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| The Textile Magazine
JUly 2012
fiber news
The unpredictable volatility in
global economies impacted the
textile markets, and demand in
major consuming economies turned
cautious and slower. Many produc-
ers across the globe shifted or set
up new manufacturing bases at
low-cost centres, mostly in Asian
countries.
The competitiveness of Chinese
exports eroded as the Chinese Gov-
ernment made Yuan market domi-
nated. As a result, Yuan strength-
ened by five per cent, while other
major Asian currencies depreciated
by 5-9 per cent against the US dol-
lar. In addition, labour costs also
impacted cost structures in China.
During FY 2011-12, cotton
markets continued to be an area of
significant interest. Encouraged by
high prices in cotton marketing year
FY 2010-11, farmers planted about
eight per cent more acres for the
next season. However, at the time
of the harvest, demand prospects in
major consuming countries faltered.
Downstream players in major
processing centres across the globe
lowered operating rates, leading to
huge stockpiles. Consequently, cot-
ton prices plunged by 10 per cent
in contrast to 100 per cent increase
witnessed in FY 2010-11. The
Chinese reserve purchases by the
Government were also not enough
to sustain the surge in supplies in
most producing countries.
The high volatility in cotton pric-
es and ambiguous outlook forced
downstream players to opt for
polyester due to lesser price volatil-
ity and greater reliability of steady
supplies of polyester. Consumption
of polyester fibre and yarn during
2011 thus increased by seven per
cent to 39 mmt.
In 2011-12, polyester prices in-
creased by five-six per cent over the
previous year, mainly owing to cost
push from feedstock and energy.
The unfriendly demand scenario
kept markets unreceptive, and pres-
sure on margins increased, lowering
delta by 24-30 per cent. Producers
turned cautious to keep plant opera-
tions in control to avoid piling of
inventories.
Polyester capacity additions
were predominantly seen in PFY,
accounting for about 70 per cent of
the total four mmt. PSF witnessed
restart of some idled capacity ow-
ing to the surge in demand, arising
from fluctuations in cotton prices
and better margins in PSF.
It is expected that by 2015
polyester capacity would increase
by about 12 mmt, largely in PFY.
Most of these capacity additions of
about 9 mmt are planned in China.
At the same time, global demand
is likely to grow by 7 mmt by the
same period.
Domestic operating envi-
ronment
India continued to hold a crucial
Outlook for
synthetics stabler
than for cotton textiles