Preliminary 2005 fiber production figures are as below.
Last year’s activity was characterized by uncertainty from the abolition of quotas, strong increases of crude oil prices and its intermediates, ongoing shifting of capacity towards Asia and technical reactions resulting from high fiber inventories in 2004.
After the strong rise in 2004, growth rate came down to 2.2%. This corresponds with a volume slightly surpassing 70 million tonnes. However, last year’s performance has led to a situation we last witnessed in 1982. Natural fibers have enjoyed favorable conditions in demand, while manmade fibers did not manage to achieve the production level of 2004. Other natural fibers (kapok, ramie, flax, hemp, jute, sisal, coir) remained unchanged at 5.7 million tonnes.
Natural fibers were able to gain ground, in particular due to a strong 6.1% increase of cotton consumption. This was partly driven by lower prices in several regions. Raw cotton production declined by 6.7%, causing a 1.6% decrease in ending stocks. However, the demand is decisive for judging utilization rate in the downstream spinning industry. Cellulosics have continued their five years old growth development, rising by 3.5% to 3.3 million tonnes. Synthetics have marginally lost market share as a result of a 0.3% decrease to 34.6 million tonnes.
Polyester industry was stagnant at 24.5 million tonnes. While we have seen double-digit growth in industrial filaments, staple fibers witnessed a 0.8% increase and textile yarns declined by 1.1%.
The cut-throat competition has continued with PR China gaining further market shares. Now, the Chinese polyester industry covers more than half the world polyester fiber and yarn spinning business. The currently largest polyester industries are illustrated below with the corresponding share for 1995 shown on the left hand side. In 2005, there was only one nation producing growth rates in all three polyester sub-segments: PR China. In contrast, the industries in South Korea and Taiwan have lost an aggregated production volume of 650,000 tonnes. Last year’s situation in India was mixed with a stable filament performance, but decreasing staple production. Western Europe, the United States and Japan experienced a decline in output volume in the range of 4.7% to 6.7% each.
Production of 10.4 million tonnes of staple fibers was 0.8% higher than 2004 output. The leading group of producing nations comprises PR China, the United States, Taiwan, Pakistan and India, accounting for a 73% market share. Within this cluster, only PR China (+9.2% at 4.7 million tonnes) and Pakistan (+7.6% at 0.6 million tonnes) managed to raise their output volume.
The volume of filaments nearly achieved the 2004 output level at 14.1 million tonnes. This segment is to be characterized by surging industrial filament and slightly declining textile filament production volumes. Strong tire demand with an ongoing preference for polyester tire cord and upgrading of technical textiles by substituting cotton for polyester has helped to realize this higher-than-average volume. The textile business was suffering from pipeline effects resulting from sizable inventories at the end of 2004. Neglecting the outlier in 2004, the average growth rate for the previous two years would have accounted for 4.2%.
Polyamide production declined by 4.1% to 4.0 million tonnes. While the carpet segment consolidated on a high level, output of industrial yarns increased by 0.8%. Meanwhile, textile yarns (-8.6%) and staple fibers (-8.3%) have strongly lost ground. To some extent, it is the result of comparatively lower margins encouraging substitutions in favor of polyester.
While Greater Europe experienced a decline of 6.7%, the Americas reduced production by 4.1%. Africa and the Middle East seem to have enjoyed a stable situation. Asia without PR China also suffered from flat demand, reducing its output volume by 9.4%. Double-digit losses have occured in South Korea (-13.4%) and Taiwan (-12.2%) each. From preliminary information on hand, India may have witnessed a modest growth. PR China was able to lift production by 7.1% achieving a level of more than 700,000 tonnes.
Polypropylene fibers rose by 0.6% to 3.0 million tonnes. While the production of staple fibers was all about the same with slightly higher utilization rates of existing equipment, filament end-uses increased by 0.7%. Carpet yarn was mainly driving this growth as a consequence of active operations in the United States, Turkey and the Middle East. In regional terms, Europe and the Americas both managed to realize modest increases. In Asia, we have seen a decrease.
The acrylics fiber market declined by 1.0% to 2.67 million tonnes. The long-term regional changes are illustrated in the chart below.
Last year’s countries with higher output volume were Thailand (+25%), PR China (+20%) and Turkey (+5%). Stimulation came from Thai Acrylic Fibre that „has ambitious plans to become the world's largest acrylic fibre producer“.
The biggest reduction (-80%) occured in the United States where Solutia closed its 80,000-tonne Alabama plant in April 2005. Strong losses were also noticed in South Korea (-24%), Western Europe (-11%) and Taiwan (-9%).
Cellulosics increased by 3.5% to 3.3 million tonnes. This growth was once again driven by staple fibers – Viscose, Tencel, Modal and cigarette tow. The production of cellulosic filaments remained static at almost 0.5 million tonnes.
Looking at the likely development in 2006, a more robust growth is forecast to occur. Despite persistent high crude oil prices, manmade fibers will return to their long-term growth rate.
The mainly cotton-based spun yarn industry may offer new opportunities, particularly for developing countries, due to scrapping of major subsidies in the cotton industry. Modestly decreasing ending cotton stocks are not expected to form an obstacle for the downstream industry. A global promotion program may help to increase future wool demand. Cautious optimism may arise as sheep stocks have been rising since 2003.
Given a normal development in world economy and stable conditions along the textile chain, a consumption level of 72.5 million tonnes for the year 2006 should be achievable.