Home    Resource Store    Past Issues    Buyers' Guide    Career Center    Subscriptions    Advertising    E-Newsletter    Contact

Textile World Photo Galleries
November/December 2014 November/December 2014

View Issue  |

Subscribe Now  |

Events

Beltwide Cotton Conferences
01/05/2015 - 01/07/2015

SURFACES 2015 International Flooring Event
01/21/2015 - 01/23/2015
02/24/2014 - 02/24/2014

ExpoProducción
02/04/2015 - 02/06/2015

- more events -

- submit your event -

Printer Friendly
Full Site
Fiber World

Asian Fiber Consumption Update

TW looks at fiber consumption in light of US-Chinese textile agreement.

John E. Luke, Technical Editor

I n an early draft aimed at exposing the risks of unfinished trade agreements with China, Textile World commented on the likelihood of a new reality of sinking certainty in the outcome of textile and apparel quota negotiations between the United States and China.

According to sources at the time, both sides agreed to the need for short-term controls, but true to form, the devil was in the details of defining a practical, substantive growth rate for Chinese apparel exports to the United States.

Two scenarios appeared likely: First, no agreement would be reached — and no future talks would be scheduled — and Washington would apply 7.5-percent annual growth caps on exports until 2008, when the specific quota restrictions agreed to by China to gain admission to the World Trade Organization (WTO) would expire. This solution apparently was unappealing to both sides; but not sufficiently so to withdraw the last proposal discussed, which offered a menu of growth rates, dates and bases from which either side could choose.

A settlement has been reached, one relatively consistent with the parameters of the more generous proposal previously noted incorporating the following features: Ten-percent increases in apparel shipments and 12.5-percent increases for textiles for 2006. In 2007, rates settle at 12.5 percent in each category, except for fiberglass and thread, which will be allowed to grow at 15 percent annually. Changes in 2008 will include a 15-percent growth against eight products deemed sensitive by US producers — cotton shirts and pants, bras and underwear. Four other categories — thread, fiberglass, knit fabric and window blinds — will be allowed to grow 17 percent, with all other categories limited to 16 percent. The offset has China agreeing to increase the categories covered up to 34 and, most importantly, agreeing to extend the pact through 2008, a year overlap, with said caps originally scheduled to evaporate in that year.

With talks settled, industry watchers need to express greater vigilance. A year ago, TW published 2002 data about the levels of consumption in Asian mills (See “ An Asian Irony,” TW, November 2004). Information has been updated through 2003, and a 2004 forecast added. This exercise was begun with a search for changes in consumption by India’s growing and well-managed fabric industries, and with the hypothesis that recent announcements from Indian government and private sources projected major expansions in man-made fiber and fabric production. It did not take long for the study to become complicated by United States/China/WTO negotiations, leading to the analysis presented here.

Page43


Asian Fiber Consumption
Table 1 details mill consumption of manufactured fibers — cellulosics plus man-mades — in the larger Asian area from 1996 through a 2004 forecast by the author. By way of identification, the regions are delineated as follows:
• Central Asia — China and Hong Kong;
• Northeast Asia — South Korea, Taiwan and Japan;
• Southeast Asia — Indonesia, Malaysia, the Philippines, Thailand, Myanmar, Singapore and Vietnam; and
• West Asia — India, Bangladesh, Pakistan and Sri Lanka.

Page44_Copy

As shown in the table, growth of fiber consumption in all of Asia continues at an almost double-digit rate, virtually doubling in the 1996-2004 period. As reported last year, the Central Asian region leads the parade, consuming almost 60 percent of the manufactured fibers consumed in all of Asia. Further, Central Asian mills account for 11-plus billion pounds, or 41-plus percent, of the total Asian consumption of 27 billion pounds (See Table 2). Together, Central Asian mills consume almost 45 billion pounds of the total 83-plus billion pounds of manufactured fibers plus cotton (See Table 3).

Page45

China and Hong Kong together consume more than 53 percent of all manufactured fibers plus cotton — simplistically, polyester/rayon or polyester/cotton blends — consumed in Asia. More significantly, China and Hong Kong together consume 31-plus percent of all manufactured fibers plus cotton, consumed in the world, assuming an approximate 143-plus billion pounds of consumption of all fibers in the world. As an aside, Central Asia consumes almost 60 percent of all fibers produced in the world.

Continuing the geographic tour, as the post-World War II manufacturing economies of Northeast Asia are replaced by service and banking economic models, manufactured fiber use among Northeast Asian mills has stagnated, with indications that further contraction will occur in the future. Japan continues to unravel its fiber, fabric and apparel complex, remaining industry-active by providing increasing amounts of capital for other Asian regions’ use in growing from undeveloped to developing nations.

Southeast Asia is made up of several troubled nations, and its performance in the fiber economy demonstrates this. Weak economies and questionable governments have bred a lack of access to world capital, and the area has missed opportunities to employ hordes of economically distressed workers.

Given the speed with which world fiber markets are changing and growing, it is unlikely that manufacturers in this area can revise policies and practices and join the capital race from labor-sensitive to capital-sensitive economies. Considering these countries have existed this long without the fiber industry, it is fair to conclude their agriculture and chemical industries are aimed at other basic industries, leaving the textile complex battle to other participants.


The Indian Subcontinent
In a move akin to the formation of the Ministry of International Trade and Industry’s Japan Inc. to guide Japanese industrial growth after World War II, India has formed several industry/government consortia to provide similar leadership. India government programs, together with several major product and brand expansions by Reliance Industries, have led to the Indian presence being felt increasingly in world markets. The country faces a birth rate that ensures India will house a population larger than China’s within a decade. With educational access and achievement limited to the few, India appears determined to structure its economy to offer employment to the entry-level masses in industries such as textiles and apparel that will generate trade dollars.

Interestingly, cotton consumption in West Asia equals that in Central Asia. Obviously, total consumption of manufactured fibers plus cotton in Central Asia overwhelms that in West Asia, but an interesting pattern is developing. Central Asia runs an almost 3 billion-pound net import balance of manufactured fibers — 10 percent of regional manufactured fiber consumption. West Asia runs a smaller import balance — only 3-plus percent of manufactured fiber consumption — which raises two questions. First, are India and its subcontinent neighbors planning to expand man-made fiber production to soak up more of the area’s supply of cotton and focus the textile complex increasingly on polyester/cotton apparel exports? Or, are the area participants satisfied with their current position, secondary to the giant China colossus?

Government programs, reinforced by the actions of Reliance Industries, point to increased investment in man-made fibers followed by increased exports to the developed world. Ah, the cycle repeats, although with an unlikely partner.

Where Will It Lead?
What path will apparel imports take over the next few years? If it’s possible to negotiate equitable import quotas and duties, will the US textile industry use the breathing room to restructure/remodel/ refinance/redevelop to enhance its competitive/productivity stance and be ready to compete in a world market?

Based on the situation, it doesn’t look hopeful. Based upon the recent settlement, another look at China and a more careful appraisal of India, which just may be settling in as a long-time rival, are needed. After all, if India could last through several centuries of British rule-fomented confiscatory trade policies, what’s a few years more in a trade war with China over dominance of international textile trade?



Author's Note: To simplify graphs and tables, the usage of wool, olefin and miscellaneous fibers in this analysis has been omitted. For reference, wool consumption totals approximately 1 billion pounds annually across the total Asian region, and olefin does not directly impact the import/negotiations theme of this article.

November/December 2005



Advertisement