Global trends in fibre production, consumption and prices, March-April 2007

23 pages, published in Issue 128, March-April 2007   Report price: Euro 395.00; US$ 520.00

World man-made fibre production continued to rise in 2006 but at a slower pace than in the previous year. In 2006 output was up by 3.9% to 37.5 mn tons following a 5.8% hike in 2005. Moreover, the 2006 rise was sustained entirely by strong growth in China. Synthetics accounted for most of the increase?and almost all of the increase in synthetics was due to growth in polyester. But cellulosics were also up, by a healthy 10.0%.

Prices of synthetic fibres and fibre intermediates grew significantly in the first four months of 2007. The rises were much faster in Asia than in Europe, and were driven by a gap between supply and demand?rather than the increases in crude oil prices which have driven up prices in the recent past. In fact crude oil prices were actually down in the first four months of 2007 compared with the corresponding period in 2006.

Output of natural fibres rose by 1.6% in 2006 after a 5.8% fall in 2005. The rise was driven by a 1.7% increase in cotton output?following a 6.2% fall in 2005?as growers responded to the firming of prices. But the decline in the wool clip continued. As a result of these trends, the share of natural fibres in total fibre output fell from 41.9% to 41.4%. The cotton price stabilised in 2006 in the high 50 cents/lb range after recovering from a low point in December 2004.

Looking ahead, cotton demand in the 2006/07 season is predicted to rise by 4.4%, mostly due to higher usage in China and South Asia. Output, meanwhile, will be up by 2.6%, according to the International Cotton Advisory Committee (ICAC). But cotton buyers remain resistant to price increases and, with no major changes in supply or demand, prices will remain steady. According to the ICAC, the cotton price will average 62 cents/lb in 2006/07?4 cents/lb more than in 2005/06. It will remain at that level or slightly above for the 2007/08 season. Wool prices rose sharply in the latter part of 2006 and in early 2007 due to concern over the continuing effect of the drought on the Australian clip?combined with rising demand at the retail level and a consequent increase in orders in the wool textile industry. But while the stock position is tightening, there is little prospect of a strong recovery in demand. Global demand is being sustained largely by consumption in China. Elsewhere, demand is being depressed by restructuring in the textile industries of industrialised countries. The outlook is for little further rise in prices. Although stocks are expected to fall slightly, the balance between supply and demand is likely to be maintained in 2007/08.

Global Trends in Fibre Production, Consumption and Prices

Summary
General Trends
Cotton
Wool
Man-Made Fibres

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• Profile of Lenzing: A Leader in Cellulosic Fibres and a Joint Venture Partner in Carbon Fibres, (1st quarter 2007)
• Global trends in fibre prices, production and consumption, September-October 2006, (September-October 2006)

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