The Fiber Year 2009/10 A World Survey on Textile and Nonwovens Industry. Issue 10 May 2010

Transcription

1 The Fiber Year 2009/10 A World Survey on Textile and Nonwovens Industry Issue 10 May 2010

2 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 The economic stimulus packages started to kick in, most importantly in our Asian market where the effect released investment for the future. Thomas Babacan CEO Oerlikon Textile and Chief Operating Officer, OC Oerlikon Management AG, Pfäffikon/Switzerland 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 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

3 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 Airbus S.A.S. All Pakistan Textile Mills Association (Punjab Zone) Asian Development Bank Association of the Nonwoven Fabrics Industry Autoliv Inc. Bangladesh Garments Manufacturers and Exporters Ass. Bangladesh Textile Mills Association Bank of Thailand Better Factories Cambodia Boeing Co. Brazilian Textile and Apparel Industry Ass. (ABIT) Camara Industrial Argentina de la Indumentaria Central Bank of the Republic of Turkey China Chemical Fibers Association China Chemical Fiber Economic Information Network China Cotton Textile Association China Nonwovens & Industrial Textiles Association China Textile Information Center Dralon GmbH EDANA Federal Bureau of Statistics (Pakistan) Fiber Economics Bureau Food and Agriculture Organization of the United Nations General Aviation Manufacturers Association German Association of the Automotive Industry (VDA) Global Organic Textile Standard (GOTS) Global Wind Energy Council Hexcel Corp. INDA Indonesian Synthetic Fiber Makers Association International Cotton Advisory Committee (ICAC) International Federation of Organic Agriculture Movements International Wool Textile Organisation (IWTO) Japan Chemical Fibers Association Lenzing AG Malaysia Trade and Industry Portal Malaysian Textile Manufacturers Association Mexican Clothing Industry (CNIV) Ministry of Economic Affairs, R.O.C. Ministry of Textiles (India) Ministry of Economy, Trade an Industry (Japan) National Bureau of Statistics of China National Council of Textile Organizations (NCTO) National Society of Industries (SNI) OPEC Organic Exchange Polyamide High Performance GmbH Polyester High Performance GmbH Proexport Colombia Spinners & Weavers Association of Korea State Committee of the Republic of Uzbekistan Taiwan Textile Research Institute The World Bank Group Trevira GmbH Turkey State Institute of Statistics Turkish Clothing Manufacturers Association United Nations Conference on Trade and Development United States Agency for International Development United States Department of Agriculture United States Department of Commerce U.S. Census Bureau Vietnam Textile Association (Vitas) 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

4 Table of contents 1. Fiber Year 2009/10 celebrates tenth anniversary World Economic Outlook 2010/ Raw Material Industry Cotton Wool Crude Oil Fiber Consumption in Manmade Filament Yarn and Staple Fibers Polyester Polyamide Polypropylene Acrylic Cellulosics Carbon Fibers Aramids Spandex Yarns Spun Yarn Organic Textiles Nonwovens and Other Unspun End-Uses Statistical Appendix 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 ; Cell andreas.engelhardt@oerlikon.com or aw_engelhardt@yahoo.de 04 The Fiber Year 2009/ 10

5 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 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 mill. tonnes Manmade Fiber Cotton/Wool/Silk The Fiber Year 2009 / 10 05

6 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 Clothing expenditure in the United States dropped from US$734 per capita in 2007 to US$679 in 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 Change Y-O-Y in % 15% 12% 9% 6% 3% 0% -3% -6% -9% -12% -15% '00 '01 '02 '03 '04 '05 '06 '07 '08 '09 * 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 % 4% 2% 0% Cotton: +2.6% 25.2m tonnes Cellulosics: +3.6% 3.8m tonnes Synthetics: +4.0% 40.3m tonnes -2% Wool: -2.2% 1.1m tonnes -4% 06 The Fiber Year 2009/ 10

7 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 mill. tonnes PR China USA India Taiwan Korea ROW Cotton Yarn Production 2000 vs mill. tonnes PR China Indila USA Pakistan Turkey ROW 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

8 -13.4% -4.3% -18.7% -16.0% +15.4% -12.6% -9.6% -14.3% Top Ten Textile and Clothing Exporters % 150 US$ billion % 0 China EU(27) HK India Turkey USA Bangl. S. Korea Pakistan Taiwan 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

9 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 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 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

10 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

11 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 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 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 /

12 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/ /10 28'000 26'000 24'000 1,000 tonnes 22'000 20'000 18'000 16'000 14'000 12' / / /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 Production (mill. t) ± in % vs prev. year Yield (kg/ha) PR China % 1,358 India % 499 United States % 868 Pakistan % 711 Brazil % 1,527 Uzbekistan % 687 Australia % 1,954 Turkey % 1,321 Turkmenistan % 475 Rest of the world % 404 World % 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 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

13 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 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, US$ cent per pound 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 million hectares '80 '90 '00 India Pakistan China ROW 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 /

14 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 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 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, ) ICAC Secretariat estimate, The Fiber Year 2009/ 10

15 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 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 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 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 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 The market share of cotton in world textile fiber demand is expected to continue its long term decline to 33% in 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 /

16 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 1'200 '000 tonnes 1' e 2011e Australia Uruguay PR China South Africa New Zealand UK Argentina 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 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 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 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 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

17 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 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 The Fiber Year 2009 /

18 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 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

19 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 Average 2004 = MEG PTA PX 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 The Fiber Year 2009 /

20 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