Price and Production Downturn Experienced by Most Fibers During Economic Crisis

Reflecting the global economic downturn, world fiber production fell by 5.3 percent in 2008 after rising by 5.8 percent in 2007, according to Research and Markets.

The decline was due mainly to a 6.8 percent fall in natural fiber production. Man-made fiber output was also down, by 4.2 percent, but the fall was cushioned by a small amount of growth in China. The decline in man-made fibers stemmed from decreases in synthetic fibers as well as cellulosic fibers, although the fall in synthetics was less marked. Declines were evident in all the main fiber types but polyester was the least affected. As a result of these developments, the share of natural fibers fell for the second consecutive year to 39.7 percent. The main cause of the fall was a 7.2 percent decline in cotton demand. Wool consumption actually increased, albeit by a mere 0.6 percent.

The cotton price fell to a trough of 52 cents/lb in March 2009 but, with signs of economic recovery starting to appear, it climbed back to reach 63 cents/lb by Sept. 3, 2009. For the 2008/09 crop year as a whole (Aug. 1, 2008-July 31, 2009), however, the average price was only 61 cents/lb-some 16.3 percent lower than in the previous year. Furthermore, there is little prospect of any further significant price increase for 2009/2010 as concerns remain over the strength of demand.

Nonetheless, the International Cotton Advisory Committee (ICAC) has predicted that demand will rise by 2.2 percent in 2009/2010-in contrast to the 12.7 percent drop recorded for 2008/2009-and this suggests that the worst may be over. Stocks are likely to fall as output is expected to be maintained while demand increases. However, the fall will be small and, therefore, it is unlikely to lead to any strong upward pressure on prices.

Wool prices have also fallen dramatically, due to concern over future demand levels. Stocks have fallen too but the stock position is not a cause for concern. Global demand for wool fiber is being sustained largely by consumption in China. Elsewhere, it is being depressed by the restructuring of the textile industries in industrialized countries. Prices are, therefore, expected to firm slightly, at best, in 2009/2010. Demand will be marginally in excess of supply in 2009/2010, leading to a further slight fall in stock levels.

Research and Markets announced the addition of Textiles Intelligence's new report "Global Trends in Fiber Prices, Production and Consumption, Sept. 2009 Edition" to their offering. The report is available for purchase at www.researchandmarkets.com/research/30dca3/global_trends_in_f.

Reprinted from Reuters.com