The Rupp Report: Domestic Markets Lead The Way

In the first news from ITMA Asia CITME 2010 two weeks ago, the Rupp Report indicated some recovery
in certain markets. Since February/March 2010, the markets have been booming, especially in Asia,
and some manufacturers already have very long delivery times. China is the top country, followed by
India, Pakistan, Bangladesh and Indonesia. This is basically thanks to the soaring domestic market
in China and in other countries such as India.

But not only are Asian markets recovering; the huge domestic market of Brazil also is showing
an important upswing. Surprisingly, the exhibitors welcomed many visitors not only from Asia, but
also from Brazil.

Fall In Global Yarn And Fabric Production

However, according to the latest State of Trade Report from the International Textile
Manufacturers Federation (ITMF), Switzerland, the strong global recovery in yarn and fabric
production that was observed after the first-quarter 2009 lows came to an end in the first quarter
of 2010.

Both yarn and fabric production dropped considerably compared to the last quarter of 2009,
though levels were significantly higher than first-quarter 2009 levels. Yarn and fabric production
dropped in Asia and Europe, whereas South and North America recorded stable or higher output levels
in comparison to the previous quarter. Global yarn stocks fell slightly mainly because of lower
inventories in South America, while those in the other regions remained almost unchanged. Global
fabric stocks increased owing to higher inventories in Asia, South America and Europe. Yarn orders
increased in South America but remained unchanged in Europe, while fabric orders rose in both

Higher Yarn Production, But Lower Fabric Production

Global yarn production dropped by 12.8 percent in the first quarter of 2010 compared to the
previous quarter, mainly as a consequence of 17.3-percent-lower output in China. Europe recorded a
4.0-percent decrease, whereas North and South American production rose by 5.1 percent and 17.4
percent, respectively. Compared to first quarter 2009, all regions recorded higher production
levels. South American yarn production was particularly impressive, recording a 60.4-percent surge.
Europe, Asia and North America also reported higher output levels, at 20.1 percent, 14.6 percent
and 1.5 percent, respectively.

In contrast, first-quarter 2010 fabric production decreased by 9.7 percent, with Asia and
Europe recording 11.4-percent and 3.6-percent lower output levels, respectively. China’s fabric
production fell by 16.4 percent. The guess of the Rupp Report is that these figures reflect lower
exports to Western countries. North American production levels were stable, and South America
recorded 5.3-percent-higher output. Yet, global fabric production increased year-on-year by 8.3
percent. Only North America reported declining fabric production over the year, with a 9.2-percent
drop. Fabric production in Europe, Asia and South America was up by 20.3 percent, 8.3 percent and
2.4 percent, respectively.

Yarn And Fabric Inventories

First-quarter 2010 global yarn inventories dropped slightly, by 0.8 percent, including
respective 4.8-percent, 0.9-percent and 0.6-percent declines in South America, Europe and Asia.
Year on year, world yarn stocks were down by 7.7 percent, with respective 31.4 percent, 8.1 percent
and 4.7-percent drops in South America, Asia and Europe.

World fabric stocks rose by 3.3 percent in the first quarter of 2010, with Asia, South
America and Europe recording respective 4.4-percent, 4.0-percent and 0.8-percent increases; while
North American fabric inventories fell by 0.6 percent. On an annual basis, global fabric
inventories jumped in South America and Asia by 36.0-percent and 11.7 percent, respectively, while
North American and European inventories fell by 15.2 percent and 1.3 percent, respectively.

Europe showed unchanged first-quarter yarn orders and 1.5-percent higher fabric orders
compared with the previous quarter. Brazil’s recovery is confirmed with yarn orders rising by 7.2
percent, while fabric orders jumped by 37.3 percent. Year-on-year, yarn orders in Europe and Brazil
rose by 15.5 percent and 25.3 percent, respectively. Also, fabric orders grew in Brazil and Europe,
by 9.5 percent and 18.1 percent, respectively.

This is good news for the global textile industry. A last word from a textile producer in
Brazil during a visit last week: “I’m happy when the  soccer World Cup is over. People will
hopefully spend some money now in textiles, and not in beer and TV sets like they did in the last

July 21, 2010