Against the backdrop of the highly dynamic development of fiber production volumes over the last two years, growth in world fiber production in the 2012 financial year was considerably dampened by the persistent weak economic climate.
Initial estimates conclude that the rise in world fiber production rose by 1.2 per cent during the year, with total volume up from 81 million tons to 82 million tons. This was in striking contrast to the 6.4 per cent increase generated in 2011. Even the slight growth rate took place only in the emerging markets. The stagnating economies of the Western countries strongly dampened textile imports from Asia. As a result, Chinese textile and clothing exports in 2012 were up by only 2.8 per cent to $254 billion, a much more moderate rate than in previous years characterized by double-digit growth rates. As compared to past years, the domestic markets in Asia could not compensate for the declining export demand. On balance, this resulted in a very weak market situation in 2012 for the entire textile industry.
Full in cotton production
Cotton production fell by 4.8 per cent, from 27.3 million tons in the previous year to 26 million tons in 2012. Accordingly, cotton production during the year corresponded to the comparable volumes of 2006 and 2007.
Initially, the total cotton harvest was expected to be considerably lower in 2012. In addition, the cotton selling price declined significantly again, starting in the second quarter of 2012, following the record cotton prices reached during 2011. As a consequence, development of cotton prices has detached itself from the current price cycle of agricultural commodities.
On the other hand, cotton production in 2012 once again exceeded consumption, which in turn led to a further increase in cotton inventories. Experts estimate that cotton stocks will rise to a new record level of 16.7 million tons after the end of the current 2012-13 cotton harvest, corresponding to a stock-to-use ratio of 71 per cent.
According to market experts, the lion’s share of the high cotton inventories is located in China. As in previous years, wool production stagnated at an annual production volume estimated at about one million tons.
Marked rise in chemical fiber output
In spite of the restrained demand for fibers, global chemical fiber production rose once again in 2012. According to preliminary figures, it showed an increase of 4.4 per cent to the new record production level of 54.9 million tons, up from the prior-year figure of 52.6 million tons. Synthetic fiber polyester, which posted growth of 4.1 per cent in 2012, accounted for some three-quarters of total chemical fiber production. Production of polyamide fibers also increased strongly by 3.8 per cent.
In contrast, production of polypropylene stagnated and acrylic fibers down four per cent. China, which manufactured close to two-thirds of all chemical fibers produced worldwide in 2012 (annual production: 35.5 million tons), generated the biggest rise, with production up 7.6 per cent.
Chemical fiber production volumes also increased in Indonesia, the US and Korea, in contrast to decreases reported in Taiwan, Japan and Western Europe.
Production of man-made cellulose fibers expanded at a considerably higher rate than the global fiber market as a whole, and was disproportionately higher than the global chemical fiber industry. A new record production level of about five million tons was achieved, comprising a growth rate of 6.8 per cent from the previous year. This included 3.66 million tons of cellulose staple fibers, a rise of 9.2 per cent in a year-on-year basis. New production capacities were put into operation in 2012, especially in China and Indonesia.
Sliding fiber prices
The cotton price, the benchmark for the entire fiber industry, was characterized by a clear downward trend starting in the middle of 2012. The Cotton A Index started the 2012 financial year at 96.7 US cents per pound. Starting in the middle of the year, the price oscillated between 80-85 cents per pound, and ended the year at 83 cents, corresponding to a drop of about 14 per cent. The average cotton selling price of 88.9 cents per pound was more than 40 per cent below the prior-year level.
In spite of the high cotton inventories, the average selling price for cotton in 2012 was still substantially above the all-time lows of past years. This can be attributed to a long-term structural change affecting the cotton price. A slight upward movement in prices was perceptible at the turn of 2013.
The Chinese Government pursued a rigid protection policy in 2012 for the benefit of cotton producers and set selling prices at a level more than 25 per cent higher than world market prices. In addition, China massively expanded its cotton inventories in 2012.
The considerably lower world market prices for cotton put a downward pressure on all other fibers. The price for polyester staple fibers hovered at a low level throughout the entire year, and declined to 140 cents per kg in June, its lowest selling price for the year.
Viscose staple fiber prices followed the general trend prevailing for all other fibers, but with a certain time delay. At the beginning of 2012, standard viscose staple fibers were quoted at a considerably higher level on the spot market in China, the world’s largest fiber market, and declined by about 15 per cent by the end of the year. The turn of the year 2012-13 witnessed a consolidation of the downward movement in Chinese spot market prices for viscose fibers.
Starting in the second half of 2012, viscose fibers were once again partially able to maintain their long-standing price premium of 10-15 per cent above the corresponding cotton prices.
The significantly lower viscose fiber prices compared to the previous year against the backdrop of raw material prices which declined to a lesser extent resulted in production cut-backs and capacity under-utilization afflicting a series of Asian manufacturers. A competitor in southern Europe completely terminated production at the turn of the year.