Acrylic staple fibre producers facing tough & rough time
Source: Fibre2fashion News Desk Date: 2008-12-16
Due to the on going slow down across the whole globe, major textile companies across the whole value are in trouble and more so are the main suppliers of the vital raw material to the industry; fibres. From amongst all fibres, Acrylic which has one of the lowest shares in comparison to PET, Nylon and Viscose, is expected to be the affected the most.
In the early and heady days of 2008, consumption of textile fibre was projected to grow by more than 10.5 percent to touch 24 million tons in the current year and global consumption of Acrylic staple Fibre (ASF) was expected to grow at the rate of 2.3 percent in the next five years.
But the unexpected meltdown and resultant recession has upset the calculations, and now it is expected to grow at only 2.0 percent per annum. Production of ASF in the previous year was approximately 2,425,000 tons and this year it is expected to touch only 2,500,000 tons.
The reasons for this downfall are not far to seek. Producers of ASF are running their plants at between 50-60 percent of their capacities due to the continuing decline in demand for the fibre. Against global sales of approximately US $550 million last year, value wise sales in the current year are expected to dip by a wide margin.
In 2007, consumption of Acrylonitrile increased by more than 8 percent which was nearly matched by a 7 percent increase in production. The other point of note is that, consumption of ACF has already witnessed a declining trend in the US and Europe by 6 and 17 percent respectively in 2007.
To bring a clear picture of the industry, we spoke to global experts from the industry who said, “though ASF manufacturers are relieved due to the reduction in prices of feedstock of ASF, a result of fall in crude oil prices, they are concerned over the future trend in the market of the fibre and as a precautionary measure they have cut operating capacities to arrest the rise in inventory levels.”
They add by saying that “the slump in demand has been very drastic but the producers are still optimistic about the upcoming winter season in the northern hemisphere which may push the sales of apparels made from ASF.” They were off course unanimous on one point and it was that only a strong consumer spending in apparels can bring about an increase in consumption of ASF.
In the third quarter of the current year, prices of Acrylonitrile were ruling at $2,175 per ton in the Asian market in the month of August have now have dipped to an alarming $1,300 per ton in November. Prices of ASF which had rebounded to early 2008 levels in the third quarter have now fallen to $2.29 per kg from $2.54 per kg in August.
Propylene prices which had witnessed a rally in July ’08 to touch $1,760 per ton have now sharply dropped to $305 per ton. ASF producers are confused and worried on the constantly declining trend in prices as it becomes very difficult to maintain margins in the current scenario.Most of the experts we spoke to foresee a further 10 percent fall in ASF prices.
Some of the ASF producers, whom the team of fibre2fashion spoke to regarding the steps they have taken to tackle the crisis, a majority of them have said that they have cut their operating rates and also cut down on raw material purchases temporarily till the market stabilizes.
