The Rupp Report: PCI Fibres Conference 2013: Excellent Source Of Fiber Information

The annual PCI Fibres Conference 2013 took place November 7-8, 2013, in Hong Kong. Topics included
the supply of the various fiber raw materials and the situation in the Asia-Pacific Rim. It was an
event full of valuable information and a gathering of global textile professionals from all
production sectors.

The PCI Consulting Group, of which PCI Fibres is a founding member, is an association of
specialist companies that together offer integrated consulting services related to the entire
fibers and intermediates chain and the related plastics industries. Its consulting perspective
ranges from refinery to finished product. PCI Fibres publishes reports that cover the major
manufactured fibers and raw materials for acrylic, polyamide, polyester and viscose as well as
related products. The PCI Fibres Red Book, published annually, provides an overview of both
consumer demand and textile mill consumption for wool, cotton and manufactured fibers. The analysis
breaks the world into 13 regions, and also looks at capacity and production for the primary
man-made fibers — acrylic, nylon and polyester — in 70 countries.

Fibers Play The Major Role

Since the beginning of all textile activities, fibers have played the most important role.
Fibers play a predominant part in defining the final fabric and its properties. Otherwise, apart
from ongoing technical improvements, the fundamental technology of forming a fabric either by
weaving or knitting hasn’t changed that much since its start. On the other hand, mostly over the
last few decades, all textile fibers have constantly gone through new developments, characteristics
and improvements — particularly man-made fibers. But also, natural fibers such as cotton have shown
permanent enhancements regarding properties. And not to be forgotten are cellulosic fibers, which
show a growing importance in global fiber consumption, not least due to the issues related to
cotton in the last few years.

Global Fiber Consumption

Peter Driscoll, managing director of PCI Consulting Group and head of the PCI Fibres
Conference, even declared cellulosic fibers to be the global fiber consumption winner in the past
few years. He mentioned that cellulosic fibers have enjoyed a strong recovery from a total of 1.7
million metric tons (mt) in 2001 to a total of 3.9 million mt in 2012. In 2013, global cellulosic
fiber consumption grew by 17 percent, and the experts from PCI Fibres predict further growth of
12.3 percent in 2013 and 10.4 percent in 2014. From 2000 to 2012, world textile mill consumption
reached an average growth of 3.6 percent, to total 80.8 million mt in 2012. World textile mill
consumption in 2013 is projected to reach 84.1 million mt. Driscoll expects further growth to 87.6
million mt in 2014.

Changing Marketplaces

As everybody in this industry is aware, fibers are the starting point of the whole
downstream process. In an evermore global textile business with its magnitude of product flows, it
is therefore vital and of outstanding importance to have a certain knowledge of global fiber
production, and consequently, its distribution channels and end-uses. The modeling system applied
in PCI Fibres’ reports takes into consideration the ups and downs of stock levels along the supply
chain. Material in this pipeline is only visible with any ease in the early stages of processing
before it is converted into other products, such as apparel. Therefore, the relationship and the
link between fiber production and the downstream processes are vital to know. Also, stock movement
along the pipeline, sometimes involving vast quantities, can be extremely influential on the future
of the global textile market – and its players.

Changing Fiber Applications

And global fiber production has gone through dramatic changes in the last two to three
decades: For a long time, the ratio of fiber consumption between the major natural fibers and
man-made fibers was about 50:50. This has changed dramatically to a current ratio of 72-percent
man-made fiber to 28-percent natural fibers. The reasons for that are well-known and don’t need to
be repeated here.

However, if one thinks that natural and man-made fibers have a separate and independent
life, that belief is more than wrong. The conference showed a crystal-clear correlation between the
different regions and fiber production as well as consumption. Certainly, everybody remembers the
big problems in 2011 with soaring cotton prices. It can be seen, for example, that polyester prices
for staple fibers and filaments rose, too. Especially, polyamide and polyester prices have a great
influence on global cotton prices and vice versa, and not only related to the costs of the raw
material — oil. Today, there are even more differences.

Changing Power Costs

The key to future success lies to a certain extent in the availability – or in other words,
the supply – of natural resources such as natural gas and, consequently, power. For example, as all
dear readers of the Rupp Report know, the U.S. textile industry, and mainly the spinning and the
man-made fibers sector, is having great success at the moment. One speaker at the conference
mentioned some possible reasons for that success: For one, all man-made fibers up to now are based
on naphtha as the raw material. All U.S./American crackers are linked with pipelines; therefore, it
is very easy to virtually send the product around to all refineries. This is not possible in China,
for example, as it would cause big logistical problems and costs as well as high energy consumption
to supply all production plants with the necessary feedstock.

Changing Fiber Mix

Nevertheless, China holds a major, if not the dominant, position in the man-made fibers
industry. Over the last few years, the mix of man-made fibers production has changed a lot. Using
the example of polyester textile filament, Driscoll presented in his paper the role of China and
its influence on global man-made fiber production. Today, polyester filament is by far the top
fiber. Its production has soared from 9.8 million mt in 2000 up to 25.7 mt in 2012. In 2000,
China’s production share was 35 percent; in 2012, its share was up to 72 percent.

Excellent Event

This was the first time the author of the Rupp Report has attended the PCI Fibres
Conference. Rarely has he visited an event that has provided better and more in-depth information
about the global textile products flow in general and the fiber markets in particular. The
presentations showed the impact of the global fibers business, the different application areas,
their correlations and even their implications. Many other events only focus on networking and
socializing. Don’t take the author wrong — they are also very important and a prerequisite for
success. However, to speak and exchange information with the right people and get most valuable and
in-depth information is seldom possible on the international events platform. The PCI Fibres
Conference encompassed both. More information about this conference will be available soon in some
of the forthcoming Rupp Reports.

November 12, 2013