Fibre Session Karen Jones page: 1

Transcription

1 Outlook for the Global Synthetic Fibers Market Insert Consultant Picture Karen Jones Service Leader Fibers & Feedstocks Market Advisory Service ITMF Annual Conference 29 October Shanghai, China Singapore Shanghai Houston New York London Düsseldorf Dubai Synthetic Fibers Represent 6% of the Market Polyester Dominates Olefin 8% Nylon 5% Acrylic 3% Cotton 34% Polyester 44% Wool & Silk 2% Cellulosic 4% 28 Global Fiber Production: 69 Million Metric Tons Fibre Session Karen Jones page: 1

2 Hit By A Wave Global Forces Impact Fibers Energy and consumer prices rose Housing bubble burst Economic uncertainty increased No more easy credit Consumers Retreated From the Market World Fiber Production Had Shown Steady Growth Until the Great Recession Million Metric Tons Synthetic Natural Cellulosic Fibre Session Karen Jones page: 2

3 Million Metric Tons However, Growth Has Long Eluded Nylon & Acrylic Fibers Acrylic Nylon Polyester Growth Fueled By Technology Advancements and Lower Costs Million Metric Tons For the first time, polyester production falls in Acrylic Nylon Polyester Fibre Session Karen Jones page: 3

4 Sluggish Demand Is Not the Only Challenge the Synthetic Fibers Industry Faces What Are The Other Challenges? Rising and volatile raw material costs Extended oversupply situation Capacity rationalizations required Continuation of production shift to Asia Credit crunch Slow economic recovery Fibre Session Karen Jones page: 4

5 The Journey May Be Rough But Challenges Bring Opportunities Near-term outlook Industry in Transition Longer-term forecast Why are Synthetic Fibers Dependent on Energy Markets? Natural gas and crude oil derivatives are primarily used for: Power generation Heating and motor fuels Petrochemicals have to buy feedstocks away from these much larger markets Fibre Session Karen Jones page: 5

6 Crude Oil Highlights Crude oil price volatility has been supported by Global economic weakness and weak demand Some Supply side concerns OPEC production cuts Instability in Nigeria, Venezuela, Iran etc. Speculative money Value of the U.S. dollar Crude & refined product inventory changes The crude oil price forecast anticipates Short term slow down in demand due to the global economic recession. Short term concerns about over supply due to weak demand and implementation of OPEC cuts In the medium to long term, continued non-oecd demand growth keeps pressure on OPEC to sustain high output Tight S/D balance supports elevated prices in the medium to long term. U.S. Dollars Per Barrel 12 World Crude Oil Price Trends WTI Brent Dubai Fibre Session Karen Jones page: 6

7 Crude Oil Price Volatility Impacts Fiber Prices U.S. Dollars Per Metric Ton 4' U.S. Dollars Per Barrel 16 3'5 3' 2'5 2' 1'5 1' Jan-5 Jan-6 Jan-7 Jan-8 Jan-9 Jan-1 Nylon 6 DTY (7/24) FOB NE Asia Polyester Staple (1.5d) FOB NE Asia Crude Oil - Dubai Excess Capacity Depressing Operating Rates Through the mid-2s, synthetic fiber capacity additions have far exceeded demand growth, especially in polyester Competition intensified ifi Profitability has suffered Fibre Session Karen Jones page: 7

8 Million Metric Tons World Polyester Staple Capacity Additions vs. Demand Growth Average Utilization Rate, Percent Cumulative Excess Cap. Americas Europe Middle East/Asia Asia World Demand Growth World Avg. Utilization Rate 75 5 Nylon Suffers From Excess Capacity Too Nylon fiber losing market share in large volume U.S. bulk continuous filament (BCF) carpet market to polyester BCF Globally, polyester is capturing an increasing share of tire cord and technical yarn markets Nylon apparel applications have lost share to polyester except for end uses with high technical requirements Nylon capacity rationalizations ongoing but excess capacity remains a drag on operating rates Fibre Session Karen Jones page: 8

9 16 14 Nylon s Higher Price Drives Substitution U.S. Cents Per Pound Nylon is now used mostly in specialist applications which values its properties Jan-5 Jan-6 Jan-7 Jan-8 Jan-9 Jan-1 Nylon 6 Fiber Chip Polyester Fiber Chip Recent Restructuring Selected Closures Or Rationalizations Wellman / U.S. Polyester Permanent exit of staple market Invista / U.S. Nylon Permanent closure of Seaford BCF assets Advansa / Europe & Turkey Partial closures of staple & textile filament Invista / U.S. Temporary closure Waynesboro BCF nylon complex Poliseda / Europe Closure of Alcala industrial filament Solutia / U.S. Partial closure of Greenwood BCF assets; Conversion of Pensacola staple assets to resin Diolen / Europe Peformance Fibers / U.S. Closure of Emmen industrial filament Partial closures of Salisbury & Moncure Invista / UK Proposed closure of nylon UK plant; partial closure of Gloucester textile filament Fibre Session Karen Jones page: 9

10 Fiber Production On The Move Polyester Fiber Capacity Shifting Million Metric tons Developed Economies Emerging Countries Fibre Session Karen Jones page: 1

11 China s Polyester Fiber Capacity Still Growing Million Metric Tons China All Other Countries Future Outlook Synthetic fiber feedstocks will follow crude oil trends especially especially in polyester where excess capacity exists throughout the value chain New capacity additions must be better aligned with demand growth if profitability is to improve Producers in developed economies must increasingly focus on value-added added specialties and service in order to compete Synthetic fiber demand growth will return as the world economies improve Fibre Session Karen Jones page: 11

12 What Will Drive Fiber Recovery? Economic stimulus measures are helping drive consumers back into the market Employment stabilization Increasing consumer confidence will loosen purse strings Population growth Emerging economies increased buying power will drive per capita consumption growth Million Metric Tons 6 World Polyester Demand Growth Returns From Asia Pacific Americas Europe Africa/Middle East World Capacity World Avg. Utilization Rate Fibre Session Karen Jones page: 12

13 Conclusions Success Strategies Devise strategic alternatives to weather near-term challenges Act decisively to maximize value Aggressively manage all costs Diversify customer base if possible to spread risk Focus on strengths Superior customer service Low-cost commodities Value-added added specialties Leverage commercial agreements for improved market position and profitability Thank you! Celebrating 3 Years as the premier provider of Market, Planning and Business Advisory Services for the global chemicals, plastics, fibers, synthetic rubber and chlor alkali industries. Fibre Session Karen Jones page: 13