell in 2009, the seventh annual decline in the past decade. Production was at 1.1million tonnes clean weight, a fall of 7.4%. Wool: Global Production 1'400

'000 tonnes

1'200 1'000 800 600 400 200 0

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010e 2011e

Australia

PR China

New Zealand

Argentina

Uruguay

South Africa

UK

Others

The largest fall was in the production of wool used in clothing (apparel wool), with production falling by an estimated 8% in 2009 to 552,000 tonnes, while production of wool used in interior textiles fell by an estimated 6% to 547,000 tonnes. The latest forecasts presented at the International Wool Textile Organisation s Annual Congress, held in Paris in May 2010, suggest that world wool production will fall by 1.4% in 2010 to 1.08 million tonnes. However, early indications are that the decline in wool production will be arrested a little in 2011, with a small lift of 1% predicted. Wool production by Australia, the world’s largest producer of wool, fell by 9% in 2009 compared with 2008 to 0.26 million tonnes. Continued drought in eastern Australia and high sheep meat prices resulted in a sell-off of sheep in Australia. This has pushed sheep numbers down to around 72 million head, the lowest since the 1920s. The drought has also reduced the average fleece weights in Australia. As 90% of Australia’s wool is used in clothing, it is the world’s largest supplier of apparel wool, accounting for around 50% of world production. The fall in Australia’s production is the reason for the relatively larger decline in world production of apparel wool in 2009. While forecasts are for Australia’s production to fall again in 2010, by 5% to 0.24 million tonnes clean, seasonal conditions have improved in recent months and production is forecast to increase by 3% in 2011. This is the first increase since 1998 and is entirely due to higher average fleece weights. Sheep numbers are predicted to fall again in 2011, but the decline looks as though it is slowing, with sheep disposal (slaughtering and live export) well down on a year ago. Production in the second largest wool producing country, PR China, fell by 7% in 2009 to 0.16 million tonnes. This is the lowest production level in China since 2003. There is a move away from woolled sheep in China to take advantage of high sheep meat prices. As well, total sheep numbers were down by 6% to 120 million head at the start of 2009. This decline in sheep numbers is in line with Chinese Government reforms to encourage a move away from sheep and other small-hoofed animals and towards larger hoofed animals (beef and dairy cattle) to reduce land degradation in the Inner Mongolia and Xinjiang Provinces (where most of China’s sheep are kept). Production is forecast to fall again in 2010, by 7%, but then stabilise as sheep numbers stabilise.

016

The Fiber Year 2009/ 10


New Zealand is the world’s third largest wool producing country and largest producer of wool for interior textiles. Wool production there fell by 24% in 2009 to 0.12 million tonnes clean. The main driver of this decline was the sell-off of sheep as farmers converted their properties to use for the dairy industry. As well, drought in some parts of the country helped pushed production down, as did reduced incidence of secondshearings. This large fall is expected to be partly reversed in 2010, with a predicted 15% rebound in production to 0.14 million tonnes. This rebound is due to lower dairy prices, better seasonal conditions and increased proportions of second-shearings. However, at this early stage, production in 2011 is predicted to dip once again by 2.5%. Estimates of world demand for wool at spinning are no longer available. However, data on trade in wool products is available for 2008 (full data for 2009 will not be available until July). The trade data for the 2008/09 season shows that raw wool exports fell sharply to just under 0.8 million tonnes clean. Data from the five major wool exporting countries show that exports of raw wool have recovered in the 2009/10 season, with a 3% rise for the year to February 2010. Global trade in wool products declined in 2008, as a result of both the lower raw wool supply and the slowdown in the global economy in the wake of the Global Financial Crisis. Global wool trade in wool top fell by 17% in 2008 to around 165,000 tonnes. Among the 20 largest exporters, which accounted for around 95% of global exports in 2008, there were significant falls almost across the board, although India was an exception with a 1% lift in exports of wool top. Global trade in wool yarn fell by 14% in 2008 from the 2007 levels, to an estimated 96,000 tonnes. There were significant falls in exports of wool yarn for most of the top 20 exporting countries, with New Zealand, Turkey, the Czech Republic and Lithuania all exceptions. The trends in exports trade of wool woven fabric were similar to that seen for wool yarn, with a 13% fall in global exports of wool fabric (pure, wool rich and blends) and a larger fall in worsted wool fabric exports (down 14%) compared with woollen wool fabric (-11%). While trade in some of the key wool apparel in knitwear and in men’s and women’s woven wear was generally lower in 2008, there were some exceptions, notably in the trade in men s wool overcoats and women’s wool jackets. Global trade in wool carpets was 9% lower in 2008 as the fall in housing markets and construction hit hard. Global trade in wool products is likely to fall again in 2009 as many economies were in recession for at least part of the year, which will hold back demand.

“Wool aims to regain its position with consumers after the seventh annual output decline in the past decade. A new marketing initiative will highlight wool’s unique attributes.”

Chris Wilcox Chairman IWTO Market Intelligence Committee Belgium www.iwto.org

The Fiber Year 2009 / 10

017


“International Wool Textile Organisation (IWTO) is the international body representing the interests of the world’s wool-textile trade and industry. IWTO membership covers woolgrowers, traders, primary processors, spinners, weavers, garment makers and retailers of wool and allied fibres in its member-countries, as well as all kind of organizations related to wool products and the wool business in general. The global wool industry, like all textile industries, faced a very challenging year in 2009 in the wake of the Global Financial Crisis. The economies of many of the major wool consuming countries entered recession during the year, which greatly reduced demand for wool garments and wool interior textiles at retail. This in turn resulted in much lower exports from the major wool product manufacturing countries, notably China and Italy, resulting in lower orders and lower production activity throughout the global wool textile business. While it was a difficult time, the signs are now that business conditions are improving and 2010 presents an improved picture. This improvement will be greatly helped by the continuing trend by consumers and by retailers and manufacturers for natural fibres, with well-established environmentally friendly, ethically sustainable credentials. This has been seen in a surge in demand and price for cotton and viscose fibres in recent months, and was seen by the strong recovery in wool prices beginning in the second half of 2009. The IWTO is working hard with its members countries to reinforce wool s strong credentials as the original natural, sustainable fibre; a fibre which has superb attributes as fire retardant, in moisture management and in comfort. We have been working closely with governments in the major markets to explain their credentials and rebuild wool’s position. The industry is addressing ethical concerns about methods of fly-strike control in several countries, and notably Australia. Extensive research and development is being done to develop fly strike control management techniques that do not compromise animal welfare of the sheep. Much work is also being undertaken to use genetics to breed sheep that are fly-strike resistant. After several years of marketing silence, wool has lost its position with consumers. Younger consumers are not aware of the attributes and benefits of wool. To help address this, IWTO has recently launched a new marketing initiative “The Campaign for Wool”.The Campaign has the full support of His Royal Highness, The Prince of Wales. It will begin in the UK in October 2010, with the objective of informing consumers about the natural, ethical features of wool and its unique attributes.”

018

The Fiber Year 2009/ 10


3.3 Crude Oil Crude oil prices were on the decline until mid-February, marking a low of about US$34 before steadily increasing to around US$80 at the end of the year. In 2008, when prices hit a historic record at about US$147, there were some who predicted that oil resources would soon vanish and oil derivatives like synthetic fibers would soon be replaced by natural fibers. Although crude oil resources are finite, improvements in technology and new discoveries have continually increased the resource base to levels well above previous expectations. In addition to that, the impact of oil prices on derivatives has often been overrated. So, polyester fiber intermediates were quite comparable to the average 2004 price level with prices for mono ethylene glycol even remaining the entire year below this level. Crude Oil and Polyester Fiber Intermediates Prices 3.5

Average 2004 = 1

3.0 2.5 2.0 1.5 1.0 0.5 0.0

2005 MEG

2006 PTA

2007

2008 PX

2009 Crude Oil

Paraxylene (PX) An annualized rate of about 1 million tonnes of new PX capacity has led to a marginal reduction in utilization rate. The world PX capacity increased to 33.2 million tonnes, up about 9%, with no changes in the Americas, de-bottlenecking in Europe and five new plants in Asia. During the second half of 2009, four new units came on-stream in PR China with a total capacity of around 2.9 million tonnes. At the end of 2009, the first PX facility with an annual capacity of 829,000 tonnes was started-up in Kuwait. After a negative production growth in 2008, a higher PX output was realized in Asia and the Middle East while the Americas and Europe were not able to defend their positions. In total, last year’s production increased by around 6% to nearly 27 million tonnes, the equivalent of a global utilization rate of 82%. This growth was result of a steady increase in demand and some inventory recovery along the polyester chain. Purified Therephthalic Acid (PTA) Global PTA capacity increased by 7% to 46.2 million tonnes while production in 2009 was 39.6 million tonnes, up nearly 2%. The ongoing contraction of the polyester industries in North America and Europe is being reflected by declining PTA demand. In contrast, activity in the PTA sector was busy in the two largest markets, PR China and South Korea, jointly accounting for a 45% market share. Three new manufacturing units were commissioned in Asia with a design capacity of 3.2 million tonnes. Despite a roughly 6.5 million-tonne surplus, new facilities are already under construction. The Chinese expansions will substitute imports that accounted for 6.3 million tonnes in 2009, mainly at the expense of South Korea, Taiwan and Thailand. Furthermore, new players will enter this industry in Poland and Portugal. Finally, Latin America’s most integrated polyester complex will comprise a PTA plant with an annual capacity of 700,000 tonnes. This project in Brazil together with downstream facilities is scheduled to come on-stream end of 2010. The Fiber Year 2009 / 10

019


Mono Ethylene Glycol (MEG) The MEG capacity is mainly located in Asia, accounting for 46%, Middle East taking in a 22% share after doubling capacity during a five-year period and North America with a 20% share. In terms of installed capacity, PR China ranks fourth with 2.5 million tonnes after Saudi Arabia at 4.2 million tonnes, Taiwan at 3.5 million tonnes and the United States at 2.8 million tonnes. When considering utilization rates, only plants in Saudi Arabia and PR China were able to run at about 90%. However, last year’s Chinese imports of almost 6 million tonnes amounted to an dependency ratio of foreign supplies of about 75%. Even three new MEG plants in PR China to be commissioned in 2010 with a nameplate capacity of 1.3 million tonnes will not significantly change this reliability on imports, mainly coming from Saudi Arabia, Taiwan, Canada and South Korea. The last year was characterized by some delays of new capacity. In total, only three new plants came on-stream, of which one 700,000-tonne plant in Saudi Arabia, one coalbased 200,000-tonne facility in PR China and another 750,000-tonne plant in Singapore.

020

The Fiber Year 2009/ 10


4. Fiber Consumption in 2009 The global fiber demand went up by 4.2% to 70.5 million tonnes. Manmade fibers increased by 4.0% to 44.1 million tonnes and natural fibers advanced by 4.5% to 26.4 million tonnes.

World Fibers Supply 80 70

mill. tonnes

60 50 40 30 20 10 0

1970

1980

Manmade Fiber

1990

2000

Cotton/Wool/Silk

2005

2009

Other Natural Fiber

While this development of returning to growth in 2009 may be positive at first sight, the entire textile and apparel industry has lost a huge processing volume and turnover in the last two years. Taking into account the long-term average annual growth rate of 3.4%, the demand shortfall in the last two years adds up to 14.8 million tonnes. As lower priced apparel was available across the world after PR China’s accession to WTO at the end of 2001, the short-term average annual growth rate even accounts for 5.2%. This annual growth rate would lead to a demand shortfall in the last two years of 19.1 million tonnes. Manmade fibers relative market position remained at 62.6%, while cotton, wool and silk hold a market share to 37.4% of the world textile market. A world population of 6.76 billion corresponds to an average per capita consumption of 10.4 kg. Global Fibers Production 45 40

mill. tonnes

35 30 25 20 15 10 5 0

'50 '60 '70 '80 '90 Natural Fibers *

'95

'00

'05

'09

Manmade Fibers

* Cotton, Wool, Silk

The Fiber Year 2009 / 10

021


Cellulosic and synthetic yarns increased by 3.4% to 24.8 million tonnes, mainly driven by textile yarn. Staple fibers, the input material for spun yarn and nonwovens, were up 4.6% to 45.6 million tonnes. This segment benefited from a stronger demand of cotton as well as higher output of cellulosic and polyester fibers. Yarn and Fiber Production 50 45

mill. tonnes

40 35 30 25 20 15 10 5 0

'50 '60 '70 '80 '90 Filament Yarn *

'95 Staple Fiber **

* Polyester, Polyamide, Polypropylene, Cellulosics, Silk ** Cotton, Wool, Polyester, Polyamide, Polypropylene, Acrylics, Cellulosics

022

The Fiber Year 2009/ 10

'00

'05

'09


5. Manmade Filament Yarn and Staple Fibers The cellulosic fiber market increased by 7.7% to 3.8 million tonnes, just marginally missing the pre-crisis’ all-time high. The viscose staple fiber segment increased by 11.4% to 2.7 million tonnes while the filament business for textile and industrial yarns declined by 5.4% to 351,000 tonnes. Steady growth momentum was again provided by the subsector of acetate filter tows, increasing by 2.3% to 759,000 tonnes. The development in the synthetic fiber segment was also favorable, although showing a mixed performance. The total market was up 3.7% to 40.3 million tonnes. Polyester production increased by 5.3% and acrylics by 4.4%. On the other hand, polypropylene decreased by 6.5% and polyamide was down by 1.4%. Spandex declined by 5.7% and even high-tech fibers like aramide and carbon fibers could not continue its long-lasting growth. Manmade Fiber Output 2000-2009 20

million tonnes

15

10

5

0

Viscose

PES-SF

PES-FY

PA

PP

2000

2005

2006

2007

2008

2009

PAN

Others

The manmade fiber spinning business has further declined in Europe, Japan and the United States, while Asia continued to gain market shares. The Asian manufacturing volume of more than 36.0 million tonnes corresponds to a global 83% market share, of which 72% was manufactured in PR China. The Chinese industry succeeded in lifting output by 11.2% to 26.3 million tonnes. The table below summarizes the output of major manmade fibers: 2009 in 1,000 t/y Cellulosics Synthetics - Polyester - Polyamide - Polypropylene - Acrylics - Others TOTAL

Filament Yarn 351 24,426 19,320 3,274 1,469 363 24,777

Staple Fiber 3,445 15,912 12,609 214 1,077 1,949 64 19,357

TOTAL 3,796 40,338 31,929 3,488 2,545 1,949 427 44,134

± in % vs 2008 +7.7% +3.7% +5.3% -1.4% -6.5% +4.4% -6.6% +4.0%

The Fiber Year 2009 / 10

023


Trevira GmbH, Germany, is a leading European specialty manufacturer of high-value branded polyester fibres and filament yarns for home textiles, apparel and automotive industries as well as for hygiene and technical applications.

“European mill consumption experienced a dramatic downwards trend in 2009 while Trevira has overcome a difficult year and restarted on a sound financial basis.”

Uwe Wöhner CEO of Trevira GmbH Germany www.trevira.com

Challenges and chances of the structural change in the textile industry “The economic crisis has accelerated the ongoing structural change of the textile global industry. Mill consumption of the industry experienced a dramatic downwards trend in 2009 in Europe. This is the situation we face today: • The recovery of the automotive industry, after the slump in demand, needs time. Demand will remain on pre-crisis levels and future growth will take place in other parts of the world. • The global contract market has suffered from stops in construction and investment, along with adjustments to modernisation budgets. This has impact on the home textile industry. Postponed investments, however, are likely to get (re-)started as t he business climate improves. • In terms of sales opportunities, more positive tendencies are developing outside the European core markets. • Mill consumption for technical applications is outpacing traditional textile industry end-uses. • Customized and innovative products and developments maintain a stable production basis in Europe, while commodity production volumes continue to shift to Asia. • The worldwide discussion of the environmental changes has increased the demand for ecofriendly products and sustainable manufacturing. • The regulations of REACH ensure a safe supply chain, but still need to be fully enforced on a global basis. The changing market environment requires a reconsideration of the business focus and strategies by the suppliers. However, this is where European fibre manufacturers as suppliers of highquality specialties will find the field for new opportunities. Trevira has overcome a difficult year and restarted in the beginning of 2010 on a sound financial basis, as a new and independent company with a clear strategy for the future. The product portfolio focuses on profitable specialties with inherent functions like flame-retardant and 024

The Fiber Year 2009/ 10


antimicrobial fibres and yarns or bi-component fibres. The share of fibres for hygiene applications and technical end-uses in our sales figure will increase. Our strength is the close partnership and cooperation with our customers along the textile value chain. The commitment to sustainability and ecological processes has been our company policy ever since. Combined with our continued commitment to quality and a strong brand, this provides the basis for state-of-the-art textiles made in Europe and elsewhere. For these there will a growing demand, worldwide and on a long-term basis.�

5.1 Polyester The output of polyester fibers was up 5.3% at 31.9 million tonnes. Filament yarns weathered the turbulences surprisingly well by increasing by 5.9% to 19.3 million tonnes and staple fibers rose by 4.4% to 12.6 million tonnes. Polyester Fibers Production 25

mill. tonnes

20 15 10 5 0

1985

1990

1995

2000

2005

2006

2007

2008

2009

PR China ROW

The fundamental change of the polyester business has continued in favor of PR China.actually taking in a 69% share. The economic center of gravity will continue to be in PR China as several large-scale expansion projects in textile and industrial yarn markets will shortly come on-stream. In general, the number of spinning positions ordered in 2009 has nearly reached the exceptional level of the year 2006. Hence, a massive volume of new filament capacity is about to be put into operation. Effective demand came from PR China in the textile yarn business from major players like Jiangsu Shenghong, Zhejiang Hengyi, Zhejiang Tongkun and tier-two manufacturers. Last year s incoming orders mainly addressed FDY positions. Along with producers in PR China, Indian manufacturers also jumped on the FDY bandwagon. Almost a dozen invested in new equipment or purchased used machinery to benefit from helping import tariffs on yarn due to shortened setting-up operation. Large-scale projects from Bhilosa, Alok and JBF as well as some market newcomers are worth mentioning. Whether existing indications for facilitation of demonstrably eco-friendly investments may turn out trend-setting is not yet clear. Strong investments in POY spinning plants have also favorably affected installation of texturing machines. Order books of all suppliers of texturing machinery filled up rapidly, as e.g. contracts for more than 900 DTY-machines were signed in PR China, coming very close to the all-time high from 2002. Despite considerable capacity additions in the Chinese industrial yarn business over the recent years, a huge expansion project was realized by Zhejiang Hailide and an even larger investment by the newcomer Zhejiang Hengli. Furthermore, one of the leading Chinese textile yarn manufacturers is to diversify into technical yarns to broaden its commercial base. The investment behavior of all the remaining polyester producing markets, accounting for a 24% share, delivered a mixed picture. There have been continuous expansion and modernization projects, predominantly affected by the Chinese and Indian superiority and politics, explaining much activity in this industry today. The Fiber Year 2009 / 10

025


The only growth region was Asia, increasing its contribution by 7.6% to 29.7 million tonnes. Double-digit growth has been witnessed in PR China (+10.0% at 22.0 million tonnes), India (+10.5% at 2.3), Malaysia (+25.5% at 0.3) and Vietnam (+17.7% at 0.2). Japan suffered from a drop of 28.9% to 309,000 tonnes. Thus, it is no surprise to have witnessed some restructuring in Japan with Asahi Kasei Fibers withdrawing from in-house production and transferring filament production to Teijin Fibers Ltd. as well as Mitsubishi Rayon outsourcing polyester filament yarn production to companies in the Unitika Group. Moreover, Japanese Teijin Ltd. has sold its stake in P.T. Teijin Indonesia Fiber Tbk. (TIFICO) to four Indonesian companies. The Chinese share in the polyester industry accounted for 69%, a staggering growth rate from a 27% ratio in 2000 and a 12% market share in 1990. The output in Greater Europe dropped by 21.0% to 960,000 tonnes and the manufacturing volume in the Americas declined by 16.6% to 1.13 million tonnes. Both regions suffered from a drop in automotive production that not only negatively affected the demand for industrial yarns, but also the consumption of textile filaments used e.g. in upholstery fabrics, headliners etc. Meanwhile, recycling of polyester bottles in the United States will gain more significance after the creation of a joint venture between DAK Americas and Shaw Industries. The common plant is planned to recycle about five billion bottles per year used for resin, staple fiber and carpet yarn. The strong growth in the polyester textile yarn production of 6.7% to 18.2 million tonnes was driven by a small number of Asian countries while the western hemisphere reported heavy declines. This has lifted the Asian market share to nearly 97%. The textile powerhouse, PR China, as well as India, Malaysia and Vietnam succeeded in increasing output substantially. The Chinese output amounted to 13.6 million tonnes, more than the global demand just five years ago. Second ranked India enjoyed a 7.6% growth to 1.4 million tonnes while the third largest polyester textile filament industry in Taiwan like the fourth largest in South Korea both remained almost unchanged in terms of volumes. Despite the Chinese superiority, small manufacturing nations like Bangladesh do not resile to set up the country’s first petrochemical plant to produce polyester chips. The plant will have an ultimate capacity of up to 600 tonnes of polyester chips per day. The textile filament markets in Greater Europe were characterized by sluggish demand, resulting in lower manufacturing activity and imports. The region’s production volume fell by 21.5% to about 265,000 tonnes. The Americas ended up with the same size after decreasing by 15.4% last year. The polyester industry in Brazil has witnessed declines in both filament sectors and the staple fiber business. Surprisingly, as the country’s huge integrated polyester complex at costs of US$1.4 billion is expected to come on-stream in autumn 2010. The industrial yarn business has not only suffered from the downturn in the automotive industry but also from changing trade flows. Major PES Industrial Yarn Exporters 180 160

'000 tonnes

140 120 100 80 60 40 20 0

026

PRC

Korea

Taiwan

France

2004

2005

2006

2007

2008

2009

The Fiber Year 2009/ 10

Netherlands

USA


The global output of polyester industrial yarn was down by 6.1% to nearly 1.1 million tonnes. While production in Greater Europe dramatically fell by 44.1% to about 110,000 tonnes, the Americas were down by 18.9% to around 140,000 tonnes. According to figures from the China Chemical Fiber Association, national output increased by 22.2% to 550,000 tonnes. Given reduced exports at 133,000 tonnes and almost unchanged imports, this calls for an additional domestic demand of 135,000 tonnes – an amazing growth momentum in a year of great depression. Other established technical textile industries in Asia like Japan, South Korea and Taiwan have suffered from a decline of 16.4% to roughly 265,000 tonnes. Tires are the biggest consumer of polyester industrial yarn and sales were on the decrease following lower automotive build-rates. However, several announcements of tire makers to further expand tire capacity may be promising for industrial yarn sales in future. Michelin will build tire plants in PR China and India over the coming two to three years at costs of US$1.9 billion. Bridgestone announced investments of about US$545 million in India, Japan and Poland. Hankook plans to invest around US$415 million in its plants in Hungary and PR China. Pirelli will spend US$275 million to increase capacity at its plants in Brazil and Romania. Yokohama is to invest US$195 million for expansion its Chinese passenger tire plant and building a new factory in Russia. Nexen Tire Corp. will invest US$843 million over eight years in a passenger and light truck tire plant in South Korea to meet growing demand for fuel-efficient tires. On the other hand, Bridgestone closed its tire plants in Australia and New Zealand at the end of 2009. Michelin will end tire production at its passenger and light truck tire plant in Ota, Japan, mid-2010. Denman Tire L.L.C., United States, has filed for Chapter 7 bankruptcy in mid-March. The company, in business for 91 years, had an annual tire capacity of nearly 1 million units. The staple business grew by 4.4% to 12.6 million tonnes. The only growth region was Asia, now accounting for a 89% market share. The 2009 output amounted to 11.2 million tonnes, up 7.4%. Although the capacity growth in PR China has significantly slowed since 2005, excess supply still is an issue. While national output increased by 9.4% to 7.9 million tonnes, the average utilization rate slightly improved from 68% in 2008 to nearly 72% last year. However, the margins for the domestic industry continuously have worsened. In particular in the second half of 2009, the entire sector suffered losses. Despite those adverse conditions, new capacity from Jiangsu Jiangnan and Zhejiang Donghua Fiber were started up last year. India, the second largest producer, increased volumes by 15.1% to around 860,000 tonnes - similar to the precrisis level. Taiwan and South Korea, in third and fourth position, both managed to lift output as well. Taiwan’s production grew by 13.3% to nearly 570,000 tonnes, equal to an average run rate of about 90%. The Korean output improved by 5.0% to 516,000 tonnes, resulting in an utilization rate of approximately 80%. The healthy operating rates in both industries are the outcome of a persistent adjustment to the changing market environment and further reductions in capacity are planned for the years to come. A promising example for continuous growth has been Vietnam, thanks to the prudent expansion strategy of the Vietnam National Textile and Garment Group (Vinatex). Together with Petrovietnam, the trading name of Vietnam Oil and Gas Group, a new polyester complex with an estimated capacity of 400 tonnes per day of staple fiber will be constructed with anticipated completion in 2011. The other parts of the world all suffered from declining output. Production in Greater Europe went down by 14.2% to below 600,000 tonnes. While Turkey was stable, Western Europe decreased by 23.2% to 268,000 tonnes and CIS manufacturing activity collapsed by 17.8% to 82,000 tonnes. In the Americas, production declined by 14.7% to about 725,000 tonnes.

The Fiber Year 2009 / 10

027


The Saudi Arabia-based Obeikan Technical Fabrics Co. Ltd. produces PVC, PTFE and Silicone coated fabrics. Obeikan stands up to the strong European and Chinese competition with their qualitative first-class products because the company is focusing on efficient, high productive, high tech equipment manufactured by Oerlikon Barmag.

“Superior equipment and skilled labor to produce first-class quality products at very competitive energy and operation cost of Saudi Arabia are our key to success.”

Mohamed ali Hassen General Manager Obeikan Technical Fabrics Co. Ltd., Kingdom of Saudi Arabia www.obeikan.com.sa

“We owe our success to many factors: Definitely the choice of Barmag as turn key project supplier, the high level of engineering of all project parts and to our very well trained and experienced multinational skilled team. Add to all these factors, we have a very competitive energy and operation cost of Saudi Arabia. We also have very low waste and the highest level of quality in the industry for the single stage yarn. Definitely the high product quality that we are achieving is 100% related to the high quality of the equipment without any doubt. Since competition is becoming more and more fierce, the only way to succeed is by distinguishing ourselves: the selection of high technology is one of the best choices to survive in the future.”

028

The Fiber Year 2009/ 10


Headquartered in Greensboro, NC, Unifi Inc. is a leading producer and processor of multi-filament polyester and nylon textured yarns.

“With a base of operations established in El Salvador, Unifi Central America will serve customers with an additional quick-turn and quick replenishment solutions.”

Roger Berrier Executive Vice President Unifi Inc. United States of America www.unifi-inc.com

“The long-term growth and the attractiveness of the Central American region to North American retailers’ and brands’ led to the formation of Unifi Central America (UCA). Our investment into this region will provide our customers with quick response and turn times, added flexibility and accessibility to Unifi’s growing line of innovative and sustainable fibers.”

5.2 Polyamide Polyamide fibers continued declining by 1.4% to 3.5 million tonnes in 2009. Despite increasing pressure from polyester, textile yarn was up by 8.3% at 1.6 million tonnes. All the other sectors suffered from decreasing activity with the industrial yarn business going down by 7.4% at 0.9 million tonnes, carpet yarn falling 8.0% to 0.7 million tonnes and staple fiber dropping by 15.7% to 214,000 tonnes. Polyamide Fibers Production 2.0

million tonnes

1.5

1.0

0.5

0.0

Textile FY

Industrial FY

Carpet FY

Staple Fiber

1990

1995

2000

2005

2006

2007

2008

2009

The Fiber Year 2009 / 10

029


Continuously rising caprolactam prices, almost doubling until year-end, have resulted in increasing prices of the subsequent products. Furthermore, the depressed housing market in the United States and lower vehicle build rates have put additional strain on the industry. VDA reported a 13.2% decline in world automotive production at 60 million vehicles. As about three quarters of nylon industrial filament have been targeting the automotive industry, lower build rates directly affect the demand for tires and airbags. Although the polyester lobby has been trying to branch out into this segment for several years, the airbag sector still is a 100% nylon market. However, trials are underway in the coated fabrics sector to achieve commercial approbation. Even if third party certification should be granted, bulkier polyester airbags due to more yarns needed will restrict the scope of action for car designers. The difficult market environment has resulted in several negative company news like e.g. Invista’s announcement in January 2009 to close its Wilton site, UK, where it produced various chemicals, including HMD, nylon salt, nylon 6,6 polymer and adipic acid; Mitsubishi Chemical ceasing caprolactam production at its Mizushima and Kurosaki plants in Japan; textile yarn producer Thüringer Filamente GmbH filing for insolvency in April 2009; textile filament producer Chemlon Humenne withdrawing from textile yarn production mid 2009; Laufaron GmbH, manufacturer of polyamide fibers in Guben, stopping production end of April 2010; Invista closing its Seaford, Delaware, plant mid of 2009; Xentrys, formerly known as Domo, in Belgium closing its carpet yarn mill; Artois, member of Beaulieu group, in France discontinuing carpet yarn production in the first half of 2009; Defibre in Spain stopping its textile filament mill; Russian Kemerovo withdrawing from industrial yarn manufacturing and Unitika in Japan ceasing textile and industrial yarn production in the second quarter of 2009. Furthermore, some major acquisitions took place as Solutia Inc. sold its entire nylon business to an affiliate of SK Capital Partners, a New York-based private equity firm. This agreement includes all the raw materials plants, staple fiber, carpet yarn, industrial filament and the engineered plastics operation. Nilit, Israel, has purchased the Nylstar textile filament operation in Martinsville, Virginia. This gives Nilit a production base in Israel, Germany, PR China and now in the United States. DSM N.V. has acquired full control of the polymerization facility of Nylon Polymer Company LLC (NPC) in Augusta, Georgia, from Shaw Industries. However, a number of investments were carried out or are in the process of starting up soon. 2009 was a strong year for nylon as more than a fifth of all newly ordered positions were targeting this sector. Zhejiang Hengyi Group has started to build a caprolactam facility in Hangzhou with an annual capacity of 200,000 tonnes, the biggest single line in the world. Many nylon chip producers in PR China are planning to expand capacity in 2010, including Haiyang Chemical Fiber, Shandong Xiangyu, Shandong Shifeng, Shandong Anda, Yueyang Chemical Fiber, Jiangsu Ruimeifu, Wuxi Polymer, Wenzhou Huajian, Tianjin Haijing, Fujian Liheng, Fujian Jinjiang Technology, Shijiazhuang Chemical Fiber and Sanding Holding Group, and expansion will roughly total 650,000 tonnes. This would almost completely replace imports that accounted for about 680,000 tonnes in 2009 (+22% vs. 2008). Ningbo Xinlun put into operation its new 48-position FDY line and total capacity will reach 40,000 tonnes. China Sky (Quanzhou) will commission its new 72-position FDY capacity. New nylon filament capacity is expected to come on-stream in 2010 at Fujian Liheng (30,000 tonnes), Zhejiang Jinshida (8,000 tonnes), Qianchao Nylon (30,000 tonnes), Xinlun Nylon (20,000 tonnes) and Fujian Jinjiang Technology (80,000 tonnes). Huading Nylon plans to add a 576-position spinning line and 100 sets of DTY machines, expanding its capacity to 120,000 tonnes by 2011. Investments beyond the Chinese border were announced for Taiwan’s FCFC, planning to startup a textile yarn facility in Vietnam in 2010. In Spain, NUREL will increase its POY and FDY filament capacity by 3,000 tonnes. In the United States, SANS Technical Fibers will move existing equipment from the South African parent company into its high tenacity nylon 66 production facility in Stoneville, North Carolina. Furthermore, Premiere Fibers is converting a spinning line from nylon POY to high tenacity FDY at its Ansonville, North Carolina, plant. Moreover, Rhodia plans to invest US$280 million into its operations in Brazil for debottlenecking of the nylon chain and for the manufacture of solvents in the next three to four years. Finally, Grodno Khimvolokno is planning to set up a large scale textile plant to manufacture nylon yarn and cord which is expected to be fully operational by 2013. 030

The Fiber Year 2009/ 10


The segment of textile yarns was up 8.3% to 1.6 million tonnes. At first sight, it appears to be good news for the entire industry. The manufacturing activity outside PR China, however, declined by 15.6% to 757,000 tonnes while Chinese output soared by 43.0% to 887,000 tonnes. Thus, almost 55% of all manufactured textile nylon filaments had Chinese origin. The strong build-up of Chinese capacity has increasingly replaced nylon-related exports from Taiwan where the output fell by 22.7% to about 245,000 tonnes in 2009. In total, the Asian output of textile yarns was 16.6% higher at 1.35 million tonnes. While the American industry declined by 9.3% to 109,000 tonnes last year with a significant reduction of 20.5% in Mexico, Greater Europe plunged down by 26.0% to 148,000 tonnes. Two thirds of the nylon industrial yarn output has Asian origin, compared with a market share of 50% in 2000. Greater Europe takes in a 17% market share and the Americas amount to 14%. Last year’s world production was down by 7.4% to about 890,000 tonnes. As in 2008, the only growing industry was domiciled in PR China where production rose by 15.9% to 364,000 tonnes. The increasing national demand was partly a result of a higher production of passenger cars and commercial vehicles. According to VDA, production shot up by 48.3% to 13.8 million units. Double-digit declines took place in the Americas, North America was down by 21.6% to 81,500 tonnes and Latin American contribution declined by 13.9% to 41,000 tonnes. Europe, where the automotive production fell by 22.1% to 17.0 million units, saw a reduction of nylon industrial yarn production by 23.9% to 148,000 tonnes. The global nylon carpet yarn suffered from the steepest decline as production fell by 8.0% to 740,000 tonnes. Above-average reduction arose in the United States with manufacturing volumes dropping 15.6% to 426,500 tonnes. The real estate crisis is one explanation for the poor carpet volumes, but steadily growing polyester carpet yarn volumes have additionally continued to substitute nylon carpet yarns. In 2009, the U.S. polyester carpet yarn output surged by 23.5% to 132,500 tonnes. New housing starts in the United States continued to worsen, dropping 37.5% to a new historic low at 565,500 in 2009. The dramatic decline in the recent four years can be easily seen at the below chart. United States: New Housing Starts Number of housing units in thousands

2'500 2'000 1'500 1'000 500 0 1970

1975

1980

1985

1990

1995

2000

2005

2009

While the majority of countries followed this negative trend in consumption, only Canada and PR China managed to lift last year’s output. Canadian nylon carpet year production increased by 14.1% to 96,300 tonnes and Chinese manufacturing volume even soared by 71.4% to 48,000 tonnes. The Chinese industry was enjoying growing manufacturing activity, mainly in the contract market, due to Shanghai Expo in 2010 and the Asian Games in Guangzhou in 2012. The production of staple fibers has further slumped by 15.7.% to 214,000 tonnes, largely driven by strong cutbacks in the United States. Nevertheless, the U.S. industry still is the main center of production with a global share of 38%, although output dropped by another 40,000 tonnes in 2009. In total, the U.S. industry has lost about 190,000 tonnes of annual output in the last four years. Greater Europe, mainly the western part, also suffered from a double-digit decline. The sustained Chinese development of nonwovens further boosted the staple market up by 37.0% to 74,000 tonnes. The Fiber Year 2009 / 10

031


POLYAMIDE HIGH PERFORMANCE (PHP) is a global business headquartered in Wuppertal, Germany.

“2009 was the worst crisis year ever since in the history of industrial yarns leading to further consolidation and concentration.”

Volker Siejak Business Director Polyamide High Performance GmbH Germany www.polyamide-hp.com

“We are a world class manufacturer strictly focused on high-tenacity polyamide yarns and polymers and hold leading positions in airbag and other technical applications as well as in specialties for tire reinforcement. Our products are marketed under the brand names Enka® Nylon (PA 6.6), Enkalon® (PA 6) and Stanylenka ® (PA 4.6). Production facilities are located in Germany, in the United States and since autumn 2007 also in China based on joint ventures with China ShenMa. The polyester business of Diolen Industrial Fibers GmbH was continued from March 1st, 2009, under the new name Polyester High Performance GmbH as a subsidiary of Polyamide High Performance GmbH. Polyester High Performance started the business with about 240 employees. The company continued to stay one of the leading European polyester yarn company with an international reputation for developing and manufacturing high-tenacity polyester yarns. The main product are Diolen® yarns-on the market since 1957-which are used worldwide to strengthen a wide variety of industrial applications, like broad fabrics, safety belts, MRG products, ropes, mooring lines and much more. Year 2009 was the worst crisis year ever since in the history of industrial yarns, leaving major deceleration effects in the markets. In some sub-segments the demand nearly disappeared and only feeble residual quantities remained. The complete value chain was nearly discontinued for a certain time. Consolidation and concentration is the outcome of the crisis-a comeback of the pre-crisis status is doubtful for the countries of the Triade (Europe, USA, Japan). Market participants from high-cost countries (in particular Europe resp. Germany) could only survive the economic downturn by taking measures as short-time work. Not permanently competitive capacities were shut down or at least idled. If the economic recovery will be sustainable beyond the first half-year 2010 is open and must be proofed during the next months.

032

The Fiber Year 2009/ 10


PET Market was affected by a big drop in demand, mainly seen in Europe and the US. China was less affected, but the domestic demand was lowered compared to previous years. The European market for PET industrial filaments dropped in 2009 by some 30% against 2008. This PET market is characterized as a global one, with significant overcapacities and ongoing investments in Asia. This overheating trend jeopardizes the business roots of most of the worldwide suppliers. To find markets for those excess production, volumes were sold on base of marginal costs, which are actually subject of anti-dumping studies, to secure global and fair competition between global suppliers to provide the best supply in terms of quality and service. The 2009 decrease in the PA 6.6 sector-especially in Europe-was partly absorbed by political actions. The inherent weakness, depending to a big extent from the automotive sector (airbag and tyres) was last year the big advantage for this specific fiber. The political support of the automotive sector (especially in Europe through the car-scrap bonus) supports also the demand for PA 6.6 filament yarns because the demand for replacement tires and for winter tires for the new cars was not as much affected by the recession as the OEM market. For Greater Europe, we calculate a demand of 170 KT (both for PA 6 and PA 6.6) , which is 28% below 2008. The drop came mainly from other uses than tyre and airbags. The latter end-use was the least affected segment during the crisis with -17%, also a result of the near connection to the automotive production. The biggest segment in Europe for PA was tyre (incl. chafer fabrics = 59% market share, besides airbags = 16% and other uses = 25%), driven by the high volumes in the CIS region. For the rest of Europe, the part of tyre is accordingly below 50%, whereas the airbag segment rises to 26% market share. The Forecast 2010 expects in Europe a recovery to some 205 KT all over Europe, mainly driven by tyres and other end-uses. Special risks in terms of availability and costs arose for PA 6.6. from the raw material side. The supply of raw materials is short (only few suppliers in the supply chain, partly with force majeure) and results for some products like ammonia and especially butadiene in double digit price increases since beginning of the year.Nevertheless, PHP feels well-positioned to assure as the most relevant multi-industrial-filament supplier to assure on a long term basis the supply of both, Polyamide 6.6 and Polyester, including developments for improvements of existing products as well as for new products such as the high-performance PPS yarn and yarns based on PLA polymer produced from natural resources.�

5.3 Polypropylene The world polypropylene market decreased by 6.5% to 2.6 million tonnes, suffering from a substantial increase in fiber grade prices from the second quarter and reduced consumer spending for home textiles. In the United States, slow demand for carpet yarn and increasing substitution by polyester have put additional pressure on the industry. Some delays in new capacity, e.g. Japan Polypropylene Corp. and Mitsubishi Chemicals, are also evidence for the slowing consumption. The underlying market definition does not take into consideration nonwovens, monofilaments, tapes, slit film and fiberfill. While staple fiber applications increased by 3.5% to 1.1 million tonnes, output of filament yarns declined by 12.7% to 1.5 million tonnes. The industry was facing ongoing margin pressure due to high raw material costs and the upstream industry could not pass these price hikes on. This pressure has further supported the substitution of polypropylene by low-cost polyester yarns. As low margins have forced producers to switch to niches, this could not compensate big-volume end-uses. On top of that, the slump in carpet yarn demand was particularly responsible for lower polypropylene spinning activities. This has mainly affected carpet yarn industries in the United States where the output of polyester carpet yarn continued surging by 23.5% to 132,500 tonnes.

The Fiber Year 2009 / 10

033


Polypropylene Fibers Production 1'200

'000 tonnes

1'000 800 600 400 200 0

USA

W.Europe

2005

2006

2008

2009

China

Turkey

Japan

L.America

ROW

2007

The double-digit decline of 15.0% to 965,000 tonnes of polypropylene filament and fiber in the Americas is mainly due to strong losses in the United States for filament yarns that dropped by 23.1% to 510,000 tonnes. The small-scale industries in Latin America almost reached its previous year’s level of 200,000 tonnes. Meanwhile, Greater Europe succeeded in defending its market position as second largest manufacturing region, extending its market share to 35%. PR China, the dominating textile powerhouse, ended the year with a decline of 1.0% to 264,000 tonnes.

5.4 Acrylic The acrylic fiber market has seen its first growth after four years of contraction and losing a volume of around 825,000 tonnes from a record high at 2.7 million tonnes in 2004. In 2009, the global output increased by 4.4% to 1.9 million tonnes. The output in Greater Europe was down by 3.5% following the closure of the Montefibre plant at Porto Marghera in Italy. The volumes in Latin America and in the Middle East were quite unchanged. The Asian contribution rose by 10.0% to 1.14 million tonnes with double-digit increases in PR China, India and Taiwan. The chart below shows major suppliers with Asia accounting for a 60% share of world output followed by Greater Europe (32%) and the Americas (6%). Acrylic Fibers Production 900 800

'000 tonnes

700 600 500 400 300 200 100 0

034

China

W.Europe Turkey

Japan

Taiwan

Thail.

1990

2000

2006

2007

2008

2009

The Fiber Year 2009/ 10

India

Korea

ROW


The recovery of operating rates started in Asia and reached Europe in the second quarter whereas the Americas did not witness any improvement. It was initially driven by stock rebuilding, seasonal improvement and the lowest price differential with polyester in six years. Price Indication of Acrylonitrile and Acrylic Fibers 3.0

US$ per kg

2.5 2.0 1.5 1.0 0.5 0.0 '01

'02

'03

'04

Price differential with PES

'05

'06

Acrylonitrile

'07

'08

'09

PAN-SF

5.5 Cellulosics The cellulosic fiber market enjoyed a strong rebound, increasing by 7.7% to 3.8 million tonnes. Staple fibers surged by 9.2% to 3.4 million tonnes while filament yarns further contracted by 5.4% to 351,400 tonnes. As in previous issues, data on the production of TENCEL ®, the thirdgeneration cellulosic fiber, is included in this survey. Cellulosic Fibers Production 3.5 3.0

mill. tonnes

2.5 2.0 1.5 1.0 0.5 0.0

'70 '80 '90 Filament Yarn

'95

'00

'05

'09

Staple Fiber *

* since 2002 with Tence® included

The filament business continued its long-term decline due to lower output in Europe and in the United States. The European contribution was down by 12.5% as Enka Group stopped its textile viscose yarn production at its Elsterberg site in Germany. The facility, established in 1909, discontinued production in July 2009. This has resulted in the lay-off of 380 employees after no new buyer could be found despite interest from PR China and India. Furthermore, the Mogilev Synthetic Fiber Plant in Belarus, founded in 1930 and CIS’ only producer of textile viscose yarn, reported technical problems as the equipment is deteriorated. In the United States, manufacturing volume was down by 25.0% at 17,100 tonnes while the Asian output stagnated The Fiber Year 2009 / 10

035


at about 260,000 tonnes. The 37.7% drop in Japan at 18,000 tonnes could be compensated by higher volumes in PR China. Meanwhile, India was stable with Century Textiles and Industries Ltd restarting production of rayon tire yarn in July 2009. Acetate tows, used in the manufacturing of cigarette filters, increase by 2.3% to 759,000 tonnes. This sector’s stimulation, highly correlated to the growth of cigarette consumption, may be surprising in the light of global efforts to restrict smoking. However, growth of the market is driven primarily by population increases and rising wealth in emerging markets. Additional dynamics may arise from substitution of unfiltered cigarettes and of polypropylene-based filters as well as a marked trend towards longer cigarette filters. As almost every manufacturing nation succeeded in lifting its output, the industry remained comparatively balanced in regional terms. About 80% of output are located in Asia, Greater Europe and the United States. At the same time, this segment is highly concentrated with three top producers (Celanese, Eastman Chemicals and Rhodia) having a share of more than 80% including their joint ventures. A significant addition of capacity was completed in December 2009 by Eastman Fibers Korea Limited, a joint venture between Eastman Chemical Company and SK Chemicals Co. The new 27,000-tonne plant increases Eastman’s overall annual capacity to nearly 210,000 tonnes. The production of viscose staple fibers soared by 11.4% to 2.7 million tonnes thanks to growing demand in nonwovens, textile applications and flame-retardant products. More importantly, fiber prices gained momentum in favour of viscose. Despite an increasingly unfavorable price differential between viscose and polyester staple fiber, demand for viscose staple fibers kept increasing. So, Lenzing Group, the leading producer of cellulose fibers, succeeded in increasing fiber prices of at least 7% in May. This seems to be a firm basis for further capacity expansions in 2010 by investing in its existing European and Asian sites as well as putting up a 80.000tonne greenfield complex in India. Price Differential of Viscose Staple Fiber vs. Polyester Staple Fiber 1.8

US$ per kg

1.5 1.2 0.9 0.6 0.3 0.0

'01

'02

'03

'04

'05

'06

'07

'08

'09

Another major expansion will be carried out by Grasim Industries Ltd. The Indian company is setting up a greenfield mill in Gujarat with an annual capacity of 80,000 tonnes. The US$216 million investment is scheduled to start-up in fiscal year 2013. Huge capacity expansions are planned for PR China, lifting current capacity by 50% to 3.0 million tonnes. While the market leader Fulida is adding 200,000 tonnes at its plant in Xinjiang, two major manufacturers in Hebei Province, Tangshan Sanyou and Jilin, are expected to expand annual capacity by 100,000 tonnes. While the technological realization should be uncomplicated, the supply of raw material and the search for new sales areas to operate these breathtaking investments at full capacity might give cause for serious concern. TENCEL®, the new age cellulose fiber with end-uses in the home textiles and clothing sector as well as the nonwovens industry, could not keep up with the sector’s dynamic growth. Viscose fibers strongly benefited from a shortage in cotton and an increasing requirement for comfort that cotton could not meet. Aboveaverage consumption became apparent in PR China and India as a result of rising household incomes. 036

The Fiber Year 2009/ 10


“Lenzing’s commitment to viscose fibers is being reflected in several investments across the world.”

Mr. Friedrich Weninger Management Board Member Lenzing AG Austria www.lenzing.com

“Turbulent, but better than expected by many market players – this is how fiber year 2009 turned out in the end. Its first quarter was still marked by the global collapse of demand caused by the recession. From the beginning of the second quarter on, however, Asian sales markets decidedly recovered and China’s economic stimulus package showed effect. The economic energy of powerhouse Asia had even gained momentum by the end of the year. All in all, 2009 for man-made fiber production closed with a robust growth of 7 % over 2008. At Lenzing, the speedy recovery was not altogether unexpected. On the one hand, it was to be expected that the emerging markets would overcome the financial crisis of 2008 fairly soon and that their domestic consumption as well as their exports would provide fresh stimulus. On the other hand, cotton production is reaching its limitations: competition for arable land is growing due to rising food and biofuel production and ecological arguments provide reason for the longterm growth of man-made fibers. Lenzing’s portfolio of three generations of cellulose fibers, Lenzing Viscose®, Lenzing Modal® and TENCEL®, offers a broad and above all a high-quality choice of products. We fully maintained our product range throughout the difficult period of 2009 and were able to supply our customers, proving that we were good partners also in troubled times, whereas other producers had to cut back production due to depressed prices. Our long-term market commitment allowed Lenzing in 2009 to benefit from the recovery right from the start. The unbroken strong demand for modal for textile applications was a major pillar of business. Lenzing’s innovative applications, such as TENCEL® in home textiles, met with major success. The first-time use of TENCEL® in powder form for moisture management in foamed plastic opened an entirely new field of sales for Lenzing. The advantages of cellulose fibers, such as their high absorbency and biodegradability, make them increasingly popular for nonwovens as well. Strong demand, such as for wipes, even caused temporary supply bottlenecks in 2009. We are convinced that our sales markets will continue to grow. Therefore, we continuously implement our strategy of expansion. We will expand our production capacity for modal fibers at our sites in Nanjing (China). In 2010, the fourth line at our Indonesian subsidiary PT. South Pacific Viscose has taken up production. Expansion and remodelling projects will be implemented. Even with repeated periods of slow-down over the next months and years, we expect the upturn of man-made cellulose fibers in the end to be sustainable.”

The Fiber Year 2009 / 10

037


5.6 Carbon Fibers This technologically advanced fiber was negatively impacted by the financial crisis. Production dropped by 15% to about 33,000 tonnes as nearly every end-use in the industrial, aerospace and sports sectors suffered from lower manufacturing activity. A pleasant exception may be the wind energy sector. Last year’s performance was certainly a difficult year for all companies engaged in the carbon fiber chain. However, superior carbon fiber properties will branch out into new markets and increasingly substitute traditional materials. The opportunities for composites have been recognized around the world and have been attracting more newcomers to enter this industry. Reportedly, five new companies from the Americas, Asia and Europe had initially planned to come on-stream, but it rather seems that start of operation was postponed. Like also established manufacturers did, e.g. Mitsubishi Rayon has postponed the commissioning of its new US$125 million carbon fiber plant in Otake by one year. The capacity of 2,700 tonnes is now expected to start-up in the fourth quarter of 2010. Meanwhile, capacity at subsidiary Grafil Inc. in the United States was increased in 2009. Nevertheless, adverse conditions will go along with this development arising from temporary excess capacity and disappointments in consumption of some end-uses. First evidence has been experienced in worsening business figures of the major carbon fiber producers. According to the General Aviation Manufacturers Association, worldwide deliveries of general aviation airplanes amounted to 2,267 airplanes in 2009, valued at US$19.5 billion, compared with 3,967 units valued at record US$24.8 billion during this same period in 2008. Annual deliveries of Airbus and Boeing, dominating the market for more than 100-seat commercial planes, surged by 14.1% at 979 aircraft in 2009. Airbus expects 2010 deliveries roughly at the same level while Boeing scaled back planned shipments by 15 to 20 aircraft this year. In the first quarter of 2010, deliveries from Airbus increased by 5% to 122 and Boeing’s delivery of 108 planes dropped by 11%. Aircraft Deliveries 1'000 800 600 400 200 0

1990

1992

1994

1996

1998

2000

2002

2004

2006

2008

Airbus Boeing

The new composite-intensive aircraft in commercial and military aerospace have still not achieved its original target of consumption. Boeing’s B787, originally scheduled to enter service in May 2008, had its first flight in December 2009 and is now scheduled for first delivery in the fourth quarter of 2010. This composite-rich aircraft will have a strong impact on the carbon fiber industry due to its composite structural weight of 52%. On top of that, Boeing plans to ramp up production of its 787 Dreamliner to 2.5 a month by August 2010 to finally build 10 of the jets each month by 2013. That could easily absorb more than 5,000 tonnes of carbon fiber in 2013, expressed in today’s output, a single type of aircraft would then consume about 15% of carbon fibers. Moreover, a number of new aircraft programs (Airbus’s A350 and A320 successor, Boeing’s Yellowstone Project, Bombardier’s CSeries, United Aircraft’s MS038

The Fiber Year 2009/ 10


21, Mitsubishi Regional Jet, C919 from Commercial Aircraft Corp. of China) entering service between 2013 and 2016 will further boost demand for lightweight composite materials. In addition to that, the outlook remains positive due to the Asian traffic growth, the increasing number of low cost carriers and more retrofitting. Contrary to the general trend of using more composites was the decision of Mitsubishi Heavy Industries Ltd. to use aluminium instead of carbon fiber wings. Wind power has continued its surging capacity additions. According to the Global Wind Energy Council, wind power installations increased by 31% in 2009 to 158 gigawatts (GW). Wind Energy Market

Megawatts (MW)

160'000

120'000

80'000

40'000

0

'95 '96 '97 '98 '99 '00 '01 '95 '03 '04 '05 '06 '07 '08 '09

This segment is increasingly gaining attractiveness for carbon fibers as the continuously increasing average blade length requires the usage of lightweight materials. Between 2000 and 2009, the average blade length has doubled to about 45 meters. Installed Wind Power Capacity 50'000 +27% * Megawatts (MW)

40'000

+39% *

30'000

+8% *

+107% * +15% *

20'000

+13% *

10'000 0 USA

Germany

China

Spain

India

Others

* Percentage: Newly added capacity in 2009 over 2008

Nearly three quarters of the wind power capacity is installed in the United States, Germany, PR China, Spain and India. The Chinese wind energy market has again doubled and the nation passed Spain to take the third place in wind power installations. A recent announcement that PR China is to invest over US$160 billion in wind farms until 2020 shows the nation’s huge potential. It has just started construction of the country’s biggest wind farm with an installed capacity of 5.2 GW in Gansu Province. The US$17.6 billion investment is scheduled to come on-stream end of 2010.

The Fiber Year 2009 / 10

039


The October 2009 may turn out to be a groundbreaking month for the carbon fiber industry in connection with the automotive industry. At present, the annual consumption of less than 2,000 tonnes is mainly addressing motorsports and luxury “super cars” in small batch series. At the 41 st Tokyo Motor Show, Toyota revealed its development project (LFA) - a vehicle with a carbon fiber structure to learn how to deal with automotive lightweight constructions. Reduction of fuel consumption and carbon dioxide emission is being vehemently discussed and this could be achieved by reducing the vehicle weight and using carbon fiber composites for producing primary automotive structures. Toyota considers weight reduction essential with specific focus on electric cars to compensate for batteries. During that exhibition, carbon fiber manufacturer SGL Group and automaker BMW Group announced the foundation of a joint venture to manufacture carbon fiber and fabric for the automotive industry. The overall investment for the joint venture will be US$340 million, including the construction of two new sites, one in Moses Lake, Washington, for the carbon fiber production and the other in Wackersdorf, Germany, for the subsequent fabrics. The polyacrylonitrile-based precursor will be produced by a joint venture between SGL Group and Mitsubishi Rayon in Otake, Japan. Composites offer so many advantages over traditional materials and the volume of 60 million manufactured passenger cars and commercial vehicles in 2009 (2008: 69 million) makes this a promising industry. Carbon fiber in automotive structural composites could reduce the weight of car components by up to 70%. Furthermore, composites offer lower manufacturing complexity. Finished assemblies with fewer parts cut manufactured costs and often accelerate design completion and model introduction. Tooling for composite parts can be as much as 80% less than for comparable metal parts. Finally, composites are superior in corrosion resistance for any application. However, some aspects speak against a rapid substitution in series production vehicles. The usage of advanced lightweight composites in primary automotive structures is limited because carbon fibers are much more expensive than traditional materials. A serious obstacle for car occupants as well as assurance companies is invisible accidental damages. Furthermore, there is also not yet a resin molding process enabling carbon fiber to be massproduced for automotive use. A switch to carbon fiber from traditional metals would mean significant redesigns of auto-assembly facilities and require companies to develop methods to recycle the material. Finally, what will happen to the manufacturing plants of the car makers when moving to carbon fiber instead of steel or aluminium? They would have to be scrapped and the employees needed to be trained, because of lacking knowledge and experience in processing of composites instead of metal-working.

5.7 Aramids The markets of aramids comprise para-type aramid, used for a variety of reinforcements reflecting its high tenacity and high strength, and meta-type aramid, equipped with superior properties in heat resistance and flame retardancy. Last year’s production is believed to have accounted for 64,000 tonnes, predominantly provided by U.S.based DuPont and Japan based Teijin. Both companies have been dominating this industry in recent decades and continuously expanding their capacities on global basis. In April 2009, DuPont has completed its US$100 million three-phase investment plan for meta-aramid fiber with commissioning a new facility in Spain. Further manufacturing sites are located in the United States and at a joint venture in Japan. Nevertheless, an increasing number of Chinese manufacturers has been entering this market of high-tech fibers. In total, 6,900 tonnes of annual meta-aramid capacity are installed at Yantai Spandex Co. Ltd. (3,400 tonnes), Sheng’Ou (Suzhou) Safety Protection Material Co Ltd (2,000 tonnes) and Guangdong Charming Co. Ltd. (1,500 tonnes). New para-aramid fiber capacity of 5,000 tonnes per year is scheduled to come on-stream at Sinopec Yizheng Chemical Fiber Co. Ltd., Yantai Spandex and China Shenma Group Co. Ltd. Consumption of para-aramid fibers, especially for tires and rubber reinforcements, started the year flat as the automobile production declined. Later on during the year, demand for paraaramid fibers revived thanks to increasing production in the automotive industry and a firm market for use in protective clothing and materials. Recovery in meta-aramid fibers was a little time-delayed, particularly picking up in steelmaking-related end-uses. The period of sluggish demand has caused manufacturers to boost efforts to develop new applications and to introduce cost-cutting measures. For example, Belgium’s N.V. Bekaert S.A. and DuPont Co. have 040

The Fiber Year 2009/ 10


developed a hybrid aramid yarn-steel cord reinforcing material for commercial truck and OTR tire applications. Bauer Hockey, the world’s leading manufacturer of ice hockey equipment, and DuPont have signed a long-term agreement that allows Bauer to market and incorporate the Kevlar fiber into its neck protection. This in an exclusive two-in-one protective apparel piece built specifically for the needs of today’s hockey players. Nearly a million registered hockey players around the world are required to wear neck protection and the majority of those players wear separate neck guard and base layer pieces. This segment has been offering a multitude of growing opportunities in various end-uses such as aircraft, automotive and tires, protective clothing, ballistics, friction, reinforcement material, heat and cut resistance applications and civil engineering/geotextile. Although the outlook for future growth still looks promising, a brand-new announcement from April 2010 may turn out to become a substitute in protective clothing. A team of international scientists from Switzerland, PR China and the United States has converted cotton T-shirts into a strong, lightweight and flexible fabric of boron carbide - the third hardest material on earth. Although we will not have bulletproof T-shirts soon, this groundbreaking study opens up unprecedented opportunities.

5.8 Spandex Yarns The spandex industry has also been negatively impacted by the slowing textile consumption. Last year’s output is believed to have dropped by about 6% to 330,000 tonnes. This translates into a global utilization rate of around 57%. The chart below shows the rapid development of the Chinese industry, ranking first with a capacity of 345,000 tonnes at the end of 2009. Due to the increase of fine-denier production, spandex output in PR China surged by 16% to about 212,000 tonnes, partly due to increased exports at 27,591 tonnes. Thus, Chinese industry had an average operating rate of more than 60%. Despite already existing surplus capacity, the industry saw another capacity expansion of 26,000 tonnes in 2009 as the following four manufacturers added new equipment: Jiangsu Shuangliang Group (12,000 tonnes), LDZ Spandex Co. Ltd. (7,000 tonnes), Zhejiang Huahai Group (2,500 tonnes) and Shaoxing Sihai Spandex Co., Ltd. (1,800 tonnes). Zhejiang Artex Chemical Co. Ltd. (3,000 tonnes) was last year’s only Chinese newcomer. Nevertheless, current projects in PR China under construction or in planning stage amount to around 60,000 tonnes additional capacity. Spandex Installed Capacity

'000 tonnes

400 300 200 100 0

USA 1995 2003

W.Europe 1997 2005

PR China

Japan 1999 2007

Korea/Taiwan

ROW 2001 2009

Spandex activity in the Americas and in Europe started very slow, but has continuously improved in the second and third quarter with operating rates beyond 80%. The slowdown of upstream activity in the fourth quarter was the result of the completion of re-stocking. The western hemisphere will only see capacity additions from Hyosung Corp. as the market leader intends to further increase capacity at its Turkish mill and is to invest more than US$100 million in a new spandex facility with an annual capacity of 10,000 tonnes in Brazil. In Brazil, Invista is currently the only manufacturer of spandex and not able to meet the annual demand of about 25,000 tonnes. The Fiber Year 2009 / 10

041


6. Spun Yarn The 2009 world output of yarns was up 4.0% to 61.8 million tonnes. The three yarn types differently benefited from the worldwide recovery in demand. Filament yarns increased 3.4% to 24.8 million tonnes, short staple yarn rose 5.1% to 32.9 million tonnes and long staple yarn remained at the low level of 4.1 million tonnes. Comparison of Yarn Markets 3.2

1990 = 1

2.7 2.2 1.7 1.2 0.7 1990

1995

Long staple yarn

2000

2001

2002

2003

2004

Filament yarn

2005

2006

2007

2008

2009

Short staple yarn

Filament yarns increased 3.4% to 24.8 million tonnes, of which carpet yarns (excluding polyester carpet yarn) dropped 13.4% to 1.7 million tonnes, industrial yarns declined 6.9% to 2.4 million tonnes and textile filament yarns were up 6.4% at 20.7 million tonnes. Filament and Spun Yarn Output 2009 vs. 2008 35 30 million tonnes

25 20 15 10 5 0

Short Staple

Textile FY

Long Staple

Industrial FY

Carpet FY

2008 2009

Spun yarns still dominate the world market with a 59.9% share compared with 64.0% in 2000. However, filament yarns have been producing higher dynamics. The average annual growth rate over the period 1995 until 2009 accounts for 5.7% in the filament business and 2.6% in the spun yarn industry. In 2009, output of filaments amounted to 24.8 million tonnes (+3.4%) and spun yarns accounted for 37.0 million tonnes (+4.5%). The chart below shows the long-term development of filament and spun yarns. 042

The Fiber Year 2009/ 10


World Yarn Production 40 35

mill. tonnes

30 25 20 15 10 5 0

1980

1985

1990

1995

2000

2005

2006

2007

2008

2009

Spun Yarn Filament Yarn

The below chart shows the leading manufacturing nations of filament and spun yarn. The world market of 61.8 million tonnes is being dominated by PR China. The Chinese output volume accounted for 39.7 million tonnes last year, equal to a market share of 64%. India has produced 5.7 million tonnes, occupying a 9% share. The United States managed to achieve a manufacturing volume of 1.9 million tonnes, followed by Taiwan with 1.5 million and South Korea with 1.1 million tonnes. The rest of the world contributed 19% to the global yarn production, corresponding to 11.9 million tonnes.

World Yarn Production

PR China

India

USA

Taiwan

Korea

ROW

The Fiber Year 2009 / 10

043


United States of America Cotton Production Cotton Area Harvested Cotton Consumption Manmade Fiber Output Spindles Rotors Spun Yarn Production Textile and Apparel Jobs Population (mid-year) Textile & Clothing Imports Textile & Clothing Exports

2008 2.8 million t 3.1 million ha 0.8 million t 2.8 million t 907,000 340,000 797,000 t 462,000 304,059,724 US$93.2 billion US$16.2 billion

2009 2.7 million t 3.1 million ha 0.8 million t 2.3 million t 870,000 335,000 611,000 t 411.200 307,212,123 US$81.0 billion US$13.6 billion

Âą in % -3.2% +1.6% -2.4% -16.7% -4.1% -1.5% -23.3% -11.0% +1.0% -13.1% -16.0%

The U.S. textile industry continued its long-term contraction. The chart below shows best the ongoing process leading to an increasingly weakening domestic textile and apparel industry. The spun yarn output declined 23.3% and the production of manmade fibers was down 16.7%. The overall textile sector employed more than 410,000 workers in 2009, down from 1.1 million in 2000. In the coming several months, however, the number of ring spindles is expected to be nearer to 930,000 due to mill re-openings. The market has been going through a transition period for the past several years with plants curtailing machines and even closing plants and now industry seems to be on the rebound with machines starting back up again. U.S. Textile Plant Closures, Cumulated 700 600 500 400 300 200 100 0

1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009

The scope of 40 company closures in 2009 comprises several spinning companies, spun yarn facilities and mainly nylon carpet yarn operations, weaving, knitting and finishing mills. This has caused the loss of more than 60,000 textile and apparel jobs. According to data from the U.S. Department of Commerce, textile and apparel imports have declined by 13.1% to US$81.0 billion in 2009 with 39% of shipments from PR China. Total U.S. exports dropped by 16.0% to US$13.6 billion with almost half of shipments targeting Canada and Mexico. The chart below shows the long-term development of the U.S. textile and apparel trade.

044

The Fiber Year 2009/ 10


U.S. Trade Balance 100 90 80 US$ billion

70 60 50 40 30 20 10 0 1987

1990

1995

Trade Deficit

2000

Imports

2005

2009

Exports

The chart below represents the ten leading textile and apparel importing nations into the United States. Last year’s volume of this group decreased by 6.8% to US$61.5 billion, but the share further increased to 76%. Shipments of the other importers dropped by 28.4% to US$19.5 billion. Spectacular reductions appeared for Mongolia, -95.7% at US$1.7 million, Jamaica, -94.3% at US$0.9 million, Hong Kong, -80.4% at US$317 million and Macau, -79.2% at US$174 million. Deliveries from CAFTA went down by 19.1% to US$6.2 billion. Leading Suppliers to U.S.

US$ billion

PR China

-2.8%

Vietnam

-1.7%

India

-9.4%

Mexico

-16.4%

Indonesia

-5.2%

Bangladesh

-0.5%

Pakistan

-10.7%

Honduras

-21.9%

Cambodia

-20.9%

Thailand

-26.7% 0

5

10

15

20

2003

2004

2005

2007

2008

2009

25

30

35

2006

* Growth rates refer to 2009 vs. 2008

However, the United States still is significantly involved in the global textile industry as it is the largest exporter of raw cotton. In the current 2009/10 season, 2.6 million tonnes of cotton are designed for exports, that accounts for 35% of world cotton exports. Moreover, it is the biggest textile and apparel consuming single country with annual retail sales in clothing and clothing accessories stores of nearly US$210 billion in 2009, equal to a per capita spending of US$679.

The Fiber Year 2009 / 10

045


U.S. Clothing & Clothing Accessories Expenditures 800 700 US$ per Capita

600 500 400 300 200 100 0

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

* Sales not adjusted for seasonal variations, holiday and trading-day in clothing and clothing accessories stores

The focus of cotton industry in the United States has continuously changed in favour of exports instead of local processing. While the domestic cotton demand hit its high in the 1997/98 season at almost 2.5 million tonnes, this volume has decreased to currently 760,000 tonnes. At the same time, exports rapidly were on the upswing, at present accounting for 2.6 million tonnes. In line with the declining local demand, the cotton cultivated area has dropped to about 3.0 million hectares – a size we have not seen in the last 25 years. U.S. Raw Cotton Balance 4000 3500

'000 tonnes

3000 2500 2000 1500 1000 500 0

1990

Export

1995

2000

2005

2009

Use

However, a promising exception to this contraction process is Parkdale, one of the two largest manufacturers of spun yarn in the world. The privately held company operates 28 plants in the Carolinas, Virginia, Georgia, Alabama and Tennessee. It also has mills in Mexico and Colombia. In addition to adding new equipment to one of its facilities in South Carolina, the company has taken over most of Hanesbrands spinning operations and acquired three plants in South Carolina and Georgia from Wellstone Mills. The company used to be one of its largest competitors.

046

The Fiber Year 2009/ 10


Mexico Cotton Production Cotton Consumption Manmade Fiber Output Population (mid-year) Foreign Direct Investment Textile & Clothing Exports

2008 125,000 t 403,000 t 261,200 t 109,955,400 US$23.2 billion US$5.2 billion

2009 92,000 t 414,000 t 242,000 t 111,211,789 US$11.4 billion US$4.4 billion

± in % -26.4% +2.7% -7.4% +1.1% -50.7% -15.2%

Mexico’s economy shrank by 6.8% in 2009, the worst result since the 1929 Great Depression. This decline in GDP even outpaced the 6.2% fall during Mexico’s currency and debt crisis in 1995. Total exports dropped by 21.2% to US$230 billion. The recession in the United States has led many companies to slow down operations as more than 80% of Mexican exports are U.S.-bound. This dependence is even more overwhelming in textiles and apparel as nearly all manufactured goods are targeting the northern neighbor. Nevertheless, Mexico moved back into the world’s top-10 most attractive countries for foreign direct investments, receiving US$11.4 billion as U.S. companies seek low-cost production closer to home. The continuing contraction of the textile and apparel supply has several reasons. The textile and apparel exports to the United States fell from a record US$9.6 billion in 2000 down to US$4.1 billion in 2009. This was another 16.4% reduction in shipments to the United States last year. In 2002, a quarter of all U.S. textile imports came from Mexico and Central America and 13% from PR China. Last year, PR China provided 39% of all U.S. clothing imports and less than 7% came from direct neighbors of the United States. On top of that, Mexico’s textile and apparel industry is losing domestic market share to other low-cost Asian countries. Probably the proximity to the big U.S. market size has prevented so far serious attempts of most Mexican manufacturers of textiles and clothing to export their products to the EU or to South America. Finally, almost half the population is under the age of 25. This represents a potential for considerable demographic and economic growth for the decades to come but holds, on the other hand, the necessity of creating jobs. About half of the population lives on less than US$2 a day, consuming very cheap Chinese clothing. But there is also a considerable number of consumers buying luxury apparel from Europe. As the total consumer expenditure is believed to have decreased by about 20% to US$578 billion, the national clothing market is estimated in the region of US$15 billion, down from the former US$18 billion rating of the Mexican Clothing Industry (CNIV). The sluggish demand for Mexican textile products has also negatively impacted the raw material sector. The cotton area planted declined about 34% and current season’s production is predicted to drop by 26.4% to 92,000 tonnes. This drop was attributed to adverse weather conditions throughout the past summer and increased prices of fertilizers and pesticides, prompting cotton producers to switch to more profitable crops. However, looking with optimism to the future may be caused by two factors. In February 2009, Wal-Mart de México, S.A.B. de C.V. has announced an unprecedented investment of $11.8 billion-peso (about US$900 million) to generate more than 14,500 new direct jobs and open 252 new units. Secondly, Francisco Mayorga was appointed as the Secretary of Agriculture. The hope for the cotton sector comes from his reputation of rewarding declining sectors with support. Calculating the cotton target price in U.S. cents per pound could spur the increase of area planted up to pre-crisis levels.

The Fiber Year 2009 / 10

047


Argentina Cotton Production Cotton Consumption Manmade Fiber Output Population (mid-year)

2008 131,000 t 169,000 t 47,800 t 40,481,998

2009 185,000 t 169,000 t 54,000 t 40,913,584

± in % +41.2% ±0.0% +13.0% +1.1%

Argentina’s economy expanded by 0.9% in 2009, according to governmental information. Favourable forecasts for its top crops, such as soybeans and corn, in the current season’s output have supported the export-oriented agricultural sector. Anyhow, concerns may arise form PR China, the world’s largest buyer of soybeans, due to its tighter fiscal policy. In 2009, Argentina registered a trade surplus of US$17 billion, up 35%, while imports decreased by 33%, far bigger than the 20-percent drop of exports. This improvement in Argentina’s balance of trade is partly result of a series of measures to restrict imports since October 2008 after adopting new rules for anti-dumping and countervailing duty investigations. In 2009, antidumping investigations against Chinese imports of denim and new rubber tires were opened. In addition to that, anti-dumping duties were imposed on imports of DTY from Indonesia and PR China, on imports of polyester fiber from PR China and India, on imports of acrylic fiber yarns from Indonesia and Brazil and finally on imports of certain fabrics from Brazil and PR China. Unsurprisingly, clothing imports from PR China dropped by nearly 45% last year as a result of these measures and the non-automatic import licenses system applied by the Argentine Government to defend national industry and preserve jobs. Argentina: Cotton Harvested Area 1'000 900

1,000 hectares

800 700 600 500 400 300 200 100 0

1990

1992

1994

1996

1998

2000

2002

2004

2006

2008

The current season’s cotton output of 185,000 tonnes is expected to be the best result in ten years after cultivated area was increased by 47%. On the other hand, corn and wheat acreage was reduced by 450,000 hectares or 0.7%. Despite a steadily falling clothing consumption, domestic cotton use has significantly recovered from its historic low in 2001 at 62,000 tonnes to 169,000 tonnes last year. Be that as it may, the garment retailer C&A has left the country as it has not fulfilled its financial targets. C&A was in the country twelve years and had owned 20 stores. In Latin America, the retailer has presence in Brazil and Mexico.

048

The Fiber Year 2009/ 10


Brazil Cotton Production Cotton Area Harvested Cotton Consumption Manmade Fiber Output Population (mid-year) Textile & Clothing Exports Textile & Clothing Imports

2008 1,193,000 t 0.8 million ha 914,000 t 412,700 t 196,342,587 US$2.4 billion US$3.8 billion

2009 1,252,000 t 0.8 million ha 914,000 t 367,800 t 198,739,269 US$1.9 billion US$3.5 billion

± in % +4.9% -2.7% ±0.0% -10.9% +1.2% -21.8% -9.2%

Brazil’s US$1.8 trillion economy shrank by 0.2% last year, its first negative annual result since 1992. The economy already returned to growth in the second quarter of 2009 after a six-month recession. According to central bank estimates, the economy will expand by 5.8% in 2010. This expansion should be buoyed by high rates of investment. Unemployment fell in December, matching the record low set in December 2008, after adding nearly one million net payroll jobs in 2009. In line with a steady improvement of last year’s consumer confidence, retail sales were strong and well above estimates. Carrefour, the world’s second largest retailer, underlined this growth as Chief Executive Lars Olofsson expects sales in Brazil to surge in the next five years due to a local market of nearly 200 million consumers with a steadily growing purchasing power. In 2009, Brazil registered a trade deficit in textiles and clothing of US$1.6 billion, up 12.5%, while exports decreased by 22%, far bigger than the 9-percent drop of imports. The below chart shows the leading trading partners in the last year. Brazil: Major Textile & Clothing Trade Volumes 1'400

US$ million

1'200 1'000 800 600 400 200 0

China

Argentina Indonesia

USA

India

Korea

Taiwan

Thailand Germany Paraguay Turkey

Others

Exports Imports

Dominant supplier of textile and apparel products was PR China, occupying an almost 40% market share. Chinese shipments of US$1.4 billion faced Brazilian deliveries to PR China of US$79 million. Trade relations with India were even more unbalanced as Brazil purchased goods from India worth US$313 million and just exported US$3 million in return. While the majority of Brazilian textiles and garment were addressing the Americas, the Texbrasil - Strategic Program of the Brazilian Textile Chain, that accounts for 17.2% of the country’s processing industry GDP - created in 2000, has the objective of preparing Brazilian companies to compete in the international market by enlarging the marketing base. In order to successfully pursue this strategy, the decline in imports of textile and apparel machines by 25.5% to US$544 million in 2009 appears to be not instrumental. Despite a capable fashion industry and a leading The Fiber Year 2009 / 10

049


position in some textile sectors, e.g. ranking second in the global jeans production, efficient machinery in operation is the key to success. In mid-2008, the Brazilian Textile and Apparel Industry Association (ABIT) initiated a Strategic Plan until 2023 with short, medium and long term actions and the following goals: • modernisation of the productive structures, • bigger output of products with higher added value, • further export growth, • combating illegal trade practices, • reducing the taxation load. If you want the advantages, you also have to take the disadvantages that are going with it. Brazil was less suffering from the textile crisis than most other countries in the world as it predominantly manufactures textile and clothing products for the domestic market, less than 5% of total Brazilian sales are destined for exports. On the other hand, Brazil tries to limit the accelerated growth of imports. However, triggering anti-dumping measures against surging imports will be tough for the country’s 23,000 clothing companies, mostly small-scale enterprises with no experience in anti-dumping procedures. Nevertheless, ABIT is committed to support national industry. In 2009, The Brazilian Foreign Trade Council (CAMEX) decided to apply definitive antidumping duties on viscose fiber imports from Austria, Indonesia, Thailand and PR China as well as on imports of Chinese tires. In addition, The Brazilian Trade Remedies Department (DECOM) initiated investigations regarding the alleged injurious dumping of polypropylene exported from the U.S. and India, and regarding the alleged injurious dumping of synthetic fiber blankets exported from PR China. DECOM further initiated an anti-dumping review on imports of jute bag from Bangladesh and India, and a review of dumping duties applied on polyethylene therephthalate exports from Argentina. While the current season’s cotton growing area is down by 2.7% at 820,000 hectares, the projected output is expected to increase by 4.9% to nearly 1.3 million tonnes. Higher yields assure Brazil’s position as the world’s fifth biggest growing nation. This result may be result of the biotechnology adoption and narrow-row cotton production as a second crop option. Narrowrow cotton planted area for 2009/10 could reach 50,000 hectares, expanding from 5,000 hectares in 2007/08. This crop reaches maturity at least one month earlier than traditional cotton.

Colombia Cotton Production Cotton Consumption Population (mid-year)

2008 38,000 t 87,000 t 43,141,109

2009 30,000 t 93,000 t 43,677,372

± in % -21.1% +6.9% +1.2%

Colombia’s industrial production dropped by 5.9% in 2009 and sales fell by 3.3%, while trade surplus more than tripled to US$1.7 billion as imports fell by 17.1% to US$32.9 billion. The textile industry was badly hit in 2009 by a slump in exports to Venezuela, following a diplomatic dispute about the U.S. military presence in Colombia, and a 34.5% drop to US$248 million in exports to the United States, following the reduced textile consumption in the U.S. This steep fall in textile exports has caused more than 50,000 job losses. Additionally, the governmental targets for the cotton industry were not achieved. Already in the last season, the Ministry of Agriculture and Rural Development announced a minimum guarantee price of cotton produced in the season 2009/10 of five million pesos per tonne (about US$2.50 per kg). The target was to increase the planting of cotton to reach at least 50,000 hectares annually and to increase yields to 1,000 kg per hectare. Forecasts for the actual season notice a reduction in cotton harvested area by 15.6% to 38,000 hectares, in cotton production by 21.1% to 30,000 tonnes and in cotton yields by 6.5% to 790 kg per hectare. 050

The Fiber Year 2009/ 10


Colombia: Cotton Situation 2009/10 60 50

1'200 1,000 hectares

1,000 tonnes

kg / hectare

1'000

40

800

30

600

20

400

10

200

0

Cotton Area

Output

Target

Target

Actual

Actual

Yields

0

Reasons for the disappointing performance may be attributed to the global slowdown in textile demand, but there are also some national shortcomings. Reportedly, cotton growers were facing difficulties with bad genetically engineered seed that caused damage to crops. Moreover, farmers must cope with higher production costs and limited financial scope for investments as the majority of cotton land under cultivation is rented and about a third of the cotton farms are smaller than 10 hectares. Nevertheless, the textiles and apparel sector still is of particular importance to the national economy. It provides more than 800,000 jobs, responsible for 22% of employment in manufacturing. The industry covers the entire supply chain from cotton and synthetic fibers, through spinning, weaving, knitting, finishing, dyeing and printing, to the manufacture of garments and accessories. However, the increasing shortfall of cotton yarn and denim, leading to textile imports of almost US$1 billion, could be replaced by local production and, hence, help reduce poverty as Colombia still is a country where more than 50% of the total population lives under such conditions. The economic environment might militate in favor of a higher value added as Colombian workers at present occupy second place in labor productivity in Latin America measured by the number of annually labor strikes and labor productivity. Above all, labor costs are below the average in Latin America, accounting for about US$400 per month. The average salary for a textile industry worker is US$274 per month in 2009, whereas the minimum salary is US$221.

Peru Cotton Production Cotton Consumption Population (mid-year) Textile & Clothing Exports

2008 28,000 t 98,000 t 29,180,899 US$2.0 billion

2009 26,000 t 93,000 t 29,546,963 US$1.4 billion

± in % -7.1% -5.1% +1.3% -28.0%

Peru’s economy was one of the few in Latin America last year to experience growth; GDP grew by 1.1%, the slowest since 2001, after expanding by 9.8% in 2008. Measures of Peru’s central bank to combat the effects of the global financial crisis were reducing the reserve ratio as well as the benchmark rates to provide cheaper credit and encourage consumption.

The Fiber Year 2009 / 10

051


Peru: Cotton Harvested Area 140

1,000 hectares

120 100 80 60 40 20 0

1980s 1990s 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009

As cotton is considered the white gold of Peru, the domestic clothing industry has heavily relied on this main input to grow its exports. While Peru has been a traditional cotton producer, the above chart shows the area planted in the last decades. The average area under cotton cultivation of 136,400 hectares in the 1980s has dramatically dropped to less than a third in the actual season. Consequently, cotton production is expected at 26,000 tonnes in the current season, less than half from the 2007/08 season. It seems that the former major export earner has tremendously lost in weight and it is not the financial crisis to blame. A bunch of factors has worsened the local cotton industry that is lacking an official government policy to support cotton production. Cotton subsidies around the world, textile and apparel dumping, better profit margins in other crops such as rice and corn, small-sized production units preventing economies of scale and insufficient credit access have all contributed to this decline. On top of that, strong concerns about Asian textiles coming into the country have increasingly become important. According to the National Society of Industries’ Textiles Chapter, imports in 2009 accounted for US$708 million with 51% Chinese and 34% Indian origin. Given these adverse conditions together with the international financial crisis, it came as surprise that 184 textile and apparel manufacturers have started to export last year. Promperu, Peru’s agency to promote exports and tourism, disclosed that the number of exporting companies rose to 2,072 last year, mostly exporting cotton T-shirts and cotton blouses. Instrumental in this international approach might be Peru’s recognition as quality supplier. As the number one producer of alpaca and vicuna fiber, it has been supplying the best international brands of knitted fabrics, e.g. Calvin Klein, Polo Ralph Lauren, Levy Strauss, Reebok and Saks Fifth Avenue. Nevertheless, exports went down by 28.0% at US$1.4 billion. The leading exporting companies include Topy Top, Devanlay Perú, Confecciones Textimax, Textiles Camones, Cotton KNIT, Michell y Cía, Sudamericana de Fibras and Hilandería de Algodón Peruano. As the U.S. House of Representatives approved the renewal of the Andean trade preferences program end of 2009, it may offer an incentive to put more effort into the international market segment. Encouraging is also the announcement of the National Society of Industries (SNI) that textile companies have invested nearly US$700 million in the last five years and this propensity to invest is said to continue. Latest example is the start-up of the Topy Top 30,000-spindle manufacturing facility with a daily capacity of 20 tonnes of 100% cotton yarn. Asia Cotton Production Cotton Consumption

052

The Fiber Year 2009/ 10

2008 15.0 million t 18.5 million t

2009 14.2 million t 19.8 million t

± in % -5.1% +7.1%


Bangladesh Cotton Production Cotton Consumption Yarn Consumption Spindle Capacity Population (mid-year) Textile & Clothing Exports

2008 9,200 t 816,000 t 760,000 t 7,200,000 154,037,902 US$10.7 billion

2009 10,900 t 871,000 t 820,000 t 7,600,000 156,050,883 US$12.3 billion

± in % +18.5% + 6.7% +7.9% +5.6% +1.3% +15.4%

Bangladesh’s GDP growth is projected between 5.0% to 6.0% for the current fiscal year 2010. The textile industry is the largest manufacturing sub-sector of the country’s industrial sector, constituting 79% of the country’s total export earnings of US$15.6 billion. The textile sector contains 350 spinning mills, 400 weaving mills, 310 dyeing and finishing mills, 800 knitting and knit dyeing mills and 4,500 garment factories. The year 2009 started very bad for the national spinning industry. In addition to the recovery from the impact of the global recession, textile production has strongly declined due to a severe interruption in gas supply since March 2009. According to the Bangladesh Textile Mills Association (BTMA), the textile sector consumes 70% of the total gas used by the private sector. While this sector needs 2,000 MW power per day, the supply of not more than 1,400 MW power is 40% short. This bottleneck has increasingly blocked industrial expansion and therefore the country crucially needs a large expansion in generation capacity as well as an upgrading of transmission and distribution networks. If this shortage will last for some time, the 2009/10 export targets for knitwear of US$7.2 billion and woven products of US$6.5 billion seem to be questionable. Furthermore, local spinners were confronted with losses and cumulating stocks in the beginning of 2009 due to an influx of yarn from India which was 20% cheaper. They are now demanding to block yarn import through the Benapole land port. Finally, a shortage of production workers in the industry has prevented to meet the rising demand. The industry largely depends on foreign workers from Cambodia, Nepal and Vietnam. In the beginning of 2009, more than 10 out of 350 mills have closed down and several other spinning mills have reduced their capacity by almost 50%. This sector’s annual production capacity amounted to 1.6 million tonnes of yarn while the total yarn consumption in Bangladesh was 820,000 tonnes in 2008/09. However, the country has made remarkable progress in the backward linkage industry as 90% of the knit yarn demand is being locally met. The local capacity for producing accessories for garments is also self-sufficient by now. Just the demand of woven yarn still is relying on imports by the majority. Apparel exports have significantly changed as knitwear exports exceeded woven apparel exports in 2007/08 for the first time. In 2008/09, Bangladesh’s knit apparel industry continued expanding more rapidly. This segment is vertically integrated to a greater extent resulting in shorter lead times and savings in foreign currency by limiting imports of textile inputs. Turkey with about US$7 billion is holding the second position after PR China that exported knitwear worth US$27 billion in recent years. Bangladesh has taken the third position since last year, overtaking India with US$5.5 knitwear exports. Knitwear which became the country’s top export item for the last two years enabled the country to earn US$6.4 billion out of total exports of US$15.6 billion in 2008/09 fiscal. In contrast, most of the yarns and fabrics for woven garments have to be imported. Total apparel exports went up by 15.4% to US$12.3 billion in 2008/09, accounting for almost 80% of the nation’s total exports. Main apparel items were T-shirt and trousers, amounting for half the total shipments. Exports in the second half of 2009 significantly lost momentum. However, Bangladesh’s export performance in 2009 to the United States was quite robust, just declining by 0.5% to US$3.5 billion. An anticipated surge of orders for low-priced products from the United States and Europe may lead to a strong rebound of exports in 2010.

The Fiber Year 2009 / 10

053


Bangladesh: Apparel Exports 14

3.0

12

2.5 2.0

8

1.5

6 1.0

4

0.5

2 0

million

US$ billion

10

1992/93

1995/96

Woven

Knit

2000/01

2005/06

2008/09

0.0

Employment

The outlook for Bangladeshi apparel exports is quite promising as Japan, willing to broaden its supplier base at the expense of PR China, has already sourced more garment from Bangladesh. During the fiscal year 2008/09, Bangladeshi garment exports rocketed upwards 165% to US$74 million compared to the same period a year ago. This market is believed to offer a huge potential as apparel exports are considered to achieve a level worth about US$1.0 billion in the next two years. In addition to that, clothing shipments will enjoy a duty-free market access to PR China from July 2010 onwards. Apart from long-awaited stimulus packages for the apparel industry, foreign buyers rate Bangladesh as a lucrative destination for global apparel outsourcing as the country manufactures quality items at cheap costs. Most global retailers like U.S. giant Wal-Mart, JC Penny, Zara, Tesco, IKEA, Marks & Spencer, H&M, Uniqlo and Li & Fung have opened offices in Dhaka in recent times. Further major brands like Puma, G-Star Raw and Espirit are expected to move to Dhaka soon. This trend became apparent at the Knitexpo in Dhaka at the beginning of November as a record 156 international buyers and investors attended the show. This exhibition turned out to be a great success in terms of new investments. After the show until mid-April, at least 15 local and foreign companies announced investments of almost US60 million in garment mills, creating about 30,000 new jobs. Amongst others, Germany’s Otto Group has signed a deal with Grameen Trust to start a joint venture in textiles in Bangladesh to produce readymade garments for the international market under “socially and ecologically sustainable conditions.”

Cambodia Population (mid-year) Textile & Clothing Exports

2008 14,241,640 US$2.8 billion

2009 14,494,293 US$2.4 billion

± in % +1.8% -16.1%

Cambodia’s economic growth turned negative in 2009, accounting for -2.7% and representing a sharp drop from double-digit growth rates during 2004 to 2007. The global economic slump started its severe impact on Cambodia during the last quarter of 2008, especially on the garment industry, tourism and construction. The garment sector is responsible for 90% of the country’s exports and last year’s shipments fell more strongly than the reduction in demand in the United States and Europe. Total textile and apparel imports into the United States declined by 13.1% to US$81.0 billion, while Cambodian products suffered from a decline of 20.9% at US$1.9 billion. This shows the vulnerability of Cambodia’s manufacturing base and the need to diversify the economy.

054

The Fiber Year 2009/ 10


The sharp 16.1% reduction in apparel exports at US$2.4 billion is mirrored by the number of factory closures. Ninety-three garment factories closed and sixty temporarily suspended work in 2009, affecting nearly 75,000 workers - close to a quarter of the national apparel workforce. However, 55 new factories were also opened, creating 15,173 new positions. To combat the crisis in the garment industry, several initiatives are underway. The Garment Manufacturers Association in Cambodia will invest US$2 million in a training center to develop skilled labor. The Asian Development Bank approved a US$24.5 million grant for the Ministry of Labor’s project at total costs of US$27.5 million to improve the labor skill. Finally, governmental support arises from a two-year tax holiday on profits for garment manufacturers. In addition, the monthly 1% turnover tax for all garment factory expenditures has been suspended for two years to improve cash flows. Nevertheless, a major obstacle for backward integration of the garment industry to broaden the national manufacturing base is Cambodia’s power supply facilities. The power prices are the highest in the region. Therefore the government has established a Power Sector Strategy for the period 1999 to 2016. According to Cambodia’s Deputy Minister for Industry, Mines and Energy Ith Praing, the country “would have sufficient electricity by 2011 or 2012.” After Cambodia has overcome its shortage in power supply, traffic lights may turn green for upstream textile investments to increase local value added and reduce the dependence of fabric imports. Thanks to several investments in hydropower plants from Chinese companies, the strategy appears to come together. Cambodian Prime Minister Hun Sen appreciated China’s efforts for building hydropower plants by adding in a speech “China is building batteries for Cambodia”.

PR China GDP Cotton Production Cotton Area Harvested Raw Cotton Imports Cotton Consumption Manmade Fiber Output Spun Yarn Output Short-Staple Spindles Open End Rotors Population (mid-year) National Trade Balance Foreign Direct Investment FOREX Reserves Textile & Clothing Exports Textile & Clothing Imports

2008 +9.6% 7.5 million t 5.8 million ha 2.1 million t 9,6 million t 23.6 million t 21.5 million t 104.4 million 2.1 million 1,317,065,677 US$297.0 billion US$92.4 billion US$1,946.0 billion US$185.1 billion US$17.4 billion

2009 +8.7% 6.4 million t 5.0 million ha 1.5 million t 10.3 million t 26.3 million t 23.9 million t 110.0 million 2.2 million 1,323,591,583 US$198.2 billion US$90.0 billion US$2,399.2 billion US$171.3 billion US$16.9 billion

± in % -14.6% -13.9% -27.7% +8.0% +11.2% +11.4% +5.4% +3.8% +0.5% -33.3% -2.6% +23.3% -7.4% -2.6%

China’s gross domestic product increased by 8.7% to reach US$4.9 trillion in 2009 thanks in a large part to massive stimulus measures, including the 4 trillion yuan (US$585 billion) stimulus package, five interest rate cuts since September 2008 and US$1.4 trillion in new lending in 2009, representing an increase of 95.3% from a year earlier. The economic growth was mostly driven by investments, consumption still is not predominant. The proportion of consumption to GDP is less than 40% in PR China. Even though Chinese exports dropped by 15.9% last year, the country overtook Germany to become the world’s largest exporter.

The Fiber Year 2009 / 10

055


China: Textile & Clothing Export's Share 180

30%

150

90 60 10%

US$ billion

120

20%

30 0

0%

1993

1995

Trade Balance without T&C

2000 T&C Surplus

2005

2009

-30

T&C Export in % of Total

China’s total trade value topped US$2.2 trillion in 2009, down 13.9%. Of this total, the value of exports was US$1.2 trillion with US$171 billion textile and clothing products including. This industry saw its first decline of exports since 1998 but growth at a sharp rate in 2010 is already predicted. In the first quarter of 2010, export of textiles and apparel surged by 15.2% to US$39.2 billion. Global economic recovery and the full implementation of the China-ASEAN free trade area effective from January 2010 will be the main drivers of this growth. Thanks to its strong economic growth, South-East Asia is experiencing a jump in apparel retail sales. The textile industry’s production value exceeded US$500 billion with profits worth more than US$20 billion. The upstream spinning industry grew by 11.2% at 26.3 million tonnes in the manmade fiber sector and by 11.4% at 23.9 million tonnes in the spun yarn business. Total volume of yarns amounted to 39.7 million tonnes, up 11.5%. In total, PR China created 11 million new jobs in urban areas in 2009. Amazingly, employment in the apparel industry grew even during the recession. At the end of 2009, the industry employed 4.1million people, com¬pared with 3.8 million a year earlier although level of employment in the spinning and weaving industry slightly fell. As the stimulus package had helped to expand domestic demand, local sales started growing before export demand recovered. The labor issue seems to arise as the most serious concern for the Chinese textile and apparel industry due to increasing wages of at least 10% in 2010 and a looming shortage. When the global downturn hit the country, 30 million migrants lost their jobs and returned home. A poll of migrant workers showed that 62% will work in cities again, a drop of 6 percentage points from 2008. 30% of the migrant workers are still undetermined, up 6 percent from previous years. Finally, 8% of migrant workers who have returned home will not work in cities again. The Chinese cotton production declined by 14.6% to 6.4 million tonnes because of planted area reduction in the range of 13.9% to 5.0 million hectares. Cotton imports dropped by 27.7% to 1.5 million tonnes, the lowest in the last four years, mainly attributed to weak demand for textile products. Despite higher cotton prices, the in dustry will need to rely on imports to a greater extent in 2010.

056

The Fiber Year 2009/ 10


CNTAC is the national Federation of all textile-related industries and is a on-profit organization formed on volunteer basis. The aim of CNTAC is to provide services in the modernization of China’s textile industry.

“Restructuring and upgrade of the textile industry continued in 2009. Achievements will pose a solid foundation for the development of ‘the Twelfth Five-year’ Program.”

Mr. Du Yuzhou President of China National Textile and Apparel Council ( CNTAC ) PR China www.english.ctei.gov.cn

“In 2009, with the support of central and local governments at all levels and the unceasing development and innovation and hard work of staff and workers at large in the textile industry, achievements have been made in both the restructuring and upgrade of the textile industry and the quality and benefits of industrial economy have been evidently improved. The situation has been stabilizing and picking up and is on the mend. The key economic indexes of textile industry has bottomed out and come back up month by month since February and the general trend is better and better. The output value of 54,000 enterprises above designated size has increased from the bottom of 2.63% in February to 10.30% in December; the growth rate of export delivery value has narrowed from -8.43% to -3.23%;the export increased by 7.74% in December; the growth rate of domestic sales has rose from 6.63% to 16.33% in December; the growth rate of gross margin in January and February is -11.01% and the accumulated gross margin has increased by 25.39% by the end of November over the same period last year. The growth rate of textile and clothes export of the whole industry has narrowed from -14.78% as of the end of February to -9.65% as of the end of December, the export is USD 171.332 billion in the whole year. With the support of domestic market, both the production and sales of textile industry have been rising steadily since 2009. Among major categories of products, the output of yarn is 24.05 million tons, up 12.71% over last year; the output of chemical fiber is 27.26 million tons, up 14.31% over last year; and the output of cloth is 56.7 billion meters, up 5.27% over last year. The pickup of the industry has promoted the steady growth of investment in fixed assets. The total investment in fixed assets is RMB 310.2 billion, up 13.86% and 7.11 percent higher over the same period last year; the number of new projects hits 7731, up 27.85% and 35.71 percent higher over the same period last year. Industry restructuring is further accelerated and the industry of industrial textile continues to grow quickly. In 2009, the output of industrial textile fiber hits 7 million tons, up 17% over last year; and the growth rate of non-woven cloth is over 20%, far higher than the growth rate of other industries.

The Fiber Year 2009 / 10

057


In the first quarter 2010, the gross industrial output value of enterprises above designated size in textile industry rose by 26.98% as compared to the same period last year, the export delivery value rose by 14.26%, and domestic rose by 30.33%; the output of yarn is 5.6665 million tons, up 19.62% over the same period last year; the output of cloth is 13.229 billion meter, up 17.64% over the same period last year; and the output of chemical fiber is 6.86 million tons, up 20% over the same period last year; the export of the whole industry is USD40.32billion, up 15.44% over the same period last year. 2010 is not only a key year when the textile industry of China continues to cope with international financial crisis and accelerate transformation of mode of economic development, but also an important year when it achieves the objective of “the Eleventh Five-year” Program to the full and lays a solid foundation for the development in “the Twelfth Five-year”. In general, the industry will continue to be on the mend; however, the situation confronted it is extremely complex. Internationally, the large-scaled financial incentives and expansionary monetary policy of countries has enabled slow recovery growth of world economy and international financial market becomes more and more stable. In the long run, the in-depth development of economic globalization and major change and adjustment in world economic pattern are pregnant with new opportunities for development. However, the foundation for recovery of world economy is still weak, as the rate of unemployment stays high in high income country, the recovery of international market is still subject to more restrictive factors, the risk in financial fields hasn’t been eliminated completely, trade protectionism is evidently gaining ground, the external environment is not stable, there are still many uncertain factors, and a range of unbalance and deep-seated contradictions arising in international financial crisis haven’t been completely solved. Domestically, China is still in a period of important strategic opportunities, the foundation for economic recovery and pickup is further consolidated, the market confidence is enhanced, the progress in building of a well-off society in an all-round way and new industrialization continues to be accelerated, and the expansion of domestic demand and improvement of people’s livelihoods have brought greater development opportunities for the development of textile industry. Driven by domestic demand, the industry will continue to pick up steadily. In the same time however, as the development of domestic economy is still under the influence of imbalance and deep-seated contradiction accumulated due to long-term extensive development as well as the influence of dilemma of controlling inflation expectations while maintaining the consistency of policies and rise of cost, it is very difficult to maintain the growth rate of the first quarter in the second half of the year, practically on a lower development base of the first two quarters of last year. China textile industry will endeavor to promote the healthy and sustainable development of textile industry and maintain the prosperity and stability of global textile and clothes market by unremittingly accelerating restructuring and transformation of development mode, advancing technical innovation and R&D, promoting science and technology and brand value, and meanwhile enhancing energy saving and emission reduction and environment improvement, promoting international cooperation on every side and opening more fields to the outside world and safeguarding free trade. ”

058

The Fiber Year 2009/ 10


India Cotton Production Cotton Area Harvested Cotton Consumption Manmade Fiber Output Spun Yarn Output Short-Staple Spindles Open End Rotors Population (mid-year) Textile & Clothing Exports

2008 4,921,000 t 9.4 million ha 3,865,000 t 2.5 million t 3.9 million t 41.2 million 652.077 1,140,566,211 US$22.4 billion

2009 5,117,000 t 10.3 million ha 4,180,000 t 2.8 million t 4.1 million t 41.7 million 665.645 1,156,897,766 US$21.5 billion

± in % +4.0% +9.1% +8.2% +10.5% +3.0% +1.3% +3.1% +1.4% -4.3%

India’s economic growth is expected to amount to 8.2% in fiscal 2010 after GDP grew by a relatively modest 6.7% in 2008/09. The country’s rebound from the global crisis is gaining momentum while stimulus measures of expansionary fiscal and monetary policies taken by the government will be gradually rolled back. While trade flows have returned to pre-crisis levels in the fourth quarter of 2009, increasing private consumption and investments are likely to underpin growth over the next two years. The positive developments could be offset by signs of increasing inflation, accounting for 15.0% in December 2009 as compared with 9.7% a year ago. The textile industry is strong in the conventional fiber-to-garment sectors with a surplus cotton balance. The textile and apparel industry is largely cotton-based contributing about 14% to the country’s total exports, 14% of industrial production, 4% to GDP and provides direct employment to more than 35 million people and indirect employment to 45 million people. The Indian textile industry includes both an “organized” sector (large-scale spinning units and composite mills) and an “unorganized” sector (small-scale spinning units, power looms, handlooms, hosiery units). More than 95% of yarn is produced in the organized sector. The weaving industry is mainly supplied by the unorganized sector, with power looms accounting for 60%, handlooms for 18% and hosiery units for 17% of total cloth production. The organized sector weaving mills account for the remaining 5% of cloth production. India: Yarn & Fiber Production 4.5 4.0

Mill. tonnes

3.5 3.0 2.5 2.0 1.5 1.0 0.5 0.0

1994/95 Manmade Staple Fiber

2000/01 Manmade Filament

2004/05

2009/10

Spun Yarn

The Fiber Year 2009 / 10

059


The total output of spun yarns and manmade fibers amounted to 6.9 million tonnes, consolidating its second position in world textile industry. While spun yarn output modestly grew by 3.0% to 4.1 million tonnes, manmade fibers increased by 10.5% to 2.8 million tonnes, in particular due to an increase in the polyester and viscose sector. This industry plays a vital role in the local economy, constituting 4% of GDP, employing about 90 million people in textile and allied sectors, and exports account for about 14% of the country’s total foreign revenues. According to the Ministry of Textiles, the number of installed spindles increased by 0.8% to 37.0 million spindles, with 4.3 million (+0.6%) spindles in the small-scale industry not included. Installations of open-end rotors were lifted by 1.7% to 491,000 at the end of last year, again small-scale installations of about 180,000 (+3.9%) rotors not included. The total number of spinning mills went up by 0.9% to 3,102. India: Cotton Yields

Yield kg / hectare

800

600

400

200

0

1985/86 1990/91 1995/96 2000/01 2005/06 2006/07 2007/08 2008/09 2009/10 2010/11 Target

Yield prospects were adversely impacted by a three to four weeks delay in cotton planting and less-than-favourable weather conditions compared with last season. Therefore, cotton yields in the new 2010/11 season are expected to increase by 6% to 528 kg per hectare. However, cotton yields still are on quite a high level compared with results prior to cultivation of Bt seeds. Since the introduction of Bt cotton in 2002, area under Bt cotton has reached nearly 90% of the total cotton area in 2009/10, amounting to 10.3 million hectares. Nevertheless, the official target to achieve yields of 800 kg per hectare by 2010 seems to be a little too challenging in the short run.

060

The Fiber Year 2009/ 10


Indonesia Cotton Production Cotton Consumption Manmade Fiber Output Population (mid-year) Textile & Clothing Exports

2008 7,000 t 435,000 t 1.1 million t 237,512,355 US$10.4 billion

2009 7,000 t 446,000 t 1.1 million t 240,271,522 US$9.3 billion

± in % ±0.0% +2.5% +1.1% +1.2% -10.1%

The economy in Indonesia, Southeast Asia’s largest economy, expanded by 4.5% last year, slowing from 6.1% growth in 2008. Lower growth was partly attributed to a 15% drop in exports and investments following the financial crisis. However, the economic growth was mainly supported by high consumer spending,which contributed 58.6% of the country’s GDP of US$600 billion and less reliance on exports. The 2010 budget deficit may increase to US$14.2 billion after adding US$4.7 billion additional subsidies, of which electricity and fuel subsidies will be raised by US$4 billion in the revised budget. Indonesia: Exports of textiles and clothing 25

rg Ta

US$ billion

et

20 15 10 5 0

1990

1995

2000

2005

2010

2015

The nation’s textile industry was suffering from the economic slowdown in the United States and Europe as textile and clothing exports fell by 10% to US$9.3 billion. High electricity prices made ready-made garments more costly what has favoured the arrival of a flood of cheap Chinese goods. As a consequence, the share of local textile products in the national market further went down to about 50% by end-2009 from 65% in 2008. Additionally, the majority of manufacturers has turned into trading houses as they believed selling imported garments would be more profitable then producing domestically. So, as many as 155 textile producers went bankrupt in the last year. This move was based on the expectation that the ASEAN free-trade agreement with PR China, coming into effect from January 2010, would even quicken low-cost imports from PR China. Indonesia is among the six members of the Association of South East Asian Nations (ASEAN) that agreed to remove the duty under a free trade pact from 2010. The other members that will implement zero-duty include Brunei, Malaysia, the Philippines, Singapore and Thailand. Vietnam, Cambodia, Laos and Myanmar will have five more years until 2015 before dismantling their barriers. Under existing law from January 2009, controls were imposed on imports into Indonesia for a number of products, amongst others for garment, to protect the domestic market from smuggled goods. According to the regulations, imports of goods in these categories may only enter Indonesia through five designated ports as well as international airports. However, the Trade Ministry revoked 1,104 import licenses last year because their holders had stopped importing goods. The Fiber Year 2009 / 10

061


Nevertheless, there were also some encouraging company news. Synthetic fiber manufacturers like PT Teijin Indonesia Fiber Corp., PT Indonesia Toray Synthetic and PT Sulindafin - have invested around US$7 million in new machinery to cut costs. South Pacific Viscose, member of Lenzing Group, is in the progress of expanding capacity at costs of US$150 million. The new line to produce viscose staple fibres for textile and nonwovens end-uses will come on-stream mid-2010. South Korea-based textile and garment manufacturer Sae-A Trading Co. Ltd. will build a US$200 million textile plant in West Java. Given the necessity to further upgrade the mostly outdated textile machines, it appears surprisingly that the Industry Ministry has reduced the budget for its machinery revitalization program by 40%. This year, the government is allocating a total of US$22.3 million for industrial revitalization, including US$15.9 million for textile firms. Under the remaining Scheme One, the government provides 10% discounts for manufacturers who want to purchase new machines, while Scheme Two providing soft loans was scrapped.

Japan Cotton Consumption Population (mid-year) Manmade Fiber Output Textile & Clothing Exports Textile & Clothing Imports

2008 98,000 t 127,288,419 1,070,904 tonnes US$7.8 billion US$32.5 billion

2009 70,000 t 127,078,679 834,894 tonnes US$6.4 billion US$31.9 billion

± in % -28.6% -0.2% -22.0% -17.6% -1.8%

Japan, the world’s number two economy, contracted 5.2% in 2009. The country has held this position for more than 40 years but risks ending 2010 in third place after the United States and PR China as it struggles to cope with renewed deflation, a strong yen, sluggish domestic consumption and a shrinking population. Along with the improving labor market, reaching a record high of 5.7% in July last year and declining to 5.2% in December, Japan’s consumer spending continued to steadily grow since mid-2009. This figure represents a key indicator of private consumption which alone accounts for about 60% of Japan’s economy. Despite shrinking tax revenues, measures aimed at stimulating domestic demand are needed and the government agreed on a US$81 billion stimulus package end of December. The below chart shows that all textile-related sectors have been on the decline until last year, when the downward trend has slowed considerably. In December 2009, Japan witnessed the first monthly increase in manmade fiber production in two years. Nevertheless, last year’s output dropped by 22.0% at 835,000 tonnes. Spun yarn output continued dropping to below 60,000 tonnes. Japan: Quarterly Industrial Production 140 120 2005 = 100

100 80 60 40 20 0

2003

2004

Textile machinery

062

The Fiber Year 2009/ 10

2005 Spun yarn

2006

2007 Manmade fibers

2008

2009


A new jump in the yen’s value against the American dollar made imports less expensive in local currency terms, offering opportunities for price reductions on the retail market. Total textile and apparel imports slightly decreased by 1.8% at US$31.9 billion. As corresponding exports dropped by 17.6% to US$6.4 billion, trade deficit continued increasing to hit a new record at US$25.5 billion. The preponderance of China-made clothing remained with an annual market share of more than 80%, an achievement Chinese industry has been enjoying already since 2003. However, the Japanese government had expressed its intention to broaden its purchasing base by moving clothing import flows from PR China to other Asian countries. The target to reduce Chinese imports to 50% from currently 82% opens up a roughly US$10 to 15 billion opportunity that garment facilities in Bangladesh, Cambodia, Indonesia, Thailand and Vietnam might tap. As a consequence, imports from Vietnam already surged by 19.8% in 2009. A strong increase in deliveries also took place from Bangladesh and Cambodia, although from much lower levels. India, Indonesia, Malaysia and Thailand also experienced a steady growth in exports to Japan in the last two years, as a clear sign that China may progressively lose its edge on this market. Japan: Textile & Clothing Trade 35 30

US$ billion

25 20 15 10 5 0 1987 Imports

1990

1995

2000

2005

2009

Exports

The Fiber Year 2009 / 10

063


Korea, South Cotton Yarn Production Spindles & Rotors Manmade Fiber Output Population (mid-year) Foreign Direct Investment Textile & Clothing Exports Textile & Clothing Imports

2008 217,304 t 1,135,204 1.4 million t 48,379,392 US$11.7 billion US$13.3 billion US$8.8 billion

2009 222,963 t 1,144,724 1.4 million t 48,508,972 US$11.5 billion US$11.6 billion US$7.4 billion

± in % +2.6% +0.8% +1.7% +0.3% -1.9% -12.6% -15.8%

South Korea’s economy modestly grew by 0.2%, the slowest growth since the Asian financial crisis in 1998, when GDP contracted by 5.7%. The economy has witnessed a record-high trade surplus of US$40.4 billion in 2009, thanks partly to US$35 billion (-40.9%) lower imports in value terms following the reduction in international crude oil prices. Despite declining exports by 13.9% at US$363.5 billion and consumer spending amid increasing unemployment, the economy recovered faster than expected, benefiting from an aggressive government stimulus package and a series of interest rate cuts. Although the government considers job creation its top priority, a survey by the Korea Chamber of Commerce and Industry showed that the top 500 companies plan to curb the size of employment. The domestic cotton yarn market remained relatively strong in 2009. While cotton yarn imports increased by 9.1% to 189,000 tonnes, the national output of cotton yarn was up by 2.6% to 223,000 tonnes. More importantly, the number of spindles and rotors was lifted by 0.8% to 1.14 million, stopping the long-term contraction in the upstream spinning industry. The subsequent processing seems to have shifted towards light-weight fabrics as a 8.9% reduced number of looms (285 units) has significantly increased output by 49.2% to 27.8 million sq. m. Total textile and apparel exports fell by 12.6% at US$11.6 billion, accounting for a 3.2% of national exports. An above-average decline occurred in shipments to the United States. Last year’s deliveries went down by 28.0% at US$806 million. The United States-Korea Free Trade Agreement, signed already on June 30, 2007, might produce relief as almost 95% of bilateral trade in consumer and industrial products would become duty free within three years of the date the FTA enters into force. However, as of today, it has not been approved by the U.S. Congress and the National Assembly of South Korea. Korea: Cotton Yarn Status and Installed Spindles & Rotors 600

4.0

'000 tonnes

3.0 400

2.5

300

2.0 1.5

200

1.0 100

0.5

0

0.0 1990 1995 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 Cotton Yarn Imports

064

The Fiber Year 2009/ 10

Cotton Yarn Production

Spindles & Rotors

million spindles

3.5

500


Malaysia Cotton Consumption Foreign Direct Investment Population (mid-year) Textile & Clothing Exports

2008 46,000 t US$12.9 billion 25,274,133 US$3.1 billion

2009 49,000 t US$6.5 billion 25,715,819 US$2.5 billion

± in % +6.5% -49.9% +1.7% -19.9%

Malaysia, Southeast Asia’s third largest economy, shrank 3.0% in 2009 compared to a growth of 4.7% in 2008. The country s approved factory investment declined in 2009 as companies delayed projects amid a global economic slump. Approved investments dropped by about half to US$9.6 billion last year. Foreign investments halved to about US$6.5 billion, of which three quarters was for new investments and the rest for expansion and diversification. As nearly 70% of investments approved by the Malaysian Industrial Development Authority were foreign investments, current year s target is to raise domestic investments. To achieve the target, the ministry will launch frequent domestic investment promotions and offer attractive packages for local investors besides creating a conducive business environment. Malaysia: Foreign Direct Investment

US$ billion

15

10

5

0

1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009

The Malaysian textile industry is focused on producing medium- to high-end apparel. The industry consists of primary textiles, including polymerisation, spinning, weaving, knitting and wet processing, made-up textiles, made-up garments and textiles and clothing accessories. More than 600 companies are involved in the four segments. In addition, about 1,000 small textiles and apparel companies, which are exempted from having to obtain manufacturing licences, are in operation. They are mostly involved in manufacturing of made-up garments. Textile and clothing exports of US$2.5 billion accounted for 1.6% of Malaysia’s total exports of around US$155 billion in 2009. The export-driven industry suffered from a 29% decline of shipments to the United States at US$473 million. Without the advantages of low labor costs and a large domestic market enjoyed by some of its Asian competitors, the industry s future appears to lie in specialized, high value added garments and home textiles, including the development of own brands. A competitive disadvantage for the Malaysian textile industry is also its minor contribution to the country’s exports. Therefore, the domestic textile and apparel industry will most likely only fractionally benefit from the second economic stimulus package, worth US$17.3 billion. To reduce the cost of doing business, the government has exempted levy payments to the Human Resources Development Fund for six months for workers in the textile industry with effect from February. The levy rate was also reduced by half a percentage point to 0.5% for a two-year period from April 2009.

The Fiber Year 2009 / 10

065


Pakistan Cotton Production Cotton Area Harvested Cotton Consumption Population (mid-year) Balance of Trade Textile & Clothing Exports

2008 2,050,200 t 2.9 million ha 2,449,000 t 171,852,793 - US$21.9 billion US$10.6 billion

2009 2,057,000 t 3.0 million ha 2,558,000 t 174,578,558 - US$14.2 billion US$9.6 billion

± in % +0.3% +5.3% +4.5% +1.6% +35.2% -9.6%

Pakistan’s GDP growth rate in 2009 was about 2.0%. Inflation, jumping to 23.3% in December 2008 from 8.8% a year ago, was 10.5% in December 2009. The prospects of returning to macroeconomic stability improved in the second half of 2009 with most key indicators continuing the positive trends that began in the second quarter of last year. Although textile and apparel exports dropped by 9.6% to US$9.6 billion in 2009, this sector’s significance in earning foreign exchange has further increased, now accounting for almost 55% of total national exports. Furthermore, the US$9.0 billion trade surplus in textiles and clothing is essential for the national economy. Cotton is vitally important to the economy as the sector is providing livelihood to more than 10 million farming families. The country is the fourth largest producer of cotton and the third largest user of cotton. In the actual season, cotton was the only major crop to see an increase in the cultivated area. As a consequence of favourable price signals, the area under cultivation increased by 6.0% to 3.0 million hectares, however, still 200,000 hectares below target. Meanwhile, production is projected to remain unchanged at nearly 2.1 million tonnes, leading to a reduction in yields from 720 kg per hectare in 2008/09 to 680 kg. The textile industry, accounting for 40% of the industrial employment, has struggled to revive growth amid a global slowdown in demand, power shortages, increasing rising interest rates and militant turmoils. At least 100 textile spinning mills closed in the past two years and a million people lost their jobs, according to the All-Pakistan Textile Mills Association. In an attempt to tackle existing problems and to safeguard employment in the long run, the government of Pakistan has announced its first-ever five-year National Textile Policy in August 2009, setting the textile and apparel export target at US$25 billion by the fiscal year 2014. Important measures to boost exports comprise low-interest rate loans, duty drawbacks, R&D subsidies and the creation of a textile investment support fund (TISF), technology upgradation fund (TUF), infrastructure and skills development, zero tax on exports and tax-free import of machinery. In addition to that, energy supply and costs are also intended to improve. The government plans to add a total of 5,000 megawatts to the national grid by 2013 as the country has faced power shortages of as much as 4,500 megawatts a day, or 30% of capacity. An initiative already for the current fiscal year is to provide US$90 million interest rate subsidy to the textile industry. Under the scheme banks will provide subsidized loans at 5% interest rate to export oriented textile units.

Sri Lanka Population (mid-year) Textile & Clothing Exports

2008 21,128,773 US$3.5 billion

2009 21,324,791 US$3.3 billion

± in % +0.9% -5.6%

Sri Lanka’s economic growth slumped to an eight-year low of 3.5% in 2009, down from 6.0% in 2008, as the almost three-decade civil war and the global recession took their toll. However, 066

The Fiber Year 2009/ 10


the country made an extraordinary recovery in the second half of the year. As the war ended last May, Sri Lanka entered 2010 with an unprecedented opportunity for higher growth, although the rebuilding of the US$41 billion economy will be most challenging. In an attempt to support reconstruction and to encourage investments, the central bank will keep interest rates low. Enhanced investor confidence in the economy due to a stable security situation has already been witnessed with foreign exchange reserves soaring from a low level of US$1.1 billion in March 2009 to a historic high of US$5.1 billion by the end of 2009. Sri Lanka: Monthly Textile and Clothing Exports 400

US$ million

300

200

100

0

+9.1% 'Jan 05

+8.9%

+6.0% 'Jan 06

'Jan 07

-5.6%

+3.8% 'Jan 08

'Jan 09

The clothing industry accounts for about 10% of Sri Lanka’s GDP and employs around 200,000 workers. In 2009, garment exports dropped for the very first time, down by 5.6% to US$3.3 billion. The comparatively moderate decline is due to strong demand from the European Union while deliveries to the United States dropped by 17.7% to US$1.2 billion. However, European Union withdrew the ‘GSP Plus’ preferential trade benefits from Sri Lanka because of the country’s poor human-rights record. The decision from February 2010 means that from mid-August the country will lose its benefits of zero duty access to the EU since 2005. Losing this sales region where the majority of apparel exports were shipped to will have an impact on the in¬dustry as costs will go up by about 10%. The expansion of a small sector of industry, however, may give new dynamics after Continental AG has set up a joint venture to produce industrial tires for the North American and Asian markets.

Taiwan District Cotton Consumption Population (mid-year) Balance of Trade Manmade Fiber Output Textile & Clothing Exports

2008 180,000 t 22,920,946 US$15.2 billion 2.1 million t US$10.9 billion

2009 180,000 t 22,974,347 US$29.0 billion 2.1 million t US$9.3 billion

± in % ±0.0% +0.2% +91.3% +0.3% -14.3%

Taiwan’s economy shrank by 2.5% last year, compared with stagnation in 2008 by 0.1%. Private consumer expenditures in 2009 increased by 1.5% to about US$235 billion driven partly by government stimulus measures. Consumer confidence has returned to pre-crisis levels, achieving the best level in 57 months in March 2010. In line with economic recovery, Taiwan’s unemployment rate fell to 5.7% in December 2009, the lowest in 11 months, while the average jobless rate for last year reached a record high of 5.9%. Additionally, retail sector revenues for last year were up 1.6%, a turnaround from the drop experienced in 2008.

The Fiber Year 2009 / 10

067


The contraction of the national textile and apparel industry continued undamped, showing a decline along the textile value chain. The textile industry ended with an unchanged volume of 2.1 million tonnes manmade fibers and 204,000 tonnes cotton yarns produced. Textile production further followed the declining apparel production. Consequentially, textile and clothing exports declined by 14.3% to US$9.3 billion, accounting for 4.8% of Taiwan’s total exports. Taiwan: Industrial Production Index 250

2006 = 100

200

150

100

50 2000

2001

Textile

2002

2003

2004

2005

2006

2007

2008

2009

Apparel

Taiwan’s total textile and apparel production value was NT$365.7 billion (US$11.1 billion) in 2009, down 15.7% from the 2008 level. While the value reached NT$167.8 billion in the first half of 2009, second half’s value was able to increase by 17.9% to NT$197.9. According to the Industry and Technology Intelligence Services, the textile industry is expected to rebound in 2010. The industry’s output will gain momentum and is expected to increase its production value by 17.6% to NT$430 billion. This forecast bases on the assumption that global economies will be picking up again. Moreover, the integration of various sections of the industry and higher production and R&D levels will also contribute to the better performance of the sector. Finally, the industry should concentrate on higher value-added products such as fabrics made with the use of nanotechnology and create new business niches by developing advanced fabrics and textiles. Taiwan: Value of Textile and Apparel Production 700 600

NT$ billion

500 400 300 200 100 0

1997

2002

2008

2009

2010

2015

This direction would be in line with the governmental textile strategy for 2015. The goal is to adjust the ratio of apparel, household and industrial textiles from 68:12:20 in 2008 to 50:17:33 in the year 2015 and to lift the value of production to NT$580 billion. Further assistance from the Ministry of Economic Affairs was recently announced by launching a 10-year NT$95 billion (US$3.0 billion) program helping textile industry to revive and transform their businesses. 068

The Fiber Year 2009/ 10


Thailand Cotton Production Cotton Consumption Synthetic Fiber Output Population (mid-year) Textile & Clothing Exports

2008 1,000 t 348,000 t 592,692 t 65,578,534 US$7.2 billion

2009 2,000 t 386,000 t 601,639 t 65,998,436 US$6.4 billion

± in % +100.0% +10.9% +1.5% +0.6% -10.5%

Thailand’s economy, heavily export-dependent with exports accounting for about 60% of GDP, has weathered the global slowdown better than expected and GDP may expand by 3.3% to 5.3% in 2010. In 2009, the economy contracted 2.7% even after growing 4.0% last quarter. Prime Minister Abhisit Vejjajiva has revitalized the economy with an US$3.5 billion stimulus package and the Bank of Thailand has kept its benchmark interest rate at a five-year low of 1.25%. Promising might be that Thailand’s consumer confidence increased to the highest level in 21 months in January 2010 following an announcement of the Bank of Thailand in October 2009 that Southeast Asia’s second largest economy is “out of recession,” citing improving employment and quarter-on-quarter GDP expansion. Thailand: Production Index in Textile Chain 4

1990 = 1

3

2

1

0

1990

1995

2000

2001

2002

Synthetic fiber

Spinning

Knitting

Garment

2003

2004

2005

2006

2007

2008

2009

Weaving

While the synthetic fiber production surged in the 1990s from 240,000 tonnes (1990) to 756,000 tonnes in 1999 to reach a peak at 894,000 tonnes in 2004, the capacities in weaving, knitting and garmenting were lifted steadily. The output of garments increased from 1.8 billion pieces in 1990 to hit a record of 4.9 billion pieces in 2006 and afterwards declined to last year’s output of 4.3 billion pieces. A similar development has also been witnessed in weaving and knitting. In 2009, weaving activity declined by 5.6% to 6.4 billion square yards and knitting even went down by 7.7% to 2.1 billion square yards. In contrast, the synthetic fiber industry enjoyed a 1.5% growth in output – the first growth in five years. The perennial contraction process of the textile industries continued with particular focus on the spinning and garment sector. Last year’s reduction in exports has further fueled corresponding adjustments as more than a third of the added value has been addressing foreign markets. Deliveries to the United States, EU and Japan, absorbing more than half of total Thai textile exports, dropped significantly. In addition to that, the spinning industry has been restructuring its manufacturing program by producing more coarse-count yarn due to the sharp contraction in the higher end of the market.

The Fiber Year 2009 / 10

069


Vietnam Cotton Consumption Foreign Direct Investment Population (mid-year) Textile & Clothing Exports

2008 272,000 t US$11.5 billion 87,558,363 US$9.1 billion

2009 316,000 t US$10.2 billion 88,576,758 US$9.1 billion

± in % +16.2% -13.0% +1.2% -0.6%

Vietnam’s economy expanded by 5.3% in 2009, the slowest pace in a decade. For 2010, the government aims to quicken growth to 6.5%. The deceleration in economic activity was result of the slump in demand for exports and a drop in foreign direct investments. Total exports in 2009 dropped by 9.7% to US$56.6 billion, of which the majority came from the FDI sector. Although the textile and apparel industry failed to meet its goal of exporting US$10.5 billion in goods for 2009 as its exports were worth US$9.1 billion, the industry battled the crisis quite successfully. This industry’s share in total exports rose to 15.9%. While shipments to the United States declined by 1.7% to US$5.3 billion, exports to Japan increased by 15.1% to US$1.04 billion. This increase is the result of the Vietnam-Japan Economic Partnership Agreement which the Japanese House of Councilors approved in June 2009. About 92% of Vietnamese exports to Japan will be exempted from tariffs within 10 years. Vietnam: Textile & Clothing Exports 1995 - 2010 12

US$ billion

10 8 6 4 2 0

'95

'00

'05

'10 Target

The trade balance in textiles and apparel together with the industry’s impact on the labor market show the national significance of this sector. The industry comprises about 3,700 enterprises with 145 spinning units running 3.8 million spindles. More than two million employees account for about 5% of the country’s labor force. A trade surplus in the range of about US$3.5 billion helps to slightly reduce the national trade deficit to about US$12 billion. However, it does not immediately disclose the sector’s vulnerability as it is significantly reliant on imports of raw materials. The Prime Minister Nguyen Tan Dung has approved a program to lift the cotton acreage to 30,000 hectares in 2015 and 76,000 hectares in 2020. Current season’s harvested area amounts to 6,000 hectares and it seems to be likely that the downward trend of the last four years will continue as the cultivation of food crops is more profitable due to rising food prices. Nevertheless, Vinatex – Vietnam National Textile and Garment Group – continues building large industrial textile parks to attract domestic and foreign investors. Chinese Texhong Textile Group is one example to lure foreign investors as the group plans to double its capacity to more than 400,000 installed spindles by investing US$100 million in a new yarn plant in Vietnam’s northern province to produce cotton core-spun yarns.

070

The Fiber Year 2009/ 10


Greater Europe Cotton Production Cotton Consumption

Turkey Cotton Production Cotton Consumption Population (mid-year) Textile & Clothing Exports

2008 2.2 million t 1.9 million t

2009 1.9 million t 1.9 million t

± in % -13.7% +0.6%

2008 420,000 t 1,089,000 t 75,793,836 US$23.0 billion

2009 370,000 t 1,154,000 t 76,805,524 US$18.7 billion

± in % -11.9% +6.0% +1.3% -18.7%

Turkey’s economy is recovering from a contraction of about 6% in 2009 and improving the country’s chronic unemployment problem. While total exports plunged by 22.6% to US$102.2 billion, the textile and apparel industry was also severely hit by the global economic crisis. The industry’s total exports were worth US$18.7 billion, down 18.7%. As the textile industrial production index hit a low in February 2009, steadily increasing manufacturing activity and higher orders are the basis for an optimistic outlook for 2010. In the first quarter of 2010, Turkey’s exports for textile goods and raw materials rose by 25.5% and ready made garments were up by 13.6%. Total exports in 2010 are forecast at more than US$20 billion. This development may underline the comparative advantage over PR China and India as Turkey is capable of producing small high-quality lots and fast shipping. Turkey: Industrial Production Index – Textile Manufacturing 120

2005 = 100

110 100 90 80 70 60

2005

2006

2007

2008

2009

Exports to the United States dropped by 30.9% to US$643 million from a record high of US$1.8 billion in 2004. To stimulate deliveries to the United States, the Turkish Clothing Manufacturers Association aims to utilize Qualified Industrial Zones (QIZ) which provide duty-free and non-quota exports to the U.S. The industry was also suffering from 3.9% declining exports to neighboring countries including Azerbaijan, Bulgaria, Georgia, Iran, Iraq and Syria during the year 2009. However, encouraging were surging exports to Russia where the industry will more strongly concentrate on. As Turkey already plays an important role in the textile sector in Africa, the aim is also to develop bilateral trade between Africa and Turkey. After several investments in Egypt and Ethiopia with the latest relocation of Saygin Dima Textile S.C., Tanzania is now trying to attract Turkish investments. The African country aims to double the cotton production capacity by the year 2015 and holds foreign investors exempt from corporate tax until they begin posting profits while also allowing foreign companies to transfer their profits out of the country. On top of targets for future growth, the first aim is to protect the local industry from unfair competition. In that sense, the Turkish Undersecretariat of Foreign Trade imposed antiThe Fiber Year 2009 / 10

071


dumping duties on textured polyester yarn from Indonesia, PR China, Malaysia and Thailand; imposed preliminary anti-dumping duties on certain made-up textile articles (mainly curtains, curtain cloth and upholstery) and fabrics made of artificial or synthetic fibers originating from PR China; imposed anti-dumping duties on yarn of manmade staple fibers originating from PR China, India and Indonesia. It further confirmed anti-dumping duties on polyester stable fibers originating from India, Thailand and Taiwan. Finally, it initiated an interim review of antidumping duties on polyester stable fibers originating from PR China last year. Turkey: Raw Cotton Balance 1'800

'000 tonnes

1'500 1'200 900 600 300 0

'90

Production

'95

'00

Imports

'05

'09

Consumption

The country’s self-sufficiency rate in raw cotton continued falling as output further declined by 11.9% to 370,000 tonnes. Despite a three-year extension of Law No. 5084 that was issued in 2004 to encourage investments in areas with per-capita income lower than US$1,500, textile manufacturers remain committed to foreign investments. A preferred target area continues to be Central Asia. Just recently, a new US$70 million cotton mill in Turkmenistan with an annual capacity of processing 10,890 tonnes of cotton fiber and producing 9,500 tonnes of high quality yarn for weaving and knitting end-uses was opened with Turkish investments.

Uzbekistan Cotton Production Cotton Area Harvested Cotton Exports Cotton Yarn Output Population (mid-year)

2008 1,002,000 t 1.4 million ha 653,000 t 136,100 t 27,345,026

2009 893,000 t 1.3 million ha 849,000 t 145,500 t 27,606,007

± in % -10.9% -8.5% +30.0% +6.9% +1.0%

Uzbekistan, producing a 8.1% growth of GDP last year, is the world’s sixth largest producer of cotton with an output volume of 0.9 million tonnes in the actual season, down 10.9%. While industrial production grew by 9.0%, retail trade turnover surged by 16.6%. The anti-crisis measures taken in 2009 have resulted in creating more than 940,000 new jobs, including over 500,000 in rural areas. Last year, 22 major manufacturing units were completed and more than 480 new enterprises were set-up, especially in small businesses in such industries as construction materials, food and textile industry. Investments in the economy touched US$ 8.2 billion which is 24.8% more than in 2008.

072

The Fiber Year 2009/ 10


Uzbekistan: Cotton Production and Export 1600 1400

'000 tonnes

1200 1000 800 600 400 200 0

1990

1995

Production

Export

2000

2005

2009

Uzbekistan is the world’s third largest exporter of cotton. Current season’s expectation even contains soaring exports to about 850,000 tonnes, which would be 30% higher than in the previous season. As up to one third of the country’s workforce is engaged in cotton farming, it is good news and contradictory at the same time. Anti-Slavery International and the Environmental Justice Foundation have obtained images of children picking cotton taken secretly during 2009 cotton harvest although the Uzbekistan government had assured that forced child labor was outlawed in 2008. This practice that up to 200,000 children as young as seven are being sent out to work in the cotton fields was the reason that major retailers like e.g. Wal-Mart, Tesco, Gap, Nike, Levi’s, Target, Limited Brands and Marks & Spencer agreed to eliminate Uzbek cotton in their supply chains. Apparently, not all international retailers adamantly refuse child labor products as investigations from the both above mentioned organizations have found links between Uzbek cotton and textile products from H&M and Zara via its Bangladeshi suppliers. Africa Cotton Production Cotton Consumption Cotton Exports

2008 1.2 million t 0.6 million t 0.8 million t

2009 1.1 million t 0.6 million t 0.8 million t

± in % -4.6% -3.3% +6.4%

The industry is very much fragmented with the top five cotton producing countries – Burkina Faso, Zimbabwe, Egypt, Nigeria and Tanzania - accounting for half the continent’s total output. Some 75% of the regional output is being exported, enabling other industries to improve valueadded production, although this would be of vital importance for those low-income cotton producing nations. Contrary to the trend in Africa was the decision of the Malawi government that has banned the exportation of raw cotton. At the same time, a new cotton investment project was launched with Chinese funds. Reportedly, employees will receive a daily salary of US$2.14 as compared with the approved national minimum wage of US$1.19. Although African cotton industries set goals to develop the textile industry, most of them appear to be not realistic. These nations need to overcome a number of obstacles, like access to technical and financial resources, abolition of direct subsidies to production provided in other countries and improvement in research, yields, quality of seeds and fiber, logistics as well as downstream textile chain.

The Fiber Year 2009 / 10

073


Burkina Faso Cotton Production Cotton Consumption Population (mid-year)

2008 185,000 t 1,000 t 15,264,735

2009 191,000 t 1,000 t 15,746,232

± in % +3.2% ±0.0% +3.2%

Burkina Faso, one of the poorest countries in the world, relies heavily on subsistence agriculture. The main agricultural activity is cotton farming sown on about 600,000 hectares and employing about 20% of the population. Cotton is the main source of foreign exchange as virtually all of Burkina Faso’s cotton is exported. So, Africa’s largest cotton producer depends on value-added apparel imports as the country’s only textile factory - Fasotex - is operating on outdated machinery since the company was privatized and reopened in 2006. However, the company is working on modernizing its equipment to begin weaving cloth out of locally grown cotton by 2011. The national cotton production is expected to further increase to 191,000 tonnes after an extremely disappointing season in 2007/08. The scope of cultivation comprises conventional, Bt and organic cotton. The expansion of cotton growing has also stimulated increased production of cereals, particularly maize, because fertilizers obtained with the cotton credit are also used for these crops. This has resulted in a significant reduction of poverty in cotton-growing zones. Assistance in gradually increasing value-added production may result from the Aid by Trade Foundation (formerly known as FSAF) set up in 2005 by Dr. Michael Otto. The purpose of the Foundation “is to promote environmental protection and to improve social conditions in Africa. An improvement in development cooperation in Africa is also to be achieved by support of regional, sustainable growing of agricultural and forestry products and their processing.”

Zimbabwe Cotton Production Cotton Consumption Population (mid-year)

2008 90,000 t 20,000 t 11,350,111

2009 100,000 t 20,000 t 11,392,629

± in % +11.1% ±0.0% +3.7%

Zimbabwe’s government has led to some economic improvements, including the cessation of hyperinflation by eliminating the use of the Zimbabwe dollar and removing price controls. Although the textile industry is considered strategic to the economy most spinning and weaving firms have reduced capacity or completely stopped production. In 2009, David Whitehead Textiles Ltd, Zimbabwe’s largest textile company, closed due to increased electricity and labor costs. So, the intention of the Cotton Ginners Association to triple cotton output by 2011 will be rather unrealistic. In fact, cotton acreage contracted by 17.5% to 261,200 hectares in the actual season while maize crop increased by 14% to 1.7 million hectares. Serious trouble for essential crops like cotton and maize is the prevalence of side-marketing. This common practice sees cotton growers selling their crops to unregistered dealers instead of those they were contracted to produce for. A measure for the about 300,000 small scale growers to improve yields may be cultivation of Bt cotton after the government has changed the biotechnology policy mid-2009. Currently there is no commercial cultivation of Bt cotton in Zimbabwe and the future success will depend on the crucial issue on how to finance cottonseed.

074

The Fiber Year 2009/ 10


Egypt Cotton Production Cotton Consumption Population (mid-year) Textile & Clothing Exports

2008 109,000 t 201,000 t 77,266,685 US$2.1 billion

2009 98,000 t 191,000 t 78,866,635 US$2.5 billion

± in % -10.1% -5.0% +2.1% +16.6%

Egypt’s gross domestic product is expected to expand by as much as 5.5% in the fiscal year through June 2010 from 4.7% the year earlier. Economic growth may pick up in the second half of the fiscal year as government spending, external and local demand as well as foreign direct investments increase. Egypt has spent almost US$2.75 billion to boost the economy in the first half of 2009 and the government has sent a bill for additional public spending of US$1.83 billion to the upper house of parliament in December. The country’s trade balance has improved in 2009, reducing the deficit by US$5 billion to US$21.8 billion. Although the national industry was one of very few that succeeded in lifting textile and clothing exports, the sector deficit remained. Last year’s textile and clothing exports increased by 16.6% to US$2.5 billion while imports almost stagnated. Most successful export items were apparel deliveries, increasing by 43.1% at US$1.1 billion, and carpet shipments that rose by 60.7% to US$275 million. In total, textile and clothing exports accounted for 10.8% of the country’s foreign exchange earnings.

US$ billion

Egypt: Total Foreign Trade and Share of Textiles & Clothing Trade 60

12%

50

10%

40

8%

30

6%

20

4%

10

2%

0

2005

2006

2007

Imports

Share of T&C Imports

Exports

Share of T&C Exports

2008

2009

0%

Despite the QIZ (Qualifying Industrial Zones) agreement with the United States settled in December 2004, duty-free deliveries to the U.S. in 2009 fell by 2.6% to US$890 million. While apparel exports stagnated, this US$23 million reduction was in non-apparel exports, mainly due to a 27% drop of cotton textile products. Untouched by this setback, Egyptian textile and apparel exports seemed to have ignored the global recession as export value surged by 30.8% to other parts of the world. Compared with Turkey, Tunisia and Morocco, Egypt managed to strengthen its position as a major supplier of the European market. The textile and apparel industry captures a central role in the national economy, covering everything from the cultivation and processing of raw cotton through to knitting and garment manufacture. This sector is characterized by medium to large-scale companies with a strong public sector presence in spinning and weaving. As the government’s long-stated plans to privatize state-owned enterprises have not yet been adequately converted, significant investments in new The Fiber Year 2009 / 10

075


equipment, information technology, restructuring and training of employees are the impact of this standstill. In contrast, the apparel sector appears to be more dynamic than textiles. During the period 2006 to 2009, apparel exports annually doubled from US$144 million to US$1.1 billion.

Nigeria Cotton Production Cotton Consumption Population (mid-year)

2008 93,000 t 71,000 t 146,255,306

2009 98,000 t 65,000 t 149,229,090

± in % +5.4% -8.5% +2.0%

Nigeria, in the 1980s, was an African giant with 175 textile companies working at full capacity, offering more than 700,000 jobs and accounting for 25% of Nigeria’s manufacturing sector. Most of these factories have shut down, another 15 companies ceased manufacturing in 2009. There are currently only about 24 mills in operation, employing less than 25,000 and accounting for just 5% of manufacturing value addition. Relief may accrue from the United Nations Industrial Development Organisation (UNIDO) that has shifted its focus on the country’s ailing textile industry. A statement from mid-2009 underlined the significance of this industry to the country’s economic health. UNIDO and the Bank of Industry have signed a Memorandum of Understanding to facilitate support for the development of textile clusters with particular emphasis on cotton production. Subsequently, the Nigerian Federal Government launched an US$670 million Cotton, Textile and Garment Development scheme (CTG). To attract foreign investments in ginning, spinning and weaving of cotton, Sokoto State in north-west Nigeria is extending a number of incentives. These include tax holidays, equity participation for viable projects and the granting of loan facilities. The administration will also assist investors with the provision of adequate industrial infrastructure such as access roads, electricity, water and telecommunications facilities, etc.

Tanzania Cotton Production Cotton Consumption Population (mid-year)

2008 124,000 t 36,000 t 40,213,162

2009 98,000 t 37,000 t 41,048,532

± in % -21.0% +2.8% +2.1%

Tanzania, Africa’s fourth-largest gold producer, has been hurt by the global financial crisis with its traditional export markets disappearing and two mining projects being shelved. However, an US$1.3 billion stimulus package has boosted consumer, buyer and investor confidence despite being essentially a bail-out plan for some sectors/sub-sectors including cotton.

076

The Fiber Year 2009/ 10


Tanzania: Cotton Production and Domestic Use 125

1’000 tonnes

100 75 50 25 0

1960

1965

1970

1975

1980

1985

1990

1995

2000

2005

2010

Domestic Use Production

Reportedly, the government disbursed US$15 million in July 2009 for the stabilisation of cotton prices. The Tanzania Gatsby Trust (TGT), which has launched a special program to double cotton production capacity by the year 2015 has set aside US$7.2 million for the period 2008 to 2010 for implementation of the cotton and textile development program.

The Fiber Year 2009 / 10

077


7. Organic Textiles “The concept of organic farming was introduced in 2003 in one of the poorest former Soviet Republics. A stunning number of 1,000 farmers joins the movement at present.”

Shaknoza Kurbanlievea Project Coordinator of the Organic Cotton Production and Trade Promotion Project in Kyrgyzstan, implemented by the Swiss Association for Development Helvetas www.helvetas.ch

“Helvetas was founded in 1955 as the first private organisation for development co-peration in Switzerland. It is a denominationally and politically independent association, supported by approximately 38 000. Helvetas supports projects in 18 partner countries in rural areas of the poorer countries of Africa, Asia and Latin America. Helvetas is oriented expressly not only towards material needs or aims, such as procuring food and improved living conditions, increased production and income or improved infrastructures. Equally important are immaterial aims that is, social, cultural, and spiritual ones. Together with the concerned people, Helvetas also seeks to create an economic, social, and political system which enables men and women to work towards these targets. Also important are the promotion of democratic structures, opportunities for participation, and joint responsibility as citizens. Bridging the gap for organic FairTrade cotton An example from Kyrgyzstan The first and up to date only Bio Farmer Cooperative of Kyrgyzstan was established in 2007 in the southern region of Jalalabad at the edge of the fertile Fergana valley. It was a result of a donorfunded market development project which started in 2003 and introduced the concept of organic farming in one of the poorest former Soviet Republics. Objectives were twofold, promoting sustainable agriculture and facilitating additional income generation for small scale farmers. In the first year 34 pioneer farmers started to operate their farms according to principles of organic farming. Within a few years a stunning number of 1000 farmers joined the movement, and the Agricultural Commodity and Service Cooperative (ACSC) could successfully get established. For 2010 the cooperative is planning to produce and market 300 tons of organic cotton fibre and organic cereals, pulses and Medicinal and Aromatic Plants as well as dried apricots are produced and looking for its export markets. Besides the organic certification the cooperative also achieved as first in Central Asia FairTrade certification. This should add considerable value to in-conversion products and thus improve the sustainability of organic farming in Kyrgyzstan. Today the ACSC Bio Farmer consists of 98% small holder farmers with a land area of up to 5 ha and of 2% bigger farmers with a land area of up to 20 ha. 25% of the organic farms are womenheaded with an increasing trend. The organic land shares are partly private and partly state owned with long term lease. Most of the farming in the region still takes place at subsistence level on family-run farms. Income is generated mainly from selling cotton, the most important 078

The Fiber Year 2009/ 10


cash crop. This is not enough to stop the strong migration trend of young women and men to urban areas and abroad. As a farmer organization, the Cooperative ACSC Bio Farmer unites the organic farmers, promotes organic products and is lobbying for bio production and mobilizing farmers in an environment where legislation and public opinion is often ignorant of organic agriculture. The cooperative provides a full package of services to organic farmers, from provision of agricultural inputs to the marketing of their crops. Operational costs are covered by membership and service fees complemented by an annually decreasing share of donor support. However, despite a fast growth of the cooperative both in terms of members and production, the future of the organic movement in Kyrgyzstan is not secured yet. This became particularly evident in 2009, when due to the financial crisis, the exporter of the organic cotton did not guarantee pre-payment of the cotton harvest any more and refused to buy the FT in-conversion cotton. This put an immediate halt to the growth of the cooperative: Only a few farmers started converting to organic, since the cooperative couldn t promise any price premium to the farmers for their two years of conversion period to a certified organic farmer. The absence of a buyer for FairTrade in-conversion cotton also directly affected the Farmers Cooperative: The Bio Farmer organization being in the process of building up capital cannot charge any membership/service fees for FairTrade in-conversion cotton as long as this cotton has to be sold for conventional market prices. However, operations in future will be only costcovering if membership and service fees increase. And although this might sound paradox, it is particularly the relatively high FairTrade certification costs which are difficult to bear for a small farmer cooperative. FairTrade certification of cotton alone made up 13% of the annual budget of the cooperative in 2009 and would not have been possible without donor support. The farmer cooperatives need to be financially sound and fully cost covering to be able to cover the full fees for certifications. Value chain actors are often not aware that these costs can break the back bone of a farmer organization in poor countries if they have to pay it all on their own. Due to all these difficulties the Bio Farmer cooperative got suddenly into a vicious circle: In order to become costcovering and competitive, new farmers should join the movement, but they refuse to join as long as the 2 years labour intensive conversion period to certified bio farming cannot be bridged with at least a FairTrade price premium for their products. For the time being, the vicious circle could be interrupted: Beginning of April 2010 the Fairtradein-conversion cotton of 2009 could finally be sold! Concerted efforts of the cooperative, the exporter and the project were leading to a first market success for Fairtrade in-conversion cotton. That resulted into an unexpected FairTrade prime for farmers in their second conversion year. They are spreading the good news among their fellow farmers, thus contributing to attract new members. Yet, for 2010 the cooperative will again have to put tremendous efforts in marketing because up to now no buyer made a long-term commitment for Fair Trade in-conversion cotton. Farmers hope strongly that the market will realize that only by bridging the gap of the in-conversion period the volume of organic cotton and other organic crops can substantially be increased.�

The Fiber Year 2009 / 10

079


Organic agriculture with the engagement of about 1.4 million farmers is grown on more than 35 million hectares of land in more than 150 countries. Australia is the largest certified organic surface area with 12 million hectares, followed by Argentina (4 million hectares) and PR China (1.9 million hectares). The worldwide volume for organic products reached a value of US$51 billion in 2008, up from US$46 billion in 2007. The main sales markets are in North America and Europe.

Organic Cotton Production 200 180

'000 tonnes

160 140 120 100 80 60 40 20 0

2004/05

2005/06

2006/07

2007/08

2008/09

According to Organic Exchange, production of organic cotton surged by 20% to 175,113 tonnes grown on 253,000 hectares in 22 countries worldwide. Thus, organic cotton actually accounts for 0.8% of global cotton production. The leading producing countries were India, Turkey, Syria, Tanzania, PR China, United States, Uganda, Peru, Egypt and Burkina Faso. The global retail sales of organic cotton apparel and home textile products exceeded US$3 billion in 2009. The leading organic cotton using brands and retailers globally were Wal-Mart, C&A, Nike, H&M, Zara, Anvil Knitwear, Coop Switzerland, Pottery Barn, Greensource and Hessnatur. Apart from efforts to protect the environment as cotton is a substantial consumer of insecticides, personal health concerns have been driven demand as well. In particular, consumers suffering from Multiple Chemical Sensitivity, a chronic medical condition characterized by symptoms that the affected person attributes to exposure to low levels of chemicals.

080

The Fiber Year 2009/ 10


“Hemp fibre - ‘the king of natural fibres’ – makes the future look a lot greener.”

Daniel Kruse Managing Director of Hempro International GmbH & Co. KG Germany www.hempro.com

“Hempro International is active in the field of production, distribution and mail order of hempraw material (seeds, oil), hemp-fabrics and -garments, -accessories, -cosmetics and hempfoodstuff. Through the consistent application of a strategy centred on product quality, Hempro has succeeded in becoming one of the biggest players in the European hemp business. Hempro Int. offers industry, retailers and end-consumers a wide selection of the best available hemp products in the world at competitive prices. ” History of Hemp. Hemp is among the oldest used material on the planet, going back more than 10,000 years to the beginnings of pottery. The Columbia History of the World states that the oldest relic of human industry is a bit of hemp fabric dating back to approximately 8,000 BC. Hemp was probably first domesticated by the Chinese who developed advanced breeding, farming and processing techniques in the 2nd century BC. They used the fibre to make paper and textiles and the seeds for food and medicines. The hemp fibre has a very good moisture absorption (approx. three times higher than cotton). Because of this characteristic, hemp played a big role in the maritime navigation in the 17th century as material for ropes, nets and sailcloth. For a normal sailing boat, 50-100 tons of hemp fibre were used. In the middle of the previous century, hemp was, next to flax, the most-spread textile fibre worldwide. At that time, Levi Strauss, the originally Bavarian tailor, riveted the first jeans in San Francisco as a working pants for the gold seekers of California. Of course, he used cloth of 100% hemp. No other material would have endured the constant contact with water without suffering damages. Not only in its tear-proof qualities but also in wet strength, hemp is the natural fibre number one. The decline arrived after the II World War for several reasons: high labour costs compared with the developing countries, the advent of synthetic fibres, drug policies and the large scale production and lobbying of cotton. Characteristics of Hemp Fibre. Hemp fibre is often referred to as “the king of natural fibres”. Clothing and fabrics made from hemp have many functions like moisture absorption, breathable, heat disperse, anti-mildew, antibacterial, anti-radiation, anti-ultraviolet and sound absorption. The bark of the hemp stalk contains bast fibres which are among the Earth’s longest natural soft fibres and are also rich in cellulose. Hemp fibre is longer, stronger, more absorbent and more isolative than cotton fibre.

The Fiber Year 2009 / 10

081


Advantages in Cultivation: Hemp is grown ecologically by nature. The plants are resistant against pests and illnesses so that no pesticides are necessary. Additionally, hemp grows so quickly that herbicides are unnecessary. Among farmers around the world, the disadvantages of cotton production lead to a lot of interest on alternative crops like hemp. Dr Ton den Nijs from the Wageningen University and Research Centre (WUR) explains: “It takes an enormous amount of water to produce a cotton crop. Farmers have to use vast amounts of pesticides and herbicides to grow it. Basically, huge amounts of chemicals are necessary in order to produce a decent cotton crop. Hemp is entirely different; it can be grown in more marginal areas and needs very little in the way of pesticides or herbicides in order to produce a decent crop. Furthermore, it needs far, far less water than cotton”. Environmental Advantages: • Rapid growth (up to 4 meters in 3 months) • Extremely resilient. No chemicals e.g. herbicides or pesticides required • Supporting its own organic cultivation in itself • Strong rootage in the soil • Improves the soil and crop rotation productivity • Monocultures can be avoided • Less water consumption than e.g. cotton • Binds CO2 (Result of previous surveys: 1 ton of hemp biomass stores approx. 500 kg of carbon which amounts to approx. 2 tons of carbon-dioxide) • No chemical additives necessary for fibre splitting • Versatile usage for all parts of the plant (Shives, fibre, seeds, etc.) Acreage and Yield: The estimated worldwide acreage of hemp is between 60,000 ha and 115,000 ha. In 2008, the total cultivation area in the European Union was around 15,000 ha – in 2009, this increased to 18,000 ha. These areas produced around 24,000 t hemp fibres and 29,000 t respectively. Main countries for European hemp production are France, UK, Germany, The Netherlands and Poland. Utilizations of Hemp Fibre: In 1990, hemp was rediscovered as an important raw material for bio-based products worldwide. The most important producers for bio-compound materials (natural fibres fortified plastics) as well as for building and isolation materials are Europe and China. Most of the hemp fibres are used for isolation materials and for the automotive industry (for fortification of the plastic of door and luggage bag covering). In 2005, the German automobile industry used about 30,000 t (EU: 40,000 to 50,000 t) natural fibres compound materials (without wood) with a proportion of 19,000 t natural fibres (EU: 30,000 t). Applied were European flax (65%) and hemp (10%), 25% were imports from Asia (jute, kenaf, coconut fibres, abaca). Today, demand on natural fibres for automotive and bio-plastic industry is increasing. Hempro Int. produces hemp clothing mainly in China. As described above, hemp has been cultivated and used extensively there since prehistory, so it was a natural choice. Over recent years, China has become increasingly aware of the damaging impact of industry on its environment and has taken serious steps to avert it. These include strict regular checks of fabric factories and dye houses, with heavy fines for polluters. With policy shifting radically towards environmental protection and energy efficiency, China could soon be leading the way towards sustainability. The sewing facility we are producing at is GOTS (Global Organic Textile Standard) certified and its guideline is combined out of the highest social and ecological requirements for conditions in the respective production locations. The awareness of sustainability and natural resources, such as hemp, is growing strongly both on consumer side and in the market generally. The future looks a lot greener – with hemp.

082

The Fiber Year 2009/ 10


8. Nonwovens and Other Unspun End-Uses The nonwovens industry has delivered a mixed performance as some sectors like personal hygiene, including adult incontinence products, feminine hygiene products and baby diapers, and medical were not impacted by the economic slowdown. Other markets like automotive, construction and home textiles, however, suffered from the slump in economic activities. In total, last year’s output of nonwovens and unspun end-uses has increased by 6.3% to 7.1 million tonnes after a slowdown in 2008. This volume includes nonwoven-based products and filling material for sleeping bags, anoraks, pillows, mattresses and insulating material in the automotive industry as well as padding material for reinforced building structures. In developed countries, growth in population and disposable income will further lead to increased spending for consumer disposables. Further, an aging population will increase the demand for medical nonwovens and adult incontinence products. Demand for better quality disposable applications will mainly come from the growing middle classes in developing countries. The Chinese and Indian markets will continue to grow in urban areas whereas consumption in the rural areas will not increase as rapidly due to far lower income levels and for reasons of tradition. Demand for disposable products such as babies‘ diapers, also true for the Middle East, will remain lower because of cheap labor, the presence of extended families and the employment of nursemaids. Finally, investments in infrastructure will assist the industrial development for geo-textile and agricultural applications. World Nonwovens Production 8 7 million tonnes

6 5 4 3 2 1 0 2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

The necessity in this growing industry for consolidation appears quite limited as a small number of mergers and acquisitions as well as closures was reported. Fiberweb and Fitesa have formed a spunlaid joint venture by combining its North and South American businesses. Under the name FitesaFiberweb, the new venture will concentrate on lightweight nonwovens for the hygiene market. The global spunlaid capacity of Polymer Group Inc. has exceeded 285,000 tonnes following the acquisition of Spain-based Tesalca-Texnovo. This has further strengthened PGI’s position as the global leader in the hygiene market. Additionally, the company closed a facility in Arkansas at the beginning of 2010 and is in the process of further expanding spunlaid capacity in the country. End of 2009, Glatfelter had announced to purchase Concert Industries, one of the world’s largest makers of airlaid nonwovens. Like in recent years, capacity additions took place around the world. Polymer Group Inc., the largest spunlaid producer in the world, will further expand its mills in the United States and installed a 15,000-tonne spunbond line in Mexico to target the medical and hygiene markets. The Fiber Year 2009 / 10

083


New thermally bonded polyester capacity was added by MidWest Nonwovens LLC in mid2009. Avanti Manufacturing, so far importer of spunbonds, has begun its own manufacturing in mid-2009 in Tennessee with a capacity of 4,500 tonnes. A new thermal bonded production line, capable of producing 6,000 tonnes of nonwovens, will start operation in late 2010 by Israel’s Shalag Group in the United States. Delayed for almost two years, the Brazilian Companhia Providencia has revived its plans for a new facility in North Carolina with an annual capacity of 20,000 tonnes that is scheduled to commission in the first half of 2011. In the fourth quarter of 2010, further spunlaid capacity will be added by FitesaFiberweb in South Carolina. Investments in Europe were broadly spread across the continent. Turkish Mogul put into operation its new meltblown line by November 2009. In the fourth quarter of 2009, Concert commissioned its third airlaid line in Germany which will add 18,000 tonnes of capacity. Fiberweb has completed erection of its new meltblown line in France in the first quarter of 2010. An additional meltblown line at the facility of Hollingsworth & Vose in Germany is planned for start-up in the third quarter of 2010. During the same quarter, the 24,000-tonne spunlaid line at Union Industries SpA will come on-stream. The new 20,000-tonne spunlaid capacity at Turkish Gulsan will become operational in the fourth quarter of 2010. SCA will invest in a new production line for incontinence care products in Russia with planned startup during 2011. This facility will support the strong growth and substitute imports from the company’s plants in Poland and the Netherlands. Pegas Nonwovens, the Czech Republic’s largest nonwovens producer, will expand its spunlaid capacity by 20,000 tonnes when the new line will be operational in the second half of 2011. Driven by planned investments of US$96 billion during the next five years in infrastructure improvements in South Africa, Danish Fibertex has established a new operation in the country to produce needlepunched nonwovens, mainly geo-textiles for road construction and products for the growing South African automotive industry. The most significant event in Asia seems to be P&G’s investment of US$100 million to build a new facility in Pakistan to manufacture diapers and laundry detergent. This facility is one element in the company’s plan to build 19 production facilities in four years. A Chinese investment of US$25 million is targeting Bangladesh to construct a fiber and nonwoven manufacturing unit under the name Bangladesh Textile and Fiber Industry Ltd. PGI will also add spunlaid capacity to its Chinese plant that will serve the market from mid-2011. Aim Filtertech has added a bicomponent meltblown line in India that is capable of processing a broad range of polymers. In Malaysia, SCA has opened its second hygiene production site. Fibertex Personal Care, already active in Malaysia since 2003, will expand its capacity be 4,000 tonnes mid-2010. Spunlaid nonwovens still take the quantitative lead in the web forming process. Last year’s production growth of 9% reached a level of about 2.7 million tonnes. The reason for this sustainable growth is that spunlaid technology offers the advantage which makes it the benchmark for efficiency, of skipping a production stage. From polymers in the beginning, it delivers finished fabrics. The other technologies start from raw material to fiber and then to a finished fabric. Spunmelts are mainly addressing hygiene products such as baby and adult diapers, feminine care and medical products such as protective apparel. Spunmelts have also expanded into more technical end-uses for construction, coating substrates, automotive, agriculture, battery separators or packaging. Carded nonwovens output was up by 4% to about 2.5 million tonnes. This technology with four web forming processes has continuously lost market shares. The chart below illustrates changes in this segment in favor of the spunlace process. The spunlaced technology has continued to benefit from further growth in hygiene and household wipes in Western Europe and North America due to its specific properties such as soft hand and drapability. The traditional method of needlepunching is an eco-friendly technology, as it allows to process any kind of recycled material like RPET fibers. The range of fibers comprises staple fibers and continuous filaments, making needlepunching a very universal and flexible technology. While needlepunched products have been experiencing a steady growth over the last decade, thermal and resin bonded applications have developed below average. The largest market for carded thermal bonded polypropylene nonwovens was cover stock. The shift from 084

The Fiber Year 2009/ 10


carded fabrics towards spunbonded materials due to more cost-effective production for low weight materials could not be compensated by developing new markets. Carded Nonwovens Production 100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% Needlepunched

1995

2000 Spunlace

2009 Thermal/Resin Bonded

The demand for airlaid nonwovens mainly used in wipes, hygiene products, sanitary pads and absorber pads for the food industry was driven by the comparative cost advantage. This has resulted in increased usage of airlaid products that increased by about 8% to 530,000 tonnes in 2009. New capacity came on-stream in Finland from Lacell Oy. This new airlaid venture put a 7,500-tonne line into operation. Additionally, Concert Industries has installed a new line with an annual capacity of 18,000 tonnes at its German facility. Technical problems and higher than expected operating costs have caused Fiberweb to close its Italian line. Investments in the highly concentrated segment of wetlaids were less. The big players in this industry are Ahlstrom Corp. and Hollingsworth & Vose Co., accounting for about half the world production. The output modestly increased by about 3% to 240,000 tonnes in 2009. The main products are tea bag and filter materials, medical barrier fabrics, speciality wipes, battery separators and several other small-sized applications. As the technology is fairly mature, some end-uses have been substituted by other nonwoven technologies. World Nonwovens Production by Technology

Spunlaid

Carded

Airlaid

Wetlaid

The most dynamic technology has been spunlaid, taking in a 46% world market share. Carded nonwovens have performed at significantly lower growth rates in the previous decade, now accounting for a 42% share. The Fiber Year 2009 / 10

085


Sectors covered by Oerlikon Textile business units

086

The Fiber Year 2009/ 10

Sectors covered by Oerlikon Te


extile business units with partners

Sectors not covered by Oerlikon Textile business units

The Fiber Year 2009 / 10

087


World Fiber Use Year

Natural *

Manmade ‘000 tonnes

TOTAL

Population billion

Consumption kg / capita

2009

26,392

44,134

70,526

6.76

10.4

2008

25,260

42,430

67,690

6.68

10.1

2007

28,092

44,425

72,517

6.61

11.0

2006

28,268

41,106

69,374

6.53

10.6

2005

26,719

39,750

66,469

6.46

10.3

2004

25,049

37,533

62,582

6.38

9.8

2003

22,688

35,291

57,979

6.31

9.2

2002

22,786

33,517

56,303

6.23

9.0

2001

21,968

31,595

53,563

6.16

8.7

2000

21,496

31,147

52,643

6.08

8.7

1999

21,266

29,400

50,666

6.01

8.4

1998

19,990

28,296

48,286

5.93

8.1

1997

20,189

27,523

47,712

5.86

8.1

1996

20,237

24,680

44,917

5.78

7.8

1995

19,600

23,594

43,194

5.70

7.6

1994

19,461

22,613

42,074

5.62

7.5

1993

19,631

20,765

40,396

5.53

7.3

1992

19,673

20,481

40,154

5.45

7.4

1991

19,740

19,738

39,478

5.37

7.4

1990

21,460

19,380

40,840

5.28

7.7

1989

21,409

18,944

40,353

5.20

7.8

1988

21,072

18,543

39,615

5.11

7.8

1987

20,638

17,864

38,502

5.02

7.7

1986

20,743

16,886

37,629

4.94

7.6

1985

17,732

16,259

33,991

4.85

7.0

1984

16,240

15,764

32,004

4.77

6.7

1983

15,705

14,850

30,555

4.69

6.5

1982

15,469

13,597

29,066

4.61

6.3

1981

15,189

14,631

29,820

4.53

6.6

1980

15,227

14,301

29,528

4.46

6.6

1975

13,349

10,677

24,026

4.09

5.9

1970

13,484

8,394

21,878

3.71

5.9

1965

13,401

5,486

18,887

3.35

5.6

1960

11,607

3,367

14,974

3.04

4.9

1950

7,723

1,681

9,404

2.56

3.7

Unit: ‘000 tonnes * cotton, wool and silk included

088

The Fiber Year 2009/ 10


Consumption of Natural Fibers Year

Cotton

Wool

Silk

TOTAL

± in %

2009

25,191

1,099

102

26,392

4.5%

2008

23,973

1,187

100

25,260

-10.1%

2007

26,773

1,221

98

28,092

-0.6%

2006

26,937

1,233

98

28,268

5.8%

2005

25,404

1,218

97

26,719

6.7%

2004

23,735

1,216

98

25,049

10.4%

2003

21,359

1,232

97

22,688

-0.4%

2002

21,422

1,272

92

22,786

3.7%

2001

20,563

1,317

88

21,968

2.2%

2000

20,067

1,343

86

21,496

1.1%

1999

19,820

1,363

83

21,266

6.4%

1998

18,527

1,386

77

19,990

-1.0%

1997

18,690

1,424

75

20,189

-0.2%

1996

18,727

1,439

71

20,237

3.3%

1995

17,998

1,510

92

19,600

0.7%

1994

17,774

1,618

69

19,461

-0.9%

1993

17,885

1,678

68

19,631

-0.2%

1992

17,870

1,736

67

19,673

-0.3%

1991

17,745

1,928

67

19,740

-8.0%

1990

19,406

1,988

66

21,460

0.2%

1989

19,388

1,955

66

21,409

1.6%

1988

19,122

1,886

64

21,072

2.1%

1987

18,743

1,832

63

20,638

-0.5%

1986

18,891

1,789

63

20,743

17.0%

1985

15,929

1,744

59

17,732

9.2%

1984

14,440

1,744

56

16,240

3.4%

1983

13,993

1,657

55

15,705

1.5%

1982

13,782

1,632

55

15,469

1.8%

1981

13,516

1,616

57

15,189

-0.2%

1980

13,575

1,599

53

15,227

2.7%

1975

11,723

1,578

48

13,349

-0.2%

1970

11,784

1,659

41

13,484

0.1%

1965

11,884

1,484

33

13,401

2.9%

1960

10,113

1,463

31

11,607

4.2%

1950

6,647

1,057

19

7,723

n/a

Unit: ‘000 tonnes

The Fiber Year 2009 / 10

089


Production of Manmade Fibers

Year

Manmade Fibers Cellulosics *

TOTAL

2009

3,796

7.7%

40,338

3.7%

44,134

4.0%

2008

3,525

-7.9%

38,905

-4.2%

42,430

-4.5%

2007

3,828

7.6%

40,597

8.1%

44,425

8.1%

2006

3,559

5.5%

37,547

3.2%

41,106

3.4%

2005

3,375

2.6%

36,375

6.2%

39,750

5.9%

2004

3,290

9.1%

34,243

6.1%

37,533

6.4%

2003

3,016

6.8%

32,275

5.2%

35,291

5.3%

2002

2,823

6.1%

30,694

6.1%

33,517

6.1%

2001

2,661

-3.5%

28,934

1.9%

31,595

1.4%

2000

2,758

6.9%

28,389

5.8%

31,147

5.9%

1999

2,579

-7.1%

26,821

5.1%

29,400

3.9%

1998

2,775

-3.6%

25,521

3.6%

28,296

2.8%

1997

2,879

0.3%

24,644

13.0%

27,523

11.5%

1996

2,870

-3.5%

21,810

5.8%

24,680

4.6%

1995

2,973

4.9%

20,621

4.3%

23,594

4.3%

1994

2,834

3.3%

19,779

9.7%

22,613

8.9%

1993

2,743

-1.6%

18,022

1.9%

20,765

1.4%

1992

2,788

-4.7%

17,693

5.2%

20,481

3.8%

1991

2,924

-8.3%

16,814

3.8%

19,738

1.8%

1990

3,189

-4.6%

16,191

3.8%

19,380

2.3%

1989

3,342

-0.9%

15,602

2.8%

18,944

2.2%

1988

3,371

2.6%

15,172

4.1%

18,543

3.8%

1987

3,286

1.4%

14,578

6.8%

17,864

5.8%

1986

3,241

0.2%

13,645

4.8%

16,886

3.9%

1985

3,234

-4.5%

13,025

5.2%

16,259

3.1%

1984

3,387

2.3%

12,377

7.3%

15,764

6.2%

1983

3,310

3.6%

11,540

10.9%

14,850

9.2%

1982

3,194

-7.8%

10,403

-6.8%

13,597

-7.1%

1981

3,464

-1.6%

11,167

3.6%

14,631

2.3%

1980

3,522

1.8%

10,779

7.7%

14,301

6.0%

1975

3,216

-2.2%

7,461

9.2%

10,677

4.9%

1970

3,585

1.0%

4,809

18.7%

8,394

8.9%

1965

3,446

5.3%

2,040

23.7%

5,486

10.3%

1960

2,664

5.2%

703

58.6%

3,367

14.9%

1950

1,611

n/a

70

n/a

1,681

n/a

Unit: ‘000 tonnes * since 2002 with Tencel® included

090

Synthetics

The Fiber Year 2009/ 10


Production of Manmade Fibers Cellulosics *

Synthetics

Year

Filament

Staple

TOTAL

Filament

Staple

TOTAL

2009

351

3,445

3,796

24,426

15,912

40,338

2008

371

3,154

3,525

23,599

15,306

38,905

2007

449

3,379

3,828

24,193

16,404

40,597

2006

450

3,109

3,559

21,882

15,665

37,547

2005

458

2,917

3,375

21,024

15,351

36,375

2004

483

2,807

3,290

19,639

14,604

34,243

2003

474

2,542

3,016

18,393

13,882

32,275

2002

463

2,360

2,823

17,368

13,326

30,694

2001

480

2,181

2,661

16,334

12,600

28,934

2000

533

2,225

2,758

15,995

12,394

28,389

1999

527

2,052

2,579

15,040

11,781

26,821

1998

581

2,194

2,775

14,141

11,380

25,521

1997

611

2,268

2,879

13,235

11,409

24,644

1996

640

2,230

2,870

11,594

10,216

21,810

1995

654

2,319

2,973

10,903

9,718

20,621

1994

630

2,204

2,834

9,957

9,822

19,779

1993

652

2,091

2,743

8,925

9,097

18,022

1992

695

2,093

2,788

8,577

9,116

17,693

1991

759

2,165

2,924

8,025

8,789

16,814

1990

837

2,352

3,189

7,637

8,554

16,191

1989

927

2,415

3,342

7,156

8,446

15,602

1988

950

2,421

3,371

6,855

8,317

15,172

1987

915

2,371

3,286

6,436

8,142

14,578

1986

934

2,307

3,241

6,026

7,619

13,645

1985

933

2,301

3,234

5,792

7,233

13,025

1984

959

2,428

3,387

5,444

6,933

12,377

1983

983

2,327

3,310

5,065

6,475

11,540

1982

967

2,227

3,194

4,612

5,791

10,403

1981

1,053

2,411

3,464

4,986

6,181

11,167

1980

1,130

2,392

3,522

4,854

5,925

10,779

1975

1,148

2,068

3,216

3,790

3,671

7,461

1970

1,391

2,194

3,585

2,398

2,411

4,809

1965

1,372

2,074

3,446

1,124

916

2,040

1960

1,131

1,533

2,664

417

286

703

1950

872

739

1,611

54

16

70

Unit: ‘000 tonnes * since 2002 with Tencel® included

The Fiber Year 2009 / 10

091


Global Fiber Consumption Year

Cotton

Wool

Synthetics

Cellulosics

TOTAL

1960

68%

10%

5%

18%

14,974

1970

54%

8%

22%

16%

21,878

1975

49%

7%

31%

13%

24,026

1980

46%

5%

37%

12%

29,528

1985

47%

5%

38%

10%

33,991

1986

50%

5%

36%

9%

37,629

1987

49%

5%

38%

9%

38,502

1988

48%

5%

38%

9%

39,615

1989

48%

5%

39%

8%

40,353

1990

48%

5%

40%

8%

40,840

1991

45%

5%

43%

7%

39,478

1992

45%

4%

44%

7%

40,154

1993

44%

4%

45%

7%

40,396

1994

42%

4%

47%

7%

42,074

1995

42%

3%

48%

7%

43,194

1996

42%

3%

49%

6%

44,917

1997

39%

3%

52%

6%

47,712

1998

38%

3%

53%

6%

48,286

1999

39%

3%

53%

5%

50,666

2000

38%

3%

54%

5%

52,643

2001

38%

2%

54%

5%

53,563

2002

38%

2%

55%

5%

56,303

2003

37%

2%

56%

5%

57,979

2004

38%

2%

55%

5%

62,582

2005

38%

2%

55%

5%

66,469

2006

39%

2%

54%

5%

69,374

2007

37%

2%

56%

5%

72,517

2008

35%

2%

57%

5%

67,690

2009

36%

2%

57%

5%

70,526

Unit: ‘000 tonnes * since 2002 with Tencel® included

092

The Fiber Year 2009/ 10


World Production of Synthetic Fibers Year

Polyester

Polyamide

Acrylics

Others

TOTAL

1970

34%

40%

21%

5%

4,809

1975

45%

33%

19%

3%

7,461

1980

47%

30%

19%

4%

10,779

1985

50%

26%

18%

6%

13,025

1986

50%

26%

18%

6%

13,645

1987

52%

25%

17%

6%

14,578

1988

53%

25%

16%

6%

15,172

1989

54%

24%

15%

7%

15,602

1990

53%

24%

14%

9%

16,191

1991

54%

22%

14%

10%

16,814

1992

56%

21%

13%

10%

17,693

1993

57%

20%

13%

10%

18,022

1994

58%

18%

13%

11%

19,779

1995

60%

19%

12%

9%

20,621

1996

61%

18%

12%

9%

21,810

1997

63%

16%

11%

10%

24,644

1998

65%

15%

10%

10%

25,521

1999

66%

15%

9%

10%

26,821

2000

66%

14%

9%

11%

28,389

2001

67%

13%

9%

11%

28,934

2002

68%

13%

9%

10%

30,694

2003

69%

12%

8%

10%

32,275

2004

70%

12%

8%

10%

34,243

2005

72%

11%

7%

10%

36,375

2006

73%

11%

7%

9%

37,547

2007

76%

10%

6%

9%

40,597

2008

78%

9%

5%

8%

38,905

2009

79%

9%

5%

7%

40,338

Unit: ‘000 tonnes * since 2002 with Tencel® included

The Fiber Year 2009 / 10

093


Production of Manmade Fibers mill. tonnes

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

PR China

6.7

8.2

9.9

11.7

13.8

17.6

19.6

23.0

23.6

26.3

India

1.9

1.9

2.0

2.0

2.2

2.2

2.5

2.8

2.5

2.8

USA

4.2

3.6

3.8

3.8

3.7

3.4

3.1

3.0

2.8

2.3

Taiwan

3.2

3.1

3.2

3.2

3.2

2.8

2.6

2.6

2.1

2.1

South Korea

2.8

2.4

2.3

2.2

2.1

1.7

1.5

1.5

1.4

1.4

Indonesia

1.4

1.5

1.4

1.3

1.2

1.2

1.2

1.2

1.1

1.1

Japan

1.5

1.5

1.3

1.2

1.2

1.2

1.1

1.2

1.1

0.8

SUBTOTAL

21.7

22.1

23.9

25.5

27.4

30.0

31.7

35.4

34.6

36.9

ROW

9.4

9.5

9.6

9.7

10.1

9.8

9.4

9.0

7.8

7.3

TOTAL

31.1

31.6

33.5

35.3

37.5

39.8

41.1

44.4

42.4

44.1

mill. tonnes

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

PES FY

10.7

11.2

12.0

12.9

13.8

15.3

16.0

18.3

18.3

19.3

PES SF

8.1

8.3

8.8

9.4

10.1

11.0

11.5

12.5

12.1

12.6

PA FY

3.6

3.3

3.5

3.5

3.7

3.6

3.7

3.6

3.3

3.3

PA SF

0.5

0.4

0.5

0.5

0.4

0.4

0.4

0.3

0.3

0.2

PP

2.8

2.9

3.0

3.0

3.1

3.1

3.1

3.0

2.7

2.6

PAN

2.6

2.6

2.7

2.7

2.7

2.6

2.5

2.4

1.9

1.9

Cellulosics *

2.8

2.7

2.8

3.0

3.3

3.4

3.6

3.8

3.5

3.8

Others

0.2

0.3

0.3

0.3

0.4

0.4

0.4

0.5

0.5

0.4

TOTAL

31.1

31.6

33.5

35.3

37.5

39.8

41.1

44.4

42.4

44.1

* since 2002 with Tencel® included

094

The Fiber Year 2009/ 10


Top 3 Producing Countries PES FY

2009

share

2005

share

2000

share

1995

share

PR China

14,152

73.3%

8,903

58.3%

3,152

29.5%

1,022

15.7%

India

1,444

7.5%

1,039

6.8%

829

7.8%

344

5.3%

Taiwan

1,010

5.2%

1,275

8.4%

1,525

14.3%

1,225

18.8%

SUBTOTAL

16,606

86.0%

11,217

73.5%

5,506

51.6%

2,591

39.8%

PES SF

2009

share

2005

share

2000

share

1995

share

PR China

7,892

62.6%

5,509

50.1%

1,815

22.5%

922

16.5%

India

861

6.8%

615

5.6%

561

7.0%

230

4.1%

Taiwan

570

4.5%

752

6.8%

932

11.6%

753

13.5%

SUBTOTAL

9,323

73.9%

6,876

62.5%

3,308

41.1%

1,905

34.1%

PA FY

2009

share

2005

share

2000

share

1995

share

PR China

1,299

39.7%

679

19.0%

333

9.3%

252

8.0%

USA

516

15.8%

811

22.7%

851

23.8%

830

26.2%

Taiwan

287

8.8%

466

13.0%

421

11.8%

294

9.3%

SUBTOTAL

2,102

64.2%

1,956

54.7%

1,605

44.9%

1,376

43.5%

PAN SF

2009

share

2005

share

2000

share

1995

share

PR China

684

35.1%

784

30.1%

475

18.5%

234

9.7%

W.Europe *

566

29.0%

767

29.5%

780

30.4%

883

36.4%

Japan

124

6.4%

261

10.0%

377

14.7%

374

15.4%

SUBTOTAL

1,374

70.5%

1,812

69.6%

1,632

63.6%

1,491

61.5%

Unit: ‘000 tonnes * Turkey included

The Fiber Year 2009 / 10

095


Manmade Fiber Industry 2009/08 Polyester

Textile Yarn

Staple Fiber

TOTAL

2009

2008

2009

2008

2009

2008

2009

2008

Europe

263

335

109

194

586

683

958

1,212

NAFTA

193

235

122

150

561

679

876

1,064

South America

74

82

20

24

161

169

255

275

PR China

13,602

12,379

550

450

7,892

7,216

22,044

20,046

India

1,438

1,337

6

1

861

748

2,305

2,086

Japan

110

169

53

75

146

191

309

435

Korea

506

510

155

175

516

492

1,177

1,177

Taiwan

955

954

55

65

570

503

1,580

1,522

ROW

1,086

1,081

23

31

1,316

1,396

2,425

2,507

SUBTOTAL

18,227

17,081

1,093

1,165

12,609

12,077

31,929

30,323

Polyamide

Textile Yarn

Industrial Yarn

Carpet Yarn

TOTAL

2009

2008

2009

2008

2009

2008

2009

2008

Europe

148

200

148

195

147

160

443

555

NAFTA

54

62

87

111

523

591

664

764

South America

55

58

36

41

0

0

91

99

PR China

887

620

364

314

48

28

1,299

962

India

29

28

56

62

0

0

85

90

Japan

35

41

42

60

7

7

84

108

Korea

80

74

48

52

5

5

133

131

Taiwan

243

315

43

47

0

0

286

362

ROW

113

119

67

80

10

14

190

212

SUBTOTAL

1,644

1,517

891

962

740

804

3,275

3,283

Staple Fiber

Acrylics

Polyamide

Cellulosics

TOTAL

2009

2008

2009

2008

2009

2008

2009

2008

Europe

643

667

54

65

615

637

1,312

1,369

NAFTA

46

45

81

121

277

272

404

438

South America

63

65

1

2

60

45

124

112

PR China

684

604

74

54

1,502

1,311

2,260

1,969

India

94

81

0

0

281

244

375

325

Japan

124

145

1

2

135

146

260

293

Korea

41

43

0

0

8

9

49

51

Taiwan

112

84

2

9

106

106

220

198

ROW

142

133

1

1

461

385

604

519

SUBTOTAL

1,949

1,867

214

254

3,445

3,154

5,608

5,275

Unit: ‘000 tonnes

096

Industrial Yarn

The Fiber Year 2009/ 10


Global Yarn Production Yarn

2009

share

2005

share

2000

share

1995

share

Filament

24,777

40.1%

21,403

37.0%

16,514

36.0%

11,557

30.9%

Spun

36,953

59.9%

36,435

63.0%

29,368

64.0%

25,895

69.1%

TOTAL

61,730

57,838

45,882

37,452

Unit: ‘000 tonnes

Dynamics in Yarn Production Yarn

2009

AAGR

2005

AAGR

2000

AAGR

1995

AAGR

Filament

24,777

3.7%

21,403

5.3%

16,514

7.4%

11,557

6.4%

Spun

36,953

0.4%

36,435

4.4%

29,368

2.5%

25,895

-0.6%

TOTAL

61,730

1.6%

57,838

4.7%

45,882

4.1%

37,452

1.2%

Unit: ‘000 tonnes

Fiber Types in Spun Yarn Production Yarn

2009

AAGR

2005

AAGR

2000

AAGR

1995

AAGR

Cotton

21,478

-0.1%

21,595

4.8%

17,109

2.2%

15,345

-1.5%

Polyester

10,289

3.5%

8,979

6.4%

6,573

7.3%

4,629

3.7%

Acrylics

1,853

-7.0%

2,473

0.4%

2,440

1.9%

2,225

0.6%

Cellulosics

2,084

4.0%

1,781

4.6%

1,417

-1.7%

1,545

-1.4%

Wool

929

-3.5%

1,073

-2.0%

1,185

-4.1%

1,460

-5.4%

Others

320

-12.0%

534

-3.7%

644

-1.4%

691

2.8%

TOTAL

36,953

0.4%

36,435

4.4%

29,368

2.5%

25,895

-0.6%

Unit: ‘000 tonnes

The Fiber Year 2009 / 10

097


Major Textile & Clothing Trading Countries Exports

Imports

US$ billion

2008

2009

± in %

2008

2009

± in %

2008

2009

PR China

185.1

171.3

-7.4%

17.4

16.9

-2.6%

167.7

154.4

India

22.4

21.5

-4.3%

3.2

3.4

6.0%

19.2

18.0

Turkey

23.0

18.7

-18.7%

7.9

6.7

-17.0%

15.1

12.0

Bangladesh

10.7

12.3

15.4%

1.8

1.9

5.7%

8.9

10.4

Pakistan

10.6

9.6

-9.6%

0.6

0.5

-9.8%

10.0

9.0

Taiwan

10.9

9.3

-14.3%

2.7

2.2

-19.0%

8.2

7.2

Hong Kong

36.9

31.9

-13.4%

30.9

25.5

-17.5%

6.0

6.5

Thailand

7.2

6.4

-10.5%

0.3

0.2

-25.5%

6.9

6.2

Indonesia

10.4

9.3

-10.1%

5.2

3.8

-28.1%

5.2

5.5

South Korea

13.3

11.6

-12.6%

8.8

7.4

-15.8%

4.5

4.2

Vietnam

9.1

9.1

-0.6%

5.7

5.4

-4.7%

3.4

3.6

Sri Lanka

3.5

3.3

-5.6%

1.7

1.4

-15.3%

1.8

1.8

Tunisia *

5.0

4.2

-16.0%

3.3

2.8

-15.1%

1.6

1.4

Cambodia

2.8

2.4

-16.1%

1.4

1.1

-19.6%

1.4

1.2

Malaysia

3.1

2.5

-19.9%

1.8

1.5

-20.2%

1.2

1.0

Morocco

3.7

n/a

2.6

n/a

Peru

2.0

1.4

-28.0%

1.0

0.7

-24.9%

1.0

0.7

Egypt

2.1

2.5

16.6%

2.7

2.7

-1.1%

-0.5

-0.2

New Zealand

0.9

0.7

-20.2%

1.4

1.2

-12.5%

-0.5

-0.5

Brazil

2.4

1.9

-21.8%

3.8

3.5

-9.2%

-1.4

-1.6

Mexico

5.2

4.4

-15.2%

7.9

n/a

Australia

1.8

1.3

-26.7%

8.6

7.9

-8.1%

-6.7

-6.5

Canada

2.8

2.2

-19.8%

12.0

10.6

-11.4%

-9.2

-8.4

Japan

7.8

6.4

-17.6%

32.5

31.9

-1.8%

-24.7

-25.5

Russia

0.8

n/a

26.9

n/a

EU (27) (extra)

51.9

42.4

121.0

104.5

EU (27) (intra)

140.7

122.7

140.7

122.7

USA

16.2

13.6

93.2

81.0

-18.3%

-16.0%

* Leather included Source: National Statistical Offices and Central Banks

098

Balance

The Fiber Year 2009/ 10

1.0

-2.7

-26.2 -13.7%

-69.1

-62.1

-13.1%

-77.0

-67.4


Imprint Oerlikon Textile GmbH & Co. KG Leverkuser Strasse 65 42897 Remscheid Germany www.oerlikontextile.com Editor and responsible for content Andreas Engelhardt Tel. + 41 - 71 - 447 51 89 Editors Andreas Engelhardt


www.oerlikontextile.com

Profile for Alexandra Wallace

The Fiber Year 2009/10  

A World Survey on Textile and Nonwovens Industry

The Fiber Year 2009/10  

A World Survey on Textile and Nonwovens Industry

Advertisement