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| Issue date:01/06/2006 |
| ATA Journal for Asia on Textile & Apparel - Jun 2006 Issue |
| Source:Journal for Asia on Textile & Apparel |
| by Au Kin-fan and Wong Man-chong |
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| Figure 1: World major synthetic fiber production in 2004 |
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The demand for polyester fiber is forecasted to enjoy a solid, long-term growth. It is predicted that global demand for polyester would increase by 7% per annum over the next 10 years, which seemingly led by strong consumption in the Asian market, especially China.
With the spectacular economic development, huge textile and apparel consumption, coupled with the expansion in textile and clothing exports after the MFA quota elimination, all provided an impetus on the persistent growth of polyester consumption in China in the next decade. According to the latest report of China Petroleum and Chemical Industry Association, it is projected that the domestic polyester consumption of China would increase by 8.3% annually, to 15.3 million tons in 2005 and 18.3 million tons by 2008.
As polyester has superior functionality and property, it is widely applied in apparel, industrial and home textiles. There are arguments that polyester staple fiber can substitute the uses of cotton fiber, since this would get rid of the threat of shortage and unsteady supply of natural fibers. Based on this, industries consider that the future prospects of polyester will remain bright despite its profit margins are being hampered by the rampant swings in energy price.
Figure 2: End uses of polyester
Source: Polyester Fibers, Chemical Market Report, Mar 2004
Figure 3: Polyester production output (million tons)
Source: Fiber Organon, various issues
* Estimated by production capacity |
Synthetic fiber remains a popular choice
Synthetic fiber production is a growing industry with global output reaching a new record of 33 million tons in 2004. With extensive end-uses and applications, the world's consumption of synthetic fibers outperformed natural fibers such as wool and cotton. In the synthetic fiber sector, acrylic, nylon and polyester are the most popular fibers. As shown in Figure 1, polyester gained its dominance to command 77% of total production of the major synthetic fibers, while nylon and acrylic shared the remaining 21%.
Today polyester overtook cotton as the leading textile fiber. It now accounts for about 40% of the global fiber consumption with a forecasted 45% share in 2008. With outstanding functional properties and relatively lower raw material cost, polyester has found its application proliferated in apparel, industrial applications and home textiles (Figure: 2).
Polyester stood out among synthetic fibers
The global polyester production has demonstrated an upward trend in recent years (Figure 3). The actual polyester production output in 2004 increased by 9.1% to 24.4 million tons with production growth rate outperformed acrylic and nylon fibers (Table 1). Both polyester filament and staple fiber contributed to this amazing growth and showed 9.1% and 9.2% increases respectively in 2004.
Table 1: Synthetic fiber production (percentage change)
* Estimated by production capacity
Source: Fiber Organon, various issues |
There is also no sign of stagnation or saturation in the coming years. Polyester production is further expected to increase by 4% and reach a record high of 35.12 million tons in 2006. In this connection, the growth rate of filament yarn production is forecasted to register a 3.3% increase, while staple fiber is expected to rise by 4.8% for the same year.
Regional shift in polyester production
It is commonly known that polyester production in the world has undergone a regional shift over the last decade. The industrialized countries have lost their pre-eminent positions in the global polyester production market as showed by decreasing trends in world shares (Figure 4). In 1990, the US and the European countries assumed the prominent roles in polyester fiber production and altogether accounted for 43% of the total world share.
Figure 4: Polyester production of leading producing countries (Share %)
Source: Fiber Organon, various issues
* Estimated by production capacity |
However, their world shares have plummeted to 6% and 4.3% respectively in 2004. According to the latest figures provided by PCI Fibers, only three North American polyester producers still maintained within the top-20 positions (No. 17, 18 and 20 respectively). While the other leading positions are dominated by Asian fiber producers, including China, India, Indonesia, South Korea and Taiwan.
In the early 1990s, South Korea and Taiwan have made a strong run in the polyester production sector, but slowed their pace in recent years. During 2001 and 2004, the world shares of South Korea and Taiwan in polyester production have dropped from 12.4% and 10.8% to 9.6% and 7.2% respectively. Although the two producing countries can manage to stay in the top positions, their world shares are projected to bottom to 7.8% and 5.7% respectively in 2006.
On the other hand, the increase in global polyester output was largely constituted by China, who currently ranked the first in the world polyester production sector. Buoyed by its burgeoning textile and clothing industry, China's polyester output showed a double-digit growth rate during the 2000s. Its production output grew by 24.6% to reach 11.38 million tons in 2004 and captured 46.6% share of the global polyester production output.
According to the China Petroleum and Chemical Industry Association, it is expected that China's polyester industry will maintain robust growth in the forthcoming years, as the country is projected to constitute 51.9% and 52.6% of the world shares in 2005 and 2006 respectively. A study conducted by the Chemtex International Inc indicated that the spectacular growth of polyester production in China was the result of the favorable government policies, adequate funding support from local banks and strong subsidized power.
Moreover, capacities in the industrialized countries, which have to rationalize their production costs due to intense price competition, have already shifted their manufacturing bases to China and other low-cost countries, and may have opened up new production plants through foreign direct investment.
It is also noticeable that other developing Asian countries are attempting to become the eminent polyester fiber producers. The production output of India and Pakistan have recorded double-digit growth rates in 2004, as the result of their cost advantages and improved technology know-how.
Polyester price to continue the uptrend
Polyester price has kept continuous increasing since the new millennium and recorded at US$0.68 per pound in 2005 (Figure 5). The cumulative increment of polyester had recorded at 18.7% over the last five years. This increasing price trend is attributed to the continuous rise in crude oil price.
Figure 5: Trend of polyester price (US$/lb)
Source: http://www.cotton.org/econ/prices/monthly.cfm
Figure 6: Price relationship between cotton and polyester
Source: http://www.cotton.org/econ/prices/monthly.cfm |
Since polyester is a derivative of petroleum product, crude oil price has a direct relationship with the polyester price. In recent days, crude oil prices rocketed to US$75 per barrel record-high, which has led to a corresponding sharp increase in PET and MEG (key raw materials for polyester) prices and hence exerted a severe pressure on the profit margins of polyester. If this trend continues, it may affect the growth in polyester demand in the short term.
At the same time, it is evident that cotton price has a strong co-movement effect as with polyester price. As illustrated in Figure 6, the cotton price increased during 2000 and 2002, with a corresponding decrease in polyester price. A reversing trend is also observed in 2004-2005: cotton price fell with a corresponding rise in polyester price. In this sense, it is predicted that the polyester price will likely increase in the medium term future, as the international cotton price is forecasted to cast a falling trend in the near future.
Au Kin-Fan is an associate professor, and Wong Man-chong is a PhD candidate, at the Institute of Textiles and Clothing, Hong Kong Polytechnic University.
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| Copyright © Adsale Publishing Limited. Any party needs to reprint any part of the content should get the written approval from Adsale Publishing Ltd and quote the source "ATA Journal for Asia on Textile & Apparel", Adsale Textile English Website - www.AdsaleATA.com. We reserve the right to take legal action against any party who reprints any part of this article without acknowledgement. For enquiry, please contact Editorial Department. |
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