Category Archives: Natural Fibres

Age of Cheap Polyester Ending As Environmental Concerns Mount

AGE OF CHEAP POLYESTER ENDING AS ENVIRONMENTAL CONCERNS MOUNT

Cotton has been attacked by environmental groups for decades for the use of pesticides, fertilizer, and water. Meanwhile, the man-made fiber industry has experienced unchecked growth with hardly a word regarding the damage caused by fossil fuel extraction, fiber production and end-of-life disposal of man-made fiber products, especially in China.

As China started to industrialize in the early 1980s, textile production was a leading area of investment. In 1990, polyester fiber production in China was about 1 million tons, but by 2015, polyester production in China had grown to approximately 35 million tons, equal to 70% of the world total. The 35-fold increase in polyester production in China in 25 years is the single biggest factor reducing world demand for cotton today.

Since 1990, China’s man-made fiber sector has enjoyed record growth, with fixed asset
investment breaking all records as new capacity was added throughout the supply chain, from
the production of feedstocks to finished fiber products. This growth occurred with little consideration for air and water quality. The policy of economic growth and jobs first meant that
any attempt to enforce the few regulations which existed were systematically overlooked. During this period, China became the largest man-made fiber feedstock and fiber producer in the world and came to dominate the sector.

There has been wholesale destruction to China’s water, air and soil caused by the unparalleled pace of industrialization over the past twenty years. Recent reports indicate that 80% of the
underground water supply is unsafe to drink. Any visitor to Beijing in the winter can testify to the smog and the “Airocalypse”, the term used to describe the periods when the air is unhealthy and almost unbreathable.

Previous Chinese government appeared to view environmental issues as part of a western conspiracy to limit China’s growth. However, things have changed under the leadership
of Xi Jinping. President Xi took office in November of 2012 and has led a radical shift in Chinese environmental policy, with air and water quality exceeding economic growth in terms of importance to his government’s agenda. Other data, such as from social media and
spending habits, illustrate that the issue has become extremely important to the Chinese people.

One significant difference in the administration of Xi Jinping is that the Communist party has reasserted power from the top down. In the past, local governments often ignored directives from Beijing, and city, county and provincial leaders focused on economic growth, often at any cost to the environment or individual rights.

However, under Xi Jinping, Beijing’s directives now override local economic concerns, and a series of important new laws and enforcement initiatives were launched in late 2016 to tackle air and water pollution. These programs have real power, and the effort to rein in industrial pollution is influencing almost every major business that has an impact on air or water quality.

China’s production of MEG and PTA,the main raw materials for polyester fiber, entered a phase of uncontrolled growth after the global financial crisis of 2008. China responded to the financial crisis with the launch of a$586 billion stimulus plan that allowed for the flow of funds into investments in industrial sectors at subsidized interest rates and easy terms.

Chemical feedstock industries have large capital requirements, and the stimulus plan
provided the capital for these industries to rapidly expand. In just the last five years, PTA
capacity in China has grown by more than 200%, and in 2016 China accounted for 56% of global PTA production. In addition, from 2011 to 2017, China’s MEG production increased more than 500%. A large block of these MEG plants use coal as a feedstock.

Polyester staple fiber accounts for about 22% of China’s total polyester production, and filament accounts for 51%. Viscose fiber production has also accelerated in recent years, with China today accounting for 65% of global production.

There are no comprehensive statistics on the number of polyester fiber production plants in China, their ownership, sources of financing or operating costs. However, the growth in polyester production in China has been so rapid, so enormous and so incongruous with investment patterns in other countries in Asia, that it is impossible to believe that industry expansion is a result of competitive, private sector investment.

The cost of construction of a polyester plant with a capacity of 250,000 tons per year is estimated at about US$150 million. It has been widely reported that the national, provincial and local governments in China encourage industrial expansion through loans that are never repaid made by government-owned banks. There are numerous stories in China of “ghost cities” and industrial plants producing only for inventory because they have no customers. Given the emphasis by all levels of government in China on textile production since 1990, it is highly likely that much of the expansion of polyester production capacity occurred with the help of loans that have become grants. It would be naïve to think that the expansion in polyester production in China occurred because Chinese consumers were demanding more polyester or that other market forces encouraged such growth. The expansion resulted from the industrial policies of the Government of China.

Enormous Polluter

The man-made fiber sector has been an enormous polluter of both air and water. Until now, environmental controls were not enforced in China. However,the new initiatives have begun the process of bringing these industries into compliance, and pollution controls are having significant impacts on the man-made fiber sector and textile operations. Viscose fiber plants in a few areas have been forced to close due to smog emissions, and the polyester fiber supply chain has had major disruptions due to shut downs and closures. Coal based MEG plants have been forced to close because of air pollution.

Much of China’s man-made fiber production base is located only a few hundred miles from either Beijing or Shanghai, and these populations are demanding clean air and safe water. Average income based on measures of purchasing power parity for the Tianjin region is US$33,290, for Beijing $32,995, Shanghai $32,684 and for the entire province of Shandong it is $27,428. The importance of the spending power of this population is now more important economically than the benefit of the jobs provided by the older industrial plants. Consequently, the man-made fiber sector will be either forced to close or to install treatment facilities.

Polyester staple fiber (PSF) is made up of virgin polyester and recycled polyester. The recycled PSF plants do not have end-of-pipe wastewater treatment systems, and thus they release a host of potentially dangerous substances, including antimony, cobalt, manganese salts, sodium bromide and titanium dioxide. To install the necessary water treatment equipment would end the economic advantage of the recycling process. In the crackdown on pollution, the recycled polyester fiber plants are being shut down.

In addition to water pollution issues, the recycled PSF plants in many areas are fired by coal, and in East China this is a chief source of air pollutants. In Hebei, which is close to Beijing, a number of plants have been recently closed which removed as much as 500,000 tons of production capacity from the market. This, plus the other closures, has had a significant impact on prices.

The demonization of cotton is very misguided. The facts are quite clear: the process of converting crude oil, natural gas and coal into a wearable fiber is very damaging to the environment if expensive environmental safeguards are not in place. This fact is now coming to light in China. The enforcement of the environmental standards and cleanup will be costly, which could mark an important turning point for the cotton industry.

Since the 2008/09 global financial crisis, cotton has lost approximately ten percentage points of market share, driven by the production of cheap man-made fibers, especially polyester fiber. The production of cheaper apparel has caused environmental destruction in the regions in which artificial fibers have been produced.

The pace of expansion of feedstock and polyester fiber and filament production may have peaked. New capacity will be much more expensive to bring on line as plants will be required to meet stricter environmental standards. Energy consumption in East China is changing, and the days of cheap coal based plants are over. Any feedstock plants using coal or coal based energy will be closed or will have to invest inexpensive new equipment. PSF is a heavy consumer of water, and this is becoming a precious commodity.

In the near-term, China’s production capacity of PSF is adequate, so there is enough idle capacity to come on-line to fill demand. However, additional growth will be much costlier.

These new dynamics mean that a PSF floor price is developing in China, which indicates that cotton should expect an increase in consumption just from changes in fiber blends. This floor price will be near the 55 – 60 cents per pound level for now, and may even move higher.

Cotton still faces a battle with consumer preference, its ability to innovate and meet changing tastes. Cotton also faces the task of communicating to the consumer the environmental cost of man-made fiber production, while also improving its own track record. Nevertheless, the changing price dynamics of polyester staplefiber in China will be an important global macroeconomic development during the next decade.

China’s Clampdown on Pollution is changing the Textile Environment

CHINA’S CLAMPDOWN ON POLLUTION IS CHANGING THE TEXTILE ENVIRONMENT

China’s move to enforce environmental regulations has entered a new phase, and by one estimate, a third of all factories in China have experienced at least some temporary closures. The Chinese Purchasing Manager Index (PMI) for October declined to 51.6 from a 5-yearhigh of 52.4 in September. The large-company PMI remained above 50,but the medium- and small-company PMI’s contracted to 49.8 and49.0, respectively; any index value below 50 denotes contraction. The China National Bureau of Statistics (NBS) said that the PMI for high energy-consuming and polluting companies declined as a result of the government’s crackdown on pollution violators.

The regulatory clampdown is showing no signs of weakening. Factories that burn coal or use electricity generated by coal, factories that are heavy water users and factories that discharge pollutants into water or air, are being shut down or forced to make significant investments in expensive treatment technology. Some factories are being closed altogether because they simply cause too much environmental damage. Even if a factory complies, a subcontractor could be shut down, disrupting the supply chain.

As of 2017, the size of the disruption is only a ripple going through the textile supply chain, but this is only the beginning. Other than new factories in the western region of Xinjiang,most of the country’s massive petrochemical, man-made fiber, textile and apparel operations are in Eastern China, which has the dirtiest air and water in the country.Iconic textile regions, such as Shandong and Hebei, are at the heart of the pollution crackdown.

The primary raw materials for producing polyester and other man-made fibers are crude oil, coal and natural gas, and one key target of the pollution crackdown is the use of coal. Polyester is produced from Purified terephthalic acid (PTA) and monoethylene glycol (MEG). Both are sometimes made from coal, and production of each has been affected by the closure of coal based plants.

While new production capacity is reportedly set to come on line in the man-made fiber sectors of China,there are also indications that the environmental regulations are curtailing domestic production and leading to increased imports of fiber. The increase in Chinese polyester fiber production from 1 million tons in 1990 to 35 million tons by 2015 put significant pressure on South Korean and Taiwanese producers, formerly the largest exporters. Ironically, in recent months China has actually begun to import polyester staple fiber. Imports in September from South Korea were up100% from a year ago, and imports from Taiwan and Thailand were also noted. This is quite unusual.

Recyclers Affected

As crazy as the argument seems, there is a lot of hype in the apparel world regarding yarns made from recycled plastic water bottles, calling them Eco-Friendly. Recycling has become a big business in China, but the recycling process is energy intensive, and a large number of recycling plants have been closed in recent months. China has also announced that as of the end of2017, it will no longer allow the import of plastic bottle waste which is used as a raw material, leading to reduced prices for bottle waste in exporting markets. China is aggressively moving away from the products which have destroyed its environment. This will have huge consequences as it shakes the foundation of the global man-made fiber industry.

Viscose Production Curtailed

Much-hyped viscose fiber, which has taken market share from cotton due to its advantage in adding softness to products, is also being affected.Breaking down wood pulp into a fiber is environmentally damaging unless expensive equipment is installed, which has not happened in much of the Chinese industry. Water is an important resource for viscose manufacturing, and plants in China have typically been built adjacent to rivers and linked to their pollution.

Bamboo is also a popular raw material for viscose fiber in China and a couple of other locations in Asia. Bamboo has been promoted as a more environmentally friendly type of viscose because the bamboo is typically grown on marginal land. However, the process to breakdown bamboo is also harmful to the environment unless the process is strictly controlled. Worker safety is a major concern. Twenty-one companies in China now account for 65% of global viscose fiber production. One of the largest is in Jiangxi Province and has been sighted for releasing untreated waste water into China’s largest fresh water lake, Poyang, and for contaminating nearby rice fields.

Polyester Costs

The production cost of polyester fiber is increasing and will continue to move higher. Chinese fabric cost will move higher,as well. Unlike cut and sew operations, which can migrate to the cheapest locations, man-made fiber production and dyeing and finishing operations, which are linked to the discharge of untreated effluent, are capital intensive and cannot be moved easily. India, which would be one logical relocation target, already has a pollution crisis of its own. Vietnam, which has drawn some of the largest investments in textile production in recent years, has already taken a tough stance on dyeing and finishing after seeing what these industries have done to the Chinese environment. Therefore, THE AGE OF CHEAP POLYESTER IS OVER.

We expect the impact of the crackdown on pollution in China to actually be evident in the2018/19 season in the cotton industry and will have an effect on prices by stimulating demand. Increases in world cotton mill use may be stimulated if the CotlookA Index falls to less than 75 cents per pound.

DNFI Innovation Award Press release

DNFI Innovation in Natural Fibres Award 2017
The deadline for award submissions is
28 July 2017

The Discover Natural Fibre Initiative (DNFI) was created in January 2010 as an outgrowth of the International Year of Natural Fibres 2009, which had been declared by the United Nations General Assembly. The purposes of DNFI are to advance the interests of all natural fibre industries and to encourage increased use of natural fibres in the world economy. DNFI is a voluntary association of individuals and organizations with interests in promoting natural fibres through collaboration, consultation and cooperation. The Organization (www.dnfi.org) works to further the interests of natural fibres by serving as a platform for information exchange, by providing statistics on fibre production and use, and by working to raise awareness of the benefits of natural fibre industries to the world economy, environment and consumers.

The DNFI Annual Innovation in Natural Fibres award will recognize innovation in the development of products and processes using natural fibres and research involving natural fibres. Candidates for a DNFI Innovation Award are requested to send the appropriate submission form to DNFI, e-mail: Secretariat@DNFI.org.

Awards will be judged in three categories: Innovative products/components orapplications, Innovative processes/procedures and Research and science.

The Evaluation criteria are Outstanding scientific work and technical feasibility, the Level of improvement or effectiveness of the innovation over existing products or processes,the Degree to which the innovative product or process has been implemented, and Potential for opening new outlets, markets or sectors for products made of natural fibres.

Deadlines: the Closing date for applications is 28 July 2017. Short-listed competitors will be notified by 1 September 2017. Worldwide voting will be conducted during September 2017, and Winners announced 6 October 2017.

Winners will be recognized by press release and announcement at the Plenary Meeting of the
International Cotton Advisory Committee October 2017, the Biocomposites Conference Cologne
(BCC, www.biocompositescc.com) December 2017, and the International Wool Textile
Organization Congress May 2018.

Application and Submission forms are available on the DNFI web site.