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Synthetic Fiber Prices Look to Continue Strength in 2018

Global synthetic fiber prices increased almost 13% in 2017, more than triple 2016’s rate of increase and the biggest annual gain since 2009, according to data from fiber consultancy PCI Wood Mackenzie.

The firm’s Synthetic Fibers Index, which has risen every month this year, was buoyed by increased global demand for apparel and textiles, and higher oil and intermediates costs.

Crude oil prices rose about 20 percent to $65 per barrel in 2017, which together with strong demand for man-made fibers, have allowed producers of polyester and nylon intermediates and fibers to increase their prices. Energy experts forecast that oil prices will settle down somewhat in early 2018, as tight supplies ease a bit, which will limit the ability of fiber producers to further increase prices.

In Asia, the world’s largest fiber-producing region, synthetic fiber prices rose 10.8% in December, the sixth straight month of double-digit year-over-year increases.

Polyester filament remains the dominant man-made fiber product globally. In China, where most of the world’s polyester filament production capacity is based, expansion this year didn’t manage to keep up with growing demand for the fiber, buoying prices. Although it remains to be seen whether prices remain elevated given the expectations of a dip in raw material costs, fiber suppliers will unlikely be willing to reduce prices if demand remains strong.

Staple fiber producers are running at or near capacity, with prices rising. Yarn spinners are shifting their interest to value-added products like hollow fiber and other products for blending with natural fibers. Higher prices are expected through 2018 when China’s ban on imports of plastic waste takes effect and curtails supply of recycled staple.

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Nylon prices have risen this year due to a sharp increase in raw material cost, but demand, though strengthening, remains below supply. Barring any dramatic change in feedstock prices, there should be stability in this segment into 2018. The spread between nylon 6 and 66 prices narrowed in 2017.

The spandex business is stable thanks to strong demand for apparel that contains stretch. Invista agreed to sell its spandex and nylon textile filament businesses, including brands Lycra, Coolmax, Supplex, Thermolite and Tactel, to Shangdong Ruyi, a leading textile and apparel company, for an undisclosed amount.

Acrylic staple prices were weak for most of the year, but finally picked up a bit thanks to seasonal demand and higher polyester staple prices. Prices for its intermediate acrylonitrile, which were rising in the first part of the year, underwent a correction this fall.

Viscose prices, which were the one bright spot in the man-made fiber market in the first half of the year, have weakened due to flat demand despite high capacity utilization rates.

Asian synthetic fiber prices remain more than 20 percent below the world average, down from 19 percent a year ago.

The European synthetic fiber price index increased 26.4% in 2017, its biggest year-over-year rise since 2011. European prices are almost 23 percent above the global average, way up from 10 percent above average a year ago, helped by stable demand and higher Asian yarn prices. The staple business remains strong thanks to growing demand for auto and hygiene products. Spandex continues to perform well despite downward price pressure from imports.

Turkey is in the process of almost doubling its polyester filament production capacity in the next two years, and has initiated anti-dumping measures, largely against Asian imports.

The U.S. index rose 7.1% percent in December, the smallest of any major producing region, and its third largest year-over-year increase in six years. U.S. synthetic prices remain almost 45 percent above the world average, down from 53 percent at the end of 2016. U.S. auto production, where a large proportion of U.S.-made polyester goes, has fallen this year compared to 2016, though a new Toyota and Mazda plant is expected to be built in Alabama or North Carolina.

During the year, the gap between prices in the most expensive region (the U.S.) and the least expensive (Asia) narrowed a bit, a trend that is expected to continue as the industry becomes increasingly global.