Polyester Fibres and Textiles: Conflict or Cooperation?ccfei.net/UpFile/Conference/201011081615374319607.pdf · Polyamide Acrylic Polypropylene Cellulosics Other. 3 ... Indonesia

Polyester Fibres and Textiles: Conflict or Cooperation?

Colin Purvis

Director General

European Man-made Fibres Association (CIRFS)

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7th China International Polyester & Intermediates F orum

Europe is a Large and Innovative MMF Producer

• The second largest man-made fibre producer in the w orld

• World’s largest exporter of acrylic and cellulosic fibres

• Hosts world’s largest single site production units for acrylic and viscose staple

• World’s largest producer of polypropylene fibres

• First in aramid and ultra high molecular weight pol yethylene

• Innovation leader in polyamide textile yarns

• Effective producer of speciality polyester

• Strong position in special fibres for filtration, g eotextiles, agrotextiles…

• And many other strong points too


Colin Purvis

CIRFS: European Man-made Fibres Association


3-5 November 2010, Shanghai


Colin Purvis

CIRFS: European Man-made Fibres Association


3-5 November 2010, Shanghai

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European Strengths in Polyester

• Extreme flexibility

• Short runs of special products

• Quick response to customers

• Innovation, leading to product development

• Leader in polymer-modified fibres

• Concentration on environmental excellence, including low energy

usage and minimal air and water emissions

• Growing share of solution-dyed fibres

• Strong position in flame-retardant fibres, bioactiv e fibres, low-pill…

Europe has a Balanced Production Profile

European man-made fibres production 2009:3.2 million tonnes

Polyester

Polyamide

Acrylic

Polypropylene

Cellulosics

Other

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But Polyester Dominates Elsewhere

World man-made fibres production 2009:44 million tonnes

Polyester

Polyamide

Acrylic

Polypropylene

Cellulosics

Other

China: the World’s Polyester Fibres Giant

• China dominates world production and trade in polye ster fibres,

textiles and apparel

• 64% of global polyester fibres capacity

• 61% of global polyester fibres production

• 64% of global polyester fibres usage (spinning, wea ving,

knitting and nonwovens)

• 25% of global polyester fibre exports

• 46% of global polyester industrial filament exports

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China has a 64% Share of Global Polyester Capacity

ChinaIndia Chinese TaipeiKoreaEuropeUSAIndonesiaThailandPakistanMalaysiaBrazilCISOthers

Major Polyester Fibre Exporters

China

Korea,South

Taiwan

India

Indonesia

Thailand

Malaysia

United States

Vietnam

E.U.27

Rest World

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China Leads in Textiles and Apparel too

• China is the world’s largest textile and apparel pr oducer and

exporter

• 40% of world textile exports

• 43% of world apparel exports

• Share of trade in polyester textiles is even higher

• 65% of global polyester spinning, weaving, knitting and apparel

production

Major World Exporters of Textiles

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Are there any Threats to China’s Success in Polyester?

• China will remain the dominant power in polyester

• India will expand, but mainly for the local market

• Excess capacity will squeeze margins and profitabil ity

• Environmental concerns will need attention – includi ng in export markets

• In some labour-intensive processes, rising wages in China will force delocalisation not only to Western provi nces, but also to Vietnam, Bangladesh, Cambodia…

• Exports may be subject to protective actions, such as anti-dumping and anti-subsidy

Will there be Anti-Dumping Actions in Polyester?

• Yes, there is a serious risk because…

• There is huge global overcapacity in polyester fibr es and

textiles

• Overcapacity leads to increased efforts to sell in export

markets

• Often at just above variable cost

• This causes volume and price injury to producers in affected

markets

• WTO rules allow anti-dumping action in these circum stances

• Other countries’ producers will defend themselves!

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Are Anti-Subsidy Actions likely?

• Yes, because…

• Many countries offer subsidies to investment, produ ction or exports, like:� Cheap finance for investment

� Under-priced land

� Subsidised energy or raw materials

� Support for brand promotion

� Export incentives

• National, regional and local support is included – a nd even help from state banks and industrial companies

• WTO rules allow anti-subsidy action if subsidised e xports are causing injury in domestic markets

• More actions are now being taken

A Textile Example: US Duties on Woven Laminated Sacks from China

0

50

100

150

200

250

Anti-dumping duties Anti-subsidy duties

Maximum

Minimum

% duty rates

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Is China Vulnerable to Anti-Dumping and Anti-Subsidy Actions on Polyester ?

• Yes, because…

• It has the biggest capacities

• It is the biggest producer (in fibres, yarns, fabri cs and

apparel)

• It is the biggest exporter

• Its exports are rising rapidly

• It has the biggest overcapacity

• It sells at some of the lowest prices of any countr ies

China has 6 million tonnes over-capacity in polyester, but is still adding capacity. Why?

000 tonnes

Source: Tecnon OrbiChem

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China Exports at up to 25% Below Other

Countries’ Export Prices. Why?

Index: Rest World export price 2009=100

Is Conflict in Global Polyester Trade Inevitable?

• It is a big risk, but it can be avoided

• China is the market leader – it needs to accept grow ing

responsibility

• That means making responsible investment decisions

• Taking a long-term view of building export markets

• Meeting the environmental expectations of consumers

• Adding value through innovation

• Seeking opportunities for global cooperation

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Responsible Investment

• Investment decisions should be based on market and financial analysis…

• …never simply on availability of cheap finance or p rotection of market share

• Copying a competitor’s expansion is always a bad id ea

• Building excess capacity depresses margins and prof itability foreveryone

• Consultants such as CCFEI and Tecnon OrbiChem can h elp –they know the market trends

• So can organisations such as the China Chemical Fib ers Association

Responsible Trade

• Maximising short-term export volumes is not always the best policy

• It can lead to a collapse of the price structure in the export market, and lower prices for the exporter

• Often, intermediaries earn more money than the expo rting producer

• It can lead to defensive action by local producers, and loss of markets already gained (like polyester staple in Eu rope)

• Exporters should study the export market before ent ering (consultants can help)

• Building relationships with customers and cooperati on with local suppliers is often the best and most profitab le way of expanding exports for the long term!

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Responsible Care for the Environment

• Pressure from customers in export markets for high environmentalstandards is still growing

• Not only Europe, USA, Japan – many other markets too

• Chinese textile exports – from fibres to apparel – wil l be at risk if respect for the environment cannot be proved

• Even a few bad examples can discredit the whole ind ustry

• Sensitive activities include pulp, viscose, dyeing, finishes…

• Care for employee safety, and for their treatment, h ave to be demonstrated too (« Corporate Social Responsibility »)

• Customers also want to see national plans to fight c limate change – and « carbon taxes » at borders are possible for impo rts from countries not playing a full part

Europe’s Largest Industrial Filament Plant

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Adding Value through Innovation

• Trade based on innovation and quality is more profi table, with better long-term prospects, than trade based o n high volumes and low prices

• Innovative fibres can be sold at higher prices – don ’t believe export customers who say that they will not pay a p remium

• China has good universities and research centres, a nd a growing number of innovative polyester products

• Improvements in intellectual property protection wi ll help innovation

• International cooperation can help

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Taking Advantage of Global Cooperation

• Global cooperation helps everyone

• Investment in China by non-Chinese fibre producers with technological lead can benefit everyone

• Some European fibre and textile producers have conc erns –justified or not – on intellectual property protecti on

• Investment in Europe by Chinese fibre or textile pr oducers is welcome – only one fibres investment so far (carbon fibre precursor)

• Other forms of cooperation – commercial, technical, innovation – can have positive results

• Cooperation breaks down suspicions and contributes to global trade growth

Conclusions

• Global trade conflict in polyester fibres and texti les is a big risk

• China has most to lose – because it is the biggest

• Further spread of anti-dumping and anti-subsidy act ions will harm China’s global expansion

• But conflict can be avoided…

• By responsibility in investment (no more building o f excess capacities)

• Building up markets on a long-term basis

• Concentration on environmental action and innovatio n

• More global cooperation

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And finally

Competition in polyester fibres and textiles is hea lthy –

but, when it becomes conflict, everyone suffers. Co nflict

can be avoided if companies make responsible choice s

on investment and marketing strategies, and think a bout

long-term growth as well as short-term volumes.

Cooperation, within a global framework of market-le d

competition, is a better way, and the European man- made

fibres industry is ready to play its part.

Thank you!Colin Purvis

[email protected]

Tel: +32/2.676.74.60+32/475.43.74.55

Documents

Polyester Fibres and Textiles: Conflict or Cooperation?ccfei.net/UpFile/Conference/201011081615374319607.pdf · Polyamide Acrylic Polypropylene Cellulosics Other. 3 ... Indonesia