The Fabric Year 2021
good to have you with us for the fabric year 2021 and thank you for taking the time to join us today the fabric here is the result of joining of forces between gross packet and fiber ear to combine upstream spinning industry with fiber making stage including the latest trends and market developments in eating weaving and non-wovens our new format is rather forward-looking providing more information about what to expect in entire 2021. given the extraordinary feedback from last year we decided to have an annual event this version includes more additional statements taken at index in geneva like in the past we have andreas engelhardt founder of the fiber year and thomas mason grass packard's market research manager for asia based in singapore over to andreas to get us started with a look at the developments in the upstream supply of fibers and ions our holistic approach from fibers and yarns to fabrics is the unique advantage and it is my pleasure sharing with you information about the upstream fiber and yarn market that are described in detail in the current report the fiber year 2021 will fiber supply with radar sin in the red coming in tolerably stable after unexpected strong official output data from beijing indicating a speculative rebound from mid 2020 with substantial inventory accumulation global market size accounted for 113 million tons which refers to an average and a half kilograms supply per head world natural fiber supply experienced a modest recovery as the decision for planting was already made ahead of the pandemic strongest dynamics were visible for cotton contraction in use however caused stocks to sharply rise to second highest level in history and projections for the new season starting august suggest cotton harvesting to remain significantly below pre-crisis level the man-made fiber business saw surprisingly robust production in china while all other industries across the globe jointly contracted a double-digit rate manmade fibers recorded an almost unchanged volume of synthetics while wood-based cellulosics suffered from six percent contraction the only two synthetic fiber segments that succeeded to grow were polyester gaining in this extraordinary situation the most in spandex fibers polyester benefited from an increasing preference of retailers and brands for standard blends such as cotton polyester at lower prices as consumers cut spending for necessary pieces of garment given losses and disposable income and uncertainty about future economic outlook and job security for the year 2020 a widening gap between upstream supply and demand for subsequent fabric processing was identifiable and came as surprise because man-made fibers quickly can be controlled to match demand activity at fabric stage sharply plummeted as my colleague thomas mason will later explain for knitted and woven fabrics so what to expect for the full year 2021 still q4 is to come and no one of us can predict daily infection numbers and icu occupancy decisive parameters that directly impact textile demand therefore i will throw a glance at this year's expectation from different angles man-made fiber growth in asia will primarily driven by chinese industry with ongoing dynamic expansion according to national bureau of statistics although stockpiling in the past open up some concerns even if fiber and february exports sharply rose this year most other industries in the region will not reach pre-crisis level man-made fiber operating rates in u.s and europe are strongly supported by freight costs at elevated level out of asia and therefore reduced fiber imports in addition container shortage comes along with not calculable delivery times which make it highly uncertain to rely production scheduling on however tight feedstock supply for some time winter storm in february in texas logistic challenges from the new hurricane season and serious labor shortage in the u.s industry prevented higher manufacturing levels nevertheless u.s benefits from increased domestic and
export demand with full year performance probably achieving pre-crisis level in both yarn and fabric industries natural fibers are projected to drop about six percent primarily affected by above average contraction of cotton planting in major countries such as india us pakistan and brazil even if processing demand at fabric stage is expected to be comparable with pre-crisis 2019 level slightly higher or lower finally remains to be seen supply at fiber and yarn stage will primarily be driven by chinese run rates which decisively determine industries performance official man-made fiber output data for the january to july period revealed substantial gains so far which appears surprising given last year's stock management the expectation for this year's textile and apparel exports is to see improvements witnessed in several countries based on six or seven month data but it is certainly not a broadly based recovery countries in the blue circle in the chart such as indonesia korea sri lanka and thailand still are 9 to 10 below pre-crisis level each in bangladesh with paramount importance of the apparel chain is another six percent below first half 2019 a strong recovery is visible for pakistan and turkey the business in pakistan will essentially be driven by imports of raw cotton and manmade fibers making the industry a promising fiber sales destination with all types killi exceeding last year's levels first half export value already soared by 17 percent and a little faster than the 15 growth in turkey ongoing growth is projected for brazil and china skyrocketing export value expansion from brazil of more than 70 percent benefits from increasing cotton prices reaching late august highest level since early 2012. chinese rice in exports includes textile articles and apparel after multi-year declines in clothing the performance in textiles is 17 above pre-crisis level but just seven percent below last year's same period which is believed to be a result of a general drop in prices or face masks rather than significant reductions in quantity apparel exports gained 9 percent so far and full year results may lead to a trend reversal after six years of gradual decreases moving further down to consumption at retail stage the latest sharp drop in u.s consumer confidence in august with the michigan consumer sentiment index hitting lowest level since january 2012 on worries about higher covet infections and inflation together with a rotation in spending from goods to services may cause some concerns for the remaining months of the year u.s retail sales from january to august in clothing stores began to expand from march and currently account for nine percent growth over the pre-crisis period while corresponding home textile sales are clearly at 22 percent higher level but showed signs of returning to normal in recent months european union volume of retail trade in textiles clothing and footwear started to grow from march as well but full year expectation is that pre-crisis level will not be reached chinese retail sales of consumer goods steadily weakened this year from double-digit growth rates in q1 to eight and a half percent growth in july china's exports unexpectedly grew at a faster pace in august thanks to solid global demand despite some doubts where the goods are really on the way to sales destinations given container shortage or just waiting in free ports for shipping meanwhile chinese economic momentum has weakened recently due to covet variants high raw material prices slowing factory activity tighter measures to tackle overheated property prices soaring prices for commodities and a campaign to reduce carbon emissions let me give you another example vietnam was among the world's most successful countries to control covet 19 until may when a devastating outbreak fueled by the delta variant began with 650 000 cases by mid-september and imposing strict lockdown measures and movement control have a direct impact to the industry the industrial production index in january to august this year rose eight percent in textiles and six percent in apparel compared with the same period in 2020 but sharply lost momentum in july and august textiles in august minus 14 compared with june and apparel minus 9 respectively global apparel demand is not believed to achieve pre-crisis level yet with some segments like sportswear performing very robust while formal wear hardly exists and fashionable garment suffering from missing opportunities to show friends and the community home textiles will distinctly outperform the 2019 demand level driven by essentially residential investments that are about to weaken while non-residential investments still are hesitant but slowly improving automotive and related industries will continue to suffer from reduced manufacturing due to ongoing semiconductor shortage despite high demand it has already lifted prices for used cars and rental cars at present are in service with mileage never seen before thus a recovery for the entire segment of mobility transportation and traffic is anticipated to postpone until 2025 with the car industry firstly a need to overcome a structural crisis that got worse last year with covet related falling disposable incomes and consumers increasing weight and sea attitude on emissions-free mobility packaging and filtration and uses turned out to be quite robust with geotextiles and construction expected to benefit from the sweeping 1 trillion u.s dollar bipartisan infrastructure bill medical health hygiene and ppe demand will remain outsized following significant capacity buildup across the globe to ensure higher rate of self-sufficiency in total modest demand growth this year seems possible despite changing consumption patterns with expenditure for travel and entertainment gaining weight and uncertainties like spread of covet-19 variants vaccine roll-out and willingness for vaccination making any forecast highly speculative thank you andreas and now as we move downstream into fabric production let's start by taking a look at the knitting industry the development until 2020 and our expectations for the current year as we all know 2020 was not a good year for many industries some were hit harder than others and textile certainly did not escape the worst of the pandemic but the effect was definitely not evenly felt across all production technologies and primarily due to its low cost high speed and flexibility knitted fabric fared well all things considered in 2020 the total global output of knit fabric was around 11 percent lower than 2019 so at the beginning of last year lockdown in china and the subsequent closures of apparel and fabric manufacturers created a scramble amongst buyers to find suppliers elsewhere who could fill their orders at the beginning of the year india and turkey were two major benefactors who saw quite a sudden jump in orders turkey especially benefited from close proximity to europe unfortunately by the second quarter the triple blow of coronavirus reaching the country scarce supply of raw materials and the subsequent increase in yarn and fiber prices added massive pressure on knitters and apparel manufacturers so by the end of 2020 we could see that almost every country the output of knit fabric decreased with a few notable exceptions such as vietnam which maintained a fairly stable fabric output thanks to their existing capacity for local fabric production and at the same time being able to quickly lock down and prevent any covert spread vietnam could quickly return to relatively high operational capacities quite quickly and absorb orders which were lost from more severely affected countries indonesia also performed better than expected with knit fabric output decreasing by just seven percent positive mandates to source fabric locally as well as strong domestic demand maintain knitting capacities even during the pandemic looking at america in the usa many knitters had pivoted their operations to focus on face mask production in order to compensate for the limited supply of medical masks during the pandemic and while a quick return to schools improved the situation by the end of the year total knit fabric output still declined by 30 percent and in brazil the most important knitting country in south america currency devaluation and weak domestic demand put massive pressure on knitters but a pivot to online sales by retailers saw an uptick in demand by year-end and knit fabric production decreased by 11 in total now china remained overall the number one producer of knit fabric last year nine percent lower than 2019 and considering that the industry effectively shut down in march and only really began to start operating again in april this is actually quite exceptional importantly the retail dynamics of the pandemic played perfectly into the hands of major sportswear exporters like china and vietnam worldwide home office requirements social distancing and a shift in work-life balance for many people resulted in a huge increase in demand for sportswear and leisure people discovered sports running cycling or just being outdoors as opposed to being in the office and at the same time a significant decrease was seen in formal wear shirts and trousers sportswear demand drove a boom in fine gained fabrics and according to the chinese textile machinery association the sales volume of circular knitting machines increased by 15 percent in 2020 and export value increased by four percent china also exported more wart netting machines in 2020 with export value increasing by 13 compared to 2019 and we also see that warpnet fabric becomes increasingly popular in sportswear such as high performance cycling shorts football jerseys and footwear by comparison flat knitting machinery sales were reported to have decreased by 69 in china as the demand for flat knit chew uppers continued to decline many of us had hoped the 2021 would bring a quick return to normal life but many of the changes forced by the pandemic still remain largely at play as 2020 shifted fabric demand in the favor of knitting this seems to still be the case many countries continue to face difficulties mainly as a direct result of covert low vaccination rates and poor access to vaccines in the likes of bangladesh vietnam and brazil means that any increase in cases is being met with a level of response not too dissimilar to what we saw over one year ago recent third waves in these countries have seen quick and significant reductions in operational capacity and quarantine orders have required workers to stay at home and factories to close this is resulting in a backlog of orders for apparel and fabric and a flow of orders back to china but positively knit apparel remains in high demand looking at the apparel export data for the first half of 2021 the main southeast asian manufacturers bangladesh vietnam indonesia cambodia and thailand shows that nit apparel makes a 59 of all apparel exports compared to 57 in 2020 and 55 in 2019 but while total production this year is certainly above 2020 recovery hasn't brought us to the same levels of 2019 in total on the other hand the latest trade data from china's chamber of commerce for import and export of textiles shows that by july 2021 knit apparel exports have increased by a massive 34 percent year-on-year and in addition to this china's retail sales of apparel and footwear in the first half of the year are even higher than in the first half of 2021.
so clearly china is booming both on the export front and the domestic front what's especially interesting to see here is that chinese power brands such as sheen anta and leaning are not only growing at a rapid pace in the local market but also increasingly gaining traction internationally this is an important trend to watch outside of asia turkey continues to benefit from nearshore sourcing decisions from european buyers knit fabric exports in the first half of 2021 are higher than in 2019 and relaxation of covert restrictions and the gradual return to offices and general return to normality is expected to further stimulate retail demand in summary for knit fabric production in 2021 it looks like we could see the global knit fabric production on par or slightly above what we saw in 2019 depending on how the rest of this year plays out thank you tom interesting to see that knitting remains such an important and resilient production technology even throughout the pandemic we will now take a look at the woven fabric production and see how that market has developed in 2020 and what we expect for this year in contrast to knitting we've seen a very different development of the weaving industry since 2019. total production of woven fabric declined by close to 30 percent when knitters emit apparel manufacturers have gained tremendously from social and lifestyle changes the opposite can be said for weavers at least in terms of apparel although there are some positive notes on the demand side woven fabric manufacturing was hindered significantly in 2020 by reduced demand for four modern office wear mainly shirts and trousers but while woven fabric appetite took a hit interest in home renovation saw a strong increase during the pandemic and many weavers have had a boost from increased demand for woven fabric used in furniture sofas curtains and rugs in general we observed quite a low operational capacity amongst weavers in 2020 and after the early stages of the pandemic most were getting by primarily based on backlogged orders from before the lockdowns by the end of last year total worldwide production of woven fabric dropped by almost 28 compared to 2019 with the two largest markets china and india shrinking the most they saw total production of woven fabrics decreased by 29 percent and 28 respectively despite a very gloomy 2020 for weavers fortunately the outlook for 2021 is much more positive firstly china's chamber of commerce reports 13 year-on-year increase in apparel exports until july 2021 positive but still far behind the growth of knitted apparel interestingly we can see that all the relocation from southeast asia to china is still ongoing in 2021 as southeast asian manufacturers continue to struggle with operational difficulties imposed by covid broadly changes in the downstream demand and consumption are having visible effects on the fabric making business both knit and woven it's apparent that lot sizes are getting smaller and there's increasing demand for flexibility and small batch production which actually favors knit production technology one knock-on effect from this is that we're seeing less build-up of inventory amongst fabric makers particularly on the apparel side positively amongst woven fabric manufacturers investment in new weaving machinery in china germany and japan has improved a lot this year and we can see a strong rebound in investment to denim grey fabric weaving and fiber weaving and finally around the world there is growing demand for woven technical textiles and business for home textile producers remains robust after growing well in 2020 however in the case of automotive industry issues with computer chip availability and limitations on production might lead to headwinds for the accompanying textile demand further down the line however the effects fell on the apparel market as a result of reduced formal wear demand for shirts and trousers is still having an adverse effect on weavers woven fabric for use in the apparel sector is still on the low side and it might take a few more years for woven apparel business to fully recover that really depends on how demand takes shape in retail in the future it's also worth noting that the world's biggest exporter and producer of apparel and fabric china has seen a boom in the first half of this year however it's also worth noting that the global shipping container crisis will most likely be felt strongest in the second half of this year this is not unique to the textile sector and now we will take a look at non-wovens production and provide you with a quick executive summary mostly based on international associations like inda idana cnita and anfa my colleague tom just shared with you status and outlook for the both main segments at fabric stage that i will further enrich by non-wovens and for the sake of completeness by unspun end users that consist of applications such as filling material for sleeping bags insulation material in automotive industry padding material for reinforced building structures and fibers for cigarette filters i intentionally structure non-wovens into fiber and polymer based because any changes in fiber-based non-wovens do have a direct impact on the volume available for knitting and weaving and vice versa pre-crisis non-wovens demand has witnessed continuous growth in the century even though financial crisis and slow economic recovery have led to decelerated growth it managed to outperform the annual increment of the world fiber market before witnessing an unprecedented push last year due to outsized demand for hygiene and medical applications surging demand in disposable products for cleaning and disinfection wipes medical fabrics filtration in face masks lifted global non-wovens demand at an unprecedented speed while several other markets for durable goods suffered from pandemic induced slowing such as apparel building construction textiles and mobility a unique development across last year with dynamics across the globe and spun lay production resulting in a 34 expanded volume output even soared breathtaking 63 to around 5 million tons in china as the industry rapidly adjusted to new consumption patterns with sales of spun bond melt-blown lines exploding by 1300 percent to 450 units in the first half 2020 and full year face mask exports shooting to 54 billion us dollar versus 5 billion us dollar in 2019 double-digit growth rates were also observable in other asian industries and greater europe whereas the expansion in north america was comparatively moderate at around five percent with operating rates at full capacity growth is expected to continue in disposable articles with significantly decelerated momentum probably not more than half the estimated global gdp increase of six percent demand for durable products as anticipated to see some changes with the entire mobility segment further declining in particular driven by losses in vehicle production due to deficits and computer chips small scale apparel and furnishings are projected flat with the outlook and non-residential investments improving while residential spendings gradually returning to normal construction and geotextiles may see modest growth even if geotextile season in some parts of the world started late by way of comparison there was a quick and concise presentation of fibres and fabrics that may leaves you with some further questions as always we invite you to get in contact with us via the email address shown at the end of this stream if you're looking for more information or if you have any questions thank you very much for taking your time and all the best from grass bakker and fiber hello i'm brad klow director of market intelligence economic insights at inda the association of the non-woven fabrics industry provide you with a quick update on the north america non-wovens market we all know how the pandemic has impacted the demand for face masks and respirators protective medical apparel and wipes but you may be wondering what has been happening on the supply side much of the non-woven material to meet that demand is produced by the spun lane process polymer-based melt spun non-woven webs that include spun bond melt blown spun melt splunbon and melt-blonde composites and a few other types of non-wovens originating from polymers in north america and globally companies many not in the non-wovens industry were able to start up melbourne lines in north america 22 lines started up in 2020 at one point in time another 16 lines would start up this year however due to the significant capacity increase not only in north america but globally that number has been lowered to nine in addition three of the lines started up in 2020 have shut down in the last couple of months on the spun spun melt side only one line was added in 2020 the timely start of barry's spin lace line to supply the disinfecting wipes market why so few spun bond spun out lines when the demand was there time and money a 1.6 meter melt blown line on average would be three to seven million dollars take three to two to three months to erect and start up and would fit in your garage a three point two meter two beam spun bond line on average is 15 to 19 million takes five to six months to set up and will not fit in your garage a 3.2 meter spun
melt line with a ss mms configuration typical of medical apparel is 26 to 31 million requires six to eight months to start up and erect because of the cost and timelines involved this is why there was just that one startup in 2020 this will soon change as for spun bond spun mount lines should start up this year in north america and another four in 2022 in summary it's a great time to be in non-wovens will continue to be so as demand and correspondingly the supply to meet that demand continues to increase the non-wovens industry has responded the pandemic and will continue to provide materials to keep the surfaces we touch clean protect the air we breathe and provide a barrier to keep our bodies safe the industry has responded by investing in these new assets to ensure the steady flow of these needed materials foreign foreign foreign you