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Wood Mackenzie Forecasts Rapid Global Fiber Recovery

The textile fiber industry suffered a “unprecedented” 6 percent decline in 2020 due to Covid, but better times lie ahead, at least for some sectors, Bruna Angel, principal analyst for fibers at Wood Mackenzie, said at the virtual Sourcing Journal Hong Kong Summit earlier this month.

“Initially, in the middle of 2020, we thought it was going to be a 10 percent,” Angel said. “But the Chinese industry and the recovery from Covid led to exceptional growth in both production and demand.”

Wood Mackenzie sees the industry reaching 2019 levels by the end of this year, with the outlook for total fiber demand by 2030 hitting 136 million tons, up from the 105 million tons forecast for this year.

“We do see a very strong recovery in fiber growth, but long term, the acceleration of environmental regulations and attempts by brands and retailers to reduce waste are going to have the impact of slowing down demand or fibers,” Angel said.

She said much of the growth will come from increased per capita consumption from many parts of China, and from Africa, which has a fast-growing population. “Regardless of sustainability and environmental issues,” such as reuse of materials and longer life of garments, “that demand is going to grow,” Angel said.

Looking at fiber demand by category, Angel said for polyester filament yarn, the largest fiber by volume, there was a 6 percent decline for use in apparel, “but a very sharp recovery.”

“We do understand the risk to the outlook because of the current situation, particularly in India, which is a big consumer of fibers and an even bigger producer of fibers,” she said. “Cotton had a sharp decline (down 9 percent), in large part because it’s becoming increasingly uncompetitive against other fibers like polyester and the cellulosic fibers.”

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Angel said cotton is one of the fibers Wood Mackenzie does not see recovering to 2019 levels due to the competitive marketplace and farmers choosing to grow other crops that are more profitable.

The polyester staple filament market, she noted, quickly pivoted from textile applications to medical, including face masks, while cellulosic fibers suffered a steep decline of 10 percent due to lack of demand for summer apparel during 2020. Nylon filament and staple fiber fell 10 percent as well, based on lack of demand and high cost and restricted availability, according to Angel.

As for the long-term synthetic fiber raw material forecast, notably the relationship down the pipeline with oil, Wood Mackenzie is projecting a 117 percent increase in the price of oil by 2030 to $100 a barrel. She said the increase in excess capacity for polyester fiber raw materials is keeping prices relatively flat, “but there is an increase in the premium between nylon and polyester raw materials, which will continue to drive the replacement of nylon by polyester.”

Polyester filament yarn is seen growing 2.5 percent in volume by 2030 and polyester staple fiber by 1.8 percent. China is by far the largest producer of polyester staple fiber and filament yarn and will continue to gain market share due to planned expansions of capacity and with fiber producers integrating back upstream with yarn and knitwear production.

The same is similarly true with nylon, where China holds an 84 percent fiber production share and is expected to rise to 86 percent in 2030, according to Angel.

“This is in part driven by domestic demand where Chinese consumers and an expanding middle class is becoming increasingly active in outdoor activities and nylon really fits into the apparel that goes into them,” she said.

With cotton becoming less competitive on prices versus polyester and celullosic fibers such as viscose and lyocell, and acrylic becoming a nonfactor due to lack of demand, Angles noted that viscose prices have risen sharply in the past few months.

“This is in particular driven by a very strong surge in demand for spring and summer clothing,” she said. “We also see huge increases in lyocell production coming, mainly driven by environmental reasons, since it is made with a mechanical process with a non-toxic solvent, and there is a large investment being made in lyocell by viscose producers.”


In Case You Missed It: All of the sessions from this year’s Sourcing Journal Hong Kong Summit: “Recovery & Reinvention” are available to purchase and view on-demand. Click here for access.