Work for The Fiber Year 2021 is still in full swing when writing this article in early May, but essential findings are becoming apparent:
1.) supply surprisingly robust
2.) demand dropping at double-digit rate
3.) massive investments for fiber specialties
1. Supply surprisingly robust
The pandemic pummeled the international fashion industry and most textile-related applications. Economic slowdown, lockdown measures, shuttered factories, lay-off of millions of workers in garment supply chains, store closures, collapse in consumer spending and changing purchasing patterns due to stay-at-home orders had a terrible impact on fibers. Moderate recovery in the second half allowed The Fiber Year forecasts to slightly revise upward, but still ending in deep reds for the previous year.
Compiling full-year production data for the new textile yearbook now tells a different story, as world fiber market at supply side was tolerably stagnant.
Natural fibers grew about 1% following expansion in cotton harvesting, while most other types slightly declined. Manmade fiber business just recorded minor softening, with the world without China suffering from double-digit contraction of manmade fibers, while official data from Beijing showed robust growth.
Losses in all major cellulosic fiber manufacturing countries led to a setback in quantity comparable to the impact during financial crisis. Synthetics almost arrived at previous year’s level thanks to polyester, while output of acrylics, nylon and polypropylene was reduced.
Widening gap between supply and demand came as a surprise because manmade fibers quickly can be controlled to match demand while cotton planting decision was already taken before pandemic.
The Fiber Year took a closer look from different angles including capacity, trade and processing demand to put into perspective the higher-than-expected fiber supply volume. Highest priority always has been to offer objective reporting based on as many as possible official sources, thus, The Fiber Year does not question the unexpected growth of Chinese manmade fiber manufacturing but wants to highlight possibly far-reaching implications.
2. Demand dropping at double-digit rate
Installed capacity, in general, enables the rebound in Chinese large-scale polyester filament production, contrary to viscose fibers, with output in November and December far exceeding local capacity. At global fiber stage, however, this inconsistency is of minor relevance.
From the point of view of trading, Chinese manmade fiber trade volumes in both directions fell at double-digit rate while filament exports were tolerably stable. Polyester and nylon production growth was ultimately outperformed by enlarged domestic availability, which necessarily calls for higher volumes for processing and garmenting when assuming lean inventory management.
Staple fibers, if not used in nonwovens or unspun applications, need to be processed into spun yarns and, similar to filaments, subsequently processed via knitting or weaving. Thanks to the long-term cooperation with Groz-Beckert, the world’s leading provider of industrial machine needles and precision parts for fabrics production, The Fiber Year has access to national fabric volumes as presented in a virtual webinar (“The Fabric Year 2020”) organized by Groz-Beckert in November last year.
Latest market appraisal for both technologies indicates steep contractions in both knitting and weaving operations in the Chinese industry, which was confirmed by National Bureau of Statistics of China with reports of a sharp fall of almost 19% in fabric production.
Based on the size of the Chinese fabric-making stage, a loss of a double-digit million tonnes in fabric output occurred in 2020, which leads to a substantial volume of fibers and polyester filaments ending up on stocks.
There can be many reasons for the speculative polyester filament growth, such as justification for millions of tonnes new annual capacity projected in Chinese industry through 2025, anticipation of higher filament prices, expectation of supply disruptions from competing industries or easing of container shortages to be prepared to rapidly export large volumes.
In a nutshell, significant manmade fiber stockpiling in Chinese industry will cloud demand growth at whatever speed in 2021. Manmade fiber stocks-to-production ratio jumped to around 20%. Such a particular dimension became normal by now when comparing with cotton.
Corresponding values even averaged at about 80% since 2012/13 season already, when the era of cotton inventory exceeding annual use began.
3. Massive investments for fiber specialties
Industry has been used to buildup of excess fiber capacity for almost two decades in mainstream commodity markets, essentially polyester but more recently nylon as well. This pattern will spill over to specialties like lyocell and carbon fibers.
Lyocell, a wood-based sustainable fiber does not use harmful carbon sulfide, which is toxic to workers and the environment, other than manmade cellulosics made by the viscose process. Austrian Lenzing started commercial lyocell production in the 1990s, and clearly leads the industry. Lenzing is in the process of constructing a new plant in Thailand with annual capacity of 100,000 tonnes of lyocell fibers from its first production line scheduled to come online end of 2021, with up to three additional lines possible on this site. The other two large-scale manufacturers in viscose, both having lyocell capacity at their disposal by now, are Birla Cellulose and Sateri. Sateri announced mid-March 2021 plans to expand its lyocell production in China to an annual capacity of up to 500,000 tonnes by 2025. Further investments in Turkey and essentially China from smaller producers are also in the pipeline.
Carbon fibers have superior properties like high stiffness and strength, low weight and high temperature tolerance, which make them most suitable in aerospace, defense, civil engineering and windmills, with an enormous potential in automobile applications if the cost of production is lessened. The market leader in carbon fiber is Japanese Toray Group with a third of today’s global capacity of almost 175,000 tonnes. Last year’s market sentiment was terrible with joint deliveries of Airbus and Boeing tumbling, down 55% from the peak in 2018. But it was a record year for wind power installations – the largest carbon fiber consumer. Several announcements from established companies and newcomers hypothesize stunning doubling of current world capacity until 2025.
The next installment of “The Fiber Year” column will take a look at facts and developments described in the The Fiber Year 2021 report, scheduled for release in late May. Visit thefiberyear.com for more information.