28 August 2009 11:58 [Source: ICB]
Global fibers markets have been hit hard by the downturn. But there are signs of an upswing that may lead to full recovery
Philippa Davies/Tecnon OrbiChem
WORLDWIDE FIBER growth has been hit hard by the global recession. However, there are some bright spots and recovery is expected to begin in 2010, when a significant rebound in demand is anticipated, bringing growth back on trend over the succeeding three to four years.
Demand for certain key fibers, such as polyester, has been better than expected, with operating rates for polyester in China averaging around 80%, despite a heavy fall in textiles exports in 2009.
At the same time, there are persistent concerns that there may be inventory building at the polyester or fibers warehouse. In the meantime, the Chinese economic stimulus programs appear to have been largely successful in getting Chinese consumers out to buy domestic textiles and fabrics.
Overall, the picture looks difficult. World fibers output fell in 2008 by 4.6% to 71.27m tonnes, reflecting a drop in demand as the global economy faltered. This downward trend was underlined by the statistics seen in the export market in China for textiles.
Chinese textile exports in the first half of 2009 were reported in official Chinese statistics at $72.8bn (€50.8bn), down by almost 11% compared with the previous year. China has put in place textiles stimulus packages to beat this downtrend. The Chinese government is expecting to boost exports to $240bn, a rise of 8%/year by 2011.
The growth expected for the huge and developing economies of China and India is predicted to be the engine for global demand growth in the coming years for textiles, as for other consumer goods.
One of the big questions for the next year or so is how much of the decline in global demand for textiles can be made up by the domestic Chinese market; and to some extent by Indian internal demand.
Chinese polyester production for the first four months of 2009 was up by 7% over the same period in 2008, a very positive sign indeed, particularly in markets that are generally challenging.
After difficult times in 2008, credit is again available for fiber producers, mainly due to government stimulus plans announced earlier this year. Although improved markets have been driven by domestic consumption (exports are down by 10%), there is growing concern that demand is based more on inventory replenishment than real retail demand. There may be a bubble here just waiting to be burst.
Although fiber producers' economic conditions have improved, the condition of their textile manufacturing customers remains fragile. So China's domestic demand growth will cover a multitude of sins in the long term, but cannot fix a broken world textiles market in the short term.
Of all the major synthetic fibers, polyester remains the fiber of choice and the fastest growing, as demonstrated by the high growth rates still seen in this industry. Polyester has qualities that cannot be matched by other fibers, except perhaps silk, and this remains a selling point.
One of the most important properties is drape, which concerns the way the fabric hangs and falls. Another important property is ease of care, which has been behind the success of polyester/cotton blends.
Over the past few years, a significant trend has seen polyester bulk continuous filament (BCF) gaining market share at the expense of other BCFs, and of carpet staple of all types. Indeed, demand for polyester BCF and in particular for polytrimethylene terephthalate BCF kept growing last year in the US. These were the only fiber types to have shown growth in 2008, though from a small base.
Another notable trend in this area is the surprisingly robust feedstock chain for polyester, in which paraxylene (PX) and purified terephthalic acid (PTA) prices have remained quite strong in the first half of 2009 - due, in part to refinery cuts that have been a result of the economic downturn.
Another polyester feedstock, ethylene glycol (EG), has also remained strong in price due to the delays in start-ups of new plants in Saudi Arabia. The high output costs for ethylene and ethylene derivatives, which have resulted from the high cost of naphtha so far this year, have also been a factor.
POLYESTER STAPLE TRENDS
World production of polyester staple fell by 2.7% in 2008 to 12.2m tonnes, representing 17.1% of total global man-made fiber production. A further decline in global output of around 3% is forecast for 2009, although a small increase is forecast for China.
Production in Western Europe was down by 12% in 2008, with a sharper fall forecast for 2009. Global production in 2010 is forecast to rise by around 10%, when polyester staple will account for 18.1% of the global total.
POLYESTER FILAMENT TRENDS
World production of polyester filament rose by 1.6% in 2008 to 17.3m tonnes, 26.3% of the global total. This growth was mainly driven by China. But a decline of around 1% is forecast for 2009, despite a small increase in growth for China. Production in Western Europe was down by 24% in 2008, with a similar drop forecast for 2009.
In 2005, Asia produced 88% of the global total and by 2010 this figure is expected to rise to 94%. Global production in 2010 is forecast to rise by about 10%, when polyester filament will account for 27.6% of the global total
POLYAMIDE FILAMENT TRENDS
World production of polyamide filament declined by 9.2% in 2008 to 3.313m tonnes, 4.7% of the global total, although production in the Middle East and Africa and China held up. A similar decline is forecast for 2009, with all regions suffering. Production in Western Europe was down by 8% in 2008, with a similar fall forecast for 2009.
In 2005, Asia produced 47% of the global total, rising to 56% by 2010. Global production in 2010 is forecast to rise by around 7%, when polyamide filament will account for 4.5% of the global total.
ACRYLIC FIBER TRENDS
World production of acrylic fiber declined by 22.3% in 2008 to 1.882m tonnes, 2.6% of the global total, with all regions suffering from production declines.
A smaller though double-digit decline is forecast for 2009; again with all regions continuing to suffer. Production in Western Europe was down by 15% in 2008 with a similar fall forecast for 2009.
In 2005, Asia produced 58% of the global total - a figure that is expected to remain unchanged in 2010. Global production in 2010 is forecast to rise by around 8%. At this time, acrylic will account for 2.5% of the global total
CELLULOSIC FIBER TRENDS
Viscose staple accounts for more than 80% of this category. World output of cellulosic fibers fell by 9.4% in 2008 to 2.636m tonnes, 3.7% of the global total. A slightly larger decline is forecast for 2009, with all regions suffering.
Production in Western Europe was down by 7% in 2008, with a much sharper fall forecast for 2009. In 2005, Asia produced 76% of the global total, rising to 83% by 2010, when production is forecast to rise by around 6%. Cellulosic fibers will still account for 3.7% of the global total, however.
Global fibers markets are facing the same challenges as all intermediates markets for the manufacture of finished goods. These difficulties are linked fundamentally to consumer demand and confidence and only when we see a rebound here, will we see a healthier scenario in the fibers markets.
There is optimism in these fibers markets, perhaps more than in markets related to automotive or housing, as there is a strong fundamental demand growth from developing countries, which should remain fairly recession proof.
Philippa Davies is business manager, fiber intermediates and aromatics at Tecnon OrbiChem. Darrel Collier, Nick Bywater, Yang Qin and Chris Nava from Tecnon OrbiChem also contributed to this article. Data for this article comes from the Tecnon OrbiChem database. Contact firstname.lastname@example.org or email@example.com
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