About Textiles Intelligence Business and market analysis...

About Textiles Intelligence

Business and market analysis for the global fibre,

textile and apparel industries

Spun-off from the Economist Intelligence Unit

in 1992

Textiles Intelligence Four publishes four regular titles:

Global Apparel MarketsPerformance Apparel Markets

Technical Textile MarketsTextile Outlook International

Textile fibres for a sustainable future: cotton,

synthetic or cellulosic?by Robin Anson

Managing Director, Textiles Intelligence

Tribute to Edelweiss, St Wolfgang, Austria, July 3, 2012

Textiles Intelligence www.textilesintelligence.com

The global economy


Recession ...


World, USA and EU: GDP growth rates, 2007-09

Sources: Economist Intelligence Unit (EIU)

World USA EU-6

-4

-2

0

2

4

6

4.0

1.92.9

1.2

-0.3

0.5

-2.4

-3.5-4.2

(%)

2007 2008 2009

... followed by recovery ...



World, USA and EU: GDP growth rates, 2009 and 2010


World USA EU-6

-4

-2

0

2

4

6

8

-2.4-3.5

-4.2

4.13.0

2.0

(%)

2009 2010

... but in the EU there will be a second dip in 2012 ...





World USA EU-1

0

1

2

3

4

5

4.1

3.0

2.02.5

1.7 1.62.1 2.2

-0.5

(%)

2010 2011 2012

... and slow growth in 2013





World USA EU-1

0

1

2

3

4

5

4.1

3.0

2.02.5

1.7 1.62.1 2.2

-0.5

2.62.1

0.8

(%)

2010 2011 2012 2013

Our industry also recovered in 2010



USA

China

Western Europe

World trade in textiles and clothing, 2000-10

Source: Textile Outlook International from WTO data

2000 2005 2006 2007 2008 2009 20100

100

200

300

400

500

600

700

352

478525

583 612

525602

US$ bn

ClothingTextiles


World fibre demand, 2006-10

NB: Excluding olefins and acetate tow; cotton and wool data are consumption figSource: Fiber Organon

2006 2007 2008 2009 20100

20

40

60

80

100

65.1 69.3 64.2 65.473.6

mn tons

SilkWool CottonCellulosicSynthetic

ures to minimise impact of inventory swings

But the upturn helped to trigger a surge in raw material prices ...



Cotton prices, 1991-2011

Source: Cotton Outlook

Jan 1991 Jan 1996 Jan 2001 Jan 2006 Jan 20110

50

100

150

200

250

US$/lb, monthly averages

Mar 2011

... causing severe disruption to the market


Impact on EU and US clothing imports


Surge in clothing import prices......slow growth or decline in clothing import volume


Growth (right hand

scale)

Size (left hand scale)

USA and EU: growth in clothing importvolume and price, 2011

Sources: Euratex; US official statistics

EU USA-10

-5

0

5

10

15

20

25

7.5

12.8

0.8

-3.6

(%)

Price Volume

EU USA

Price PriceVolume

Volume

But the trend in man-made fibre apparel was different – volumes and prices kept growing



Growth (right hand

scale)


USA: growth in clothing import volumeand price by fibre type, 2011

Source: US official statistics

Cotton apparel MMF apparel-15

-10

-5

0

5

10

15

2017.0

9.7

-11.8

8.3

(%)

Price Volume

Price Price

Volume

Volume

USA

MMFCotton


Growth (right hand

scale)


USA: share of clothing imports in volume termsby fibre type, 1991-2011


19911992

19931994

19951996

19971998

19992000

20012002

20032004

20052006

20072008

20092010

201130

35

40

45

50

55

60

65

(%)

Cotton apparel

Man-made fibre apparel

USA


Growth (right hand

scale)


USA: growth in clothing import volume and priceby selected leading supplying country, 2011


PakistanBangladesh

HondurasIndia

ChinaEl Salvador

IndonesiaVietnam

Cambodia

-10

0

10

20

30

23.619.7

16.5 15.012.1 11.2 10.2

8.1 6.5

-10.3

-4.1-7.0 -7.4 -6.2 -4.6

3.6 4.6

9.5

(%)

Price Volume

USA


Growth (right hand

scale)


EU: growth in clothing import volume and priceby selected leading supplying country, 2011

Source: Euratex

BangladeshIndia

PakistanTurkey

IndonesiaVietnam

CambodiaChina

-20

-10

0

10

20

30

40

50

22.3 20.5 19.6

12.1 11.97.9 6.4

3.15.0

-9.1

5.4

-7.1

2.5

14.2

39.7

1.4

(%)

Price Volume

EU


Since then the cotton price has fallen ...


Cotton prices, 1991-Jun 2012

Source: Cotton Outlook

Jan

1991

Jan

1992

Jan

1993

Jan

1994

Jan

1995

Jan

1996

Jan

1997

Jan

1998

Jan

1999

Jan

2000

Jan

2001

Jan

2002

Jan

2003

Jan

2004

Jan

2005

Jan

2006

Jan

2007

Jan

2008

Jan

2009

Jan

2010

Jan

2011

Jan

2012

June

201

2

0

50

100

150

200

250

US$/lb

But there are few signs of a return to normality



USA and EU: growth in clothing importvolume and price, q1 2012

Sources: Euratex; US official statistics

EU USA-20

-10

0

10

20

8.7 7.6

-12.0

-3.9

(%)

Price Volume

Price Price

Volume

Volume

EU USA

Jan-Mar 2012


USA: growth in clothing import volumeand price by fibre type, q1 2012


Cotton apparel MMF apparel-15

-10

-5

0

5

10

15

20

9.57.9

-11.8

8.1

(%)

Price Volume

Price Price

Volume

Volume

Jan-Mar 2012 – USA

MMFCotton


Impact of the cotton price hike downstream?


Interesting work on “pass-through” by Jon Divine and Alejandro Plastina of ICAC...






USAUSA

9 Asian countries

Isn’t this all in the past now?

Surely, the cotton price hike was a one-off ...


ICAC press release July 2, 2012 ...


World Cotton Trade to Decline Significantly in 2012/13After a 20% jump to 9.2 million tons in 2011/12, the volume of cotton traded internationally is expected to drop by 18% to 7.6 million tons in 2012/13.

The leap in global cotton trade in 2011/12 does not reflect improved demand for cotton. In fact, global cotton mill use is estimated down by 7% to 22.7 million tons, the smallest in eight years.

High and volatile prices and a slowing global economy drove demand for cotton yarn down. Increased cotton trade in 2011/12 is due to a neardoubling of shipments to China to 5.1 million tons.

Chinese mills have turned to imports to compensate for the shortage of domestic cotton caused by the rebuilding of the national reserve. In addition, large quantities of cotton were imported by the Chinese government specifically to help rebuild that national reserve.


In fact raw material prices will climb again over time because there are long-term problems



Fibre demand per head is growing


World end use consumption of textile fibresper head, 1960-2011

Source: International Cotton Advisory Committee (ICAC)

1960 1975 1990 2005 20110

2

4

6

8

10

12


So is world population –1.4 bn more people by 2030


The result?


World fibre consumption, 1960-2030

Source: ICAC

1960 1970 1980 1990 2000 2010 2020 20300

50

100

150mn tons


That’s good news for the textile and clothing industry.

But where will the extra fibre come from?


Sustainability issues


Dilemma: food vs fibres?% change

Fibres

Food

Population

Arable land

Source: Franz Martin Haemmerle


Harvested area of cotton range-bound



So, to grow more cotton, yields must rise


Yields are rising



But there is a big cost to the environment:

• genetically modified (GM), Bt cotton

• more intensive farming – more fertilisers, more water


And how long can yields keep rising?“India's cotton yield may fall to 5-year low... even as the area under Bt has grown to 93 per cent of the total area under the cash crop”

Business Standard, Wednesday, 26 October 2011


“Cotton production based on irrigation requires 15-35 times more water than cellulose fibre production based on wood pulp”

“Only 45% of cotton growing is based on natural rains”

(Source: Franz Martin Haemmerle)

Water consumption


Can the planet spare the amount of water needed?



• Planted area down to 28 mn ha

Cotton production heading for a plateau

• Yield up to 925 kg/ha

• Maximum theoretical cotton production 26 mn tons a year


If fibre consumption keeps rising, cotton’s share must fall


Share of cotton in world fibre consumption, 1960-2020


1960 1975 1990 2005 20200

20

40

60

80

100

%


Non-cotton fibres will have to fill the gap


USA

China

Western Europe

World textile fibre consumption, 1960-2020


1960 1965 1970 1975 1980 1985 1990 1995 2000 2005 2010 2015 20200

20

40

60

80

100

120

mn tons

Cotton Non-cotton


Question: what fibre type can fill the gap?


Polyester?


Problem: consumers want fibres with absorbency, moisture management etc33-37% has to be cellulose based, says Franz Martin Haemmerle

The cellulosic gap


% shares

Synthetic

Cotton

The cellulosic

gap


Where will the cellulosic gap be greatest?


South Asia is the most dependent on cotton


USA

China

Western Europe

Share of mill consumption by fibre type 2010

Japan, SK, Taiwan

China, HK

S East Asia

South Asia

All Asia

0 20 40 60 80 100

Wool Cotton Man-made fibre

More dependent on cotton


But can it fill the gap?


Cellulosic fibre output by leading producer2007-11

Source: Fiber Organon

China Western Europe Indonesia India0

1

2

3

1.6

0.40.3 0.3

1.4

0.40.3 0.3

1.6

0.4 0.3 0.3

1.7

0.4 0.4 0.4

1.9

0.4 0.4 0.4

mn tons

2007 2008 2009 2010 2011

India is no match for China

3 countries plus W.E. = 90% of global output


Cellulosic fibre capacity and growth,Mar 2012 and Dec 2013

Source: Fiber Organon

ChinaIndia

IndonesiaWestern Europe

0

1

2

3

mn tonsMarch2012December2013

36.1%growth

6.7% growth

6.3%growth

0.0%growth

India capacity growing but no match for China


Filling the cellulosic gap by 2030 will certainly be a challenge!


Finally, something interesting for Lenzing planners to think about...



What are we looking at?


A cellulosic material made from fermented wine ...


… called Micro‘be’…from Bioalloy in Australia


How is it made?


You will wish you hadn’t asked!


• acetobacter is added to vats of wine to turn it into vinegar• fibrous cellulose forms on the surface of the wine in the vats• the resulting fibrous cellulose is draped over a mannequin• the material shrinks to fit the mannequin’s shape• the mannequin is deflated and the garment remains


Is this serious?


Artist Donna Franklin hasdesigned a collection of stitchless dresses, T-shirts and swimwear



Wet strength?


OK, it’s not perfect yet!More info at http://bioalloy.org/o/projects/micro-be.html

Thank you!www.textilesintelligence.com

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