Authorised Learning Centre ACIIT INSTITUTE, Ludhiana. Learning Centre Code No. 1788 FUTURE PROSPECTS OF POLYESTER YARN FUTURE PROSPECTS OF POLYESTER YARN BY ANURAG VARSHNEY ANURAG VARSHNEY Roll No.: 510928963 A project report submitted in partial fulfillment of the requirement for MASTER OF BUSINESS MANAGEMENT MASTER OF BUSINESS MANAGEMENT Of Sikkim Manipal University, INDIA Directorate of Distance Education S I K K I M M A N I P A L U N I V E R S I T Y Of Health, Medical & Technology Sciences Syndicate house, Manipal – 576 119
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Authorised Learning Centre
ACIIT INSTITUTE, Ludhiana.
Learning Centre Code No. 1788
FUTURE PROSPECTS OF POLYESTER YARNFUTURE PROSPECTS OF POLYESTER YARN
BY
ANURAG VARSHNEYANURAG VARSHNEY
Roll No.: 510928963
A project report submitted in partial fulfillment of the requirement for
MASTER OF BUSINESS MANAGEMENTMASTER OF BUSINESS MANAGEMENT
Of Sikkim Manipal University, INDIA
Directorate of Distance Education
S I K K I M M A N I P A L U N I V E R S I T Y
Of Health, Medical & Technology Sciences
Syndicate house, Manipal – 576 119
I here by declare that the project report entitled
FUTURE PROSPECTS OF POLYESTER YARNFUTURE PROSPECTS OF POLYESTER YARN
Submitted in partial fulfillment of the requirement for the degree of
MASTER OF BUSINESS MANAGEMENTMASTER OF BUSINESS MANAGEMENT
To Sikkim Manipal University, INDIA
Is my original work and not submitted for the award of any other degree, diploma fellowship, or any other similar title or prizes
Place: LUDHIANA ANURAG VARSHNEY
Date: 26/12/2010 Reg. No.: 510928963
The Project Report of
ANURAG VARSHNEYANURAG VARSHNEY
Is approved and is acceptable in quality and form
Internal Examiner External Examiners
(Name, Qualification and Designation) (Name, Qualification)
This is to certify that the project report entitled
FUTURE PROSPECTS OF POLYESTER YARNFUTURE PROSPECTS OF POLYESTER YARN
Submitted in partial fulfillment of the requirement for the degree of
MASTER OF BUSINESS MANAGEMENTMASTER OF BUSINESS MANAGEMENT
Of Sikkim Manipal University, INDIA
Distance Education Wing
S I K K I M M A N I P A L U N I V E R S I T Y
Of Health, Medical & Technology Sciences
ANURAG VARSHNEYANURAG VARSHNEY
Has worked under my supervision and guidance and that no part of this report has been submitted for the award of any other degree, Diploma, Fellowship or other similar titles or prizes and that the work has not been published in
any journal or Magazine.
Certified M. VENUGOPAL
MBAMANAGER
RELIANCE INDUSTRIES LIMITED
TABLE OF CONTENTS:
Executive summary
i) Introduction
ii) Objective
iii) Methodology.
iv) Analysis
v) Conclusions
vi) Recommendations.
Part I.
Company Profile
i) Brief Introduction of a company
ii) History (very brief) of the organization.
PART IIProject overview
i) Introduction.
ii) Objective
iii) Methodology
iv) Analysis
v) conclusions
vi) Recommendations.
Part III
i) Appendix
ii) Bibliography
iii) References
iv) Glossary
Note: this is only suggestive but not exhaustive
EXECUTIVE SUMMARY
1. INTRODUCTION
1.1 INDIAN MANMADE FIBRE INDUSTRY
Initially, a company engaged in the production of manmade fibres has the
option to set up the largest capacity that the market can absorb, decide
the level of participation in the manmade fibres chain, and use the most
cost-effective technology. To a large extent, these factors determine the
profitability and cost structure of a manmade fibre company, while later
efforts are focused on managing the facilities efficiently and effectively.
Currently, the Indian textile industry accounts for 9.0% of the global
textile fibres production. India is the fifth largest manmade fibre producer
in the world, after China, South Korea, Taiwan and Japan. Of the global
production of around 24.0 million tonnes of manmade fibres, India
produces around 1.5 million tonnes. Thus, India’s share of the world
manmade fibres output is low at around 7.0%.The demand for polyester
in the domestic market increased at the fast pace of over 15% during the
1990s. Currently, polyester accounts for a significant 38% share of the
country’s total fibre consumption (for ultimate use in the domestic
market, the share is even higher at more than 50%).Further, the weaving
industry, being weak, finds it difficult to export synthetic fibre based
textile goods (the cotton and cotton-blend textiles and clothing are
exported from India mainly on the strength of low raw cotton prices).
Thus, with textile trade coming under the World Trade Organisation
(WTO) regime, the Indian manmade fabrics and apparel industry would
have to measure up to the challenge of imports (fabrics and apparel are
under a higher threat from imports than other forms of textile) as also a
domestic manmade fibres market that is getting increasingly saturated.
The Indian manmade fibres industry has a pyramidal structure, i.e. there
are many companies with capacities while only a few have large
capacities. The entry of very large integrated players have not only
turned the small players sick, but also hurt the medium capacity players
who are showing poor financial performance. The stock prices of these
middle-capacity players have taken a severe beating, making them good
targets for acquisition by the financially strong players. Already, market
leader Reliance Industries Limited (RIL) has acquired various medium-
capacity players in the Indian polyester filament & fibre industry (like
Raymond Synthetics, ICI and DCL Polyester; JCT Fibers, OSL,IPL and
BRPL). The acquisition of small capacity players is expected to lead to an
overall decline in the number of players in the Indian manmade fibres
industry, resulting in lower fragmentation. So long, the significant decline
in polyester prices had severely affected its substitutes such as viscose
staple fibre, acrylic and nylon. However, with polyester margins and
prices showing a rising trend, the prospects for these businesses are also
expected to improve.
1.2 WORLD TEXTILE INDUSTRY
Global growth of the textile industry from the beginning of the decade is
being phenomenal. It improved from the 2.2% in 2001 to more than
2.5%. In the face of major uncertainties in the global environment, any
forecasts on the future prospects are extremely difficult. Though global
GDP is expected to rise, the dangers of the world economy sliding toward
recession are real. As for the textile industry’s performance, no
fundamental changes occurred. The U.S. and the EU are still the most
important regions in terms of consumption. Asia, with China taking the
unquestioned lead, has gained further market shares in terms of
production. As a result, the gap between supply and demand has further
widened.
The U.S. and China, representatively of the developed and developing
countries, each stand for an extreme position in this industry.
The textile and apparel industry will increasingly center on China in the
years to come China has continued increasing production, being protected
by high tariffs and an import license system. Investments have been
fuelled by massive Chinese subsidies in various forms. Forced to lend in
large amounts to unprofitable state-owned enterprises, China’s banking
sector has accumulated at least a 40 to 50% ratio of non-performing
loans to assets. This means that the Chinese government has about
$400-500 billion of bad loans that must be resolved. Furthermore,
intellectual property rights infringements are increasingly causing
concerns. A recent estimate by the U.S. Department of Commerce
assumes lost sales of more than $100 million annually. The Chinese
synthetic fiber industry is highly dependent on imported synthetic fiber
raw materials. Reductions of import tariffs are advantageous for local
synthetic fiber producers. However, particular concerns may arise for the
polyester fiber intermediates sector. The phasing-out of the multi fiber
agreement in 2005, too soon to examine its impacts yet, will present an
enormous challenge to the developed world.
2. OBJECTIVE OF STUDY
To complete the project as per time frame decided.
To meet the key marketing personnel’s for better information.
To meet experts in the field.
To browse the web for data collection and study about environment.
To collect information about firm, products, industry, market,
competitors and general environment.
To analyze the data collected.
To forecast projections for the coming years.
To derive conclusion based on analysis.
To prepare the project report.
3. RESEARCH METHODOLOGY
3.1 INTRODUCTION
This chapter deals with stepwise procedure adopted to carry out this
project. It is felt that the procedure adopted here is sufficiently effective and
most accurate in the light of research with various limitation.
3.2 PROBLEM STATEMENT
To study the current global fiber scenario and domestic fiber scenario and
study the growth prospects for RIL, in PSF business, in the current
decade .
3.3 RESEARCH DESIGN
The primary purpose of this study is to provide comprehensive market
intelligence on a domestic level for Polyester staple fiber. This study
attempts to provide a comprehensive review of the global fiber market
scenario and analyzes trends in INDIA with emphasis on RIL’s PSF
Bussiness prospects up to the year 2010.A combination of primary and
secondary research have been used for all findings. The usage of
obtained information is based on the perceived reliability of the source by
the researcher. It is based upon my belief that companies in the
advanced world have started to look at newer niche opportunities very
aggressively. I’ve studied the impact of the growing competition in the
Asian region and on how the polyester bases are shifting to Asia .The
next step was to conduct exploratory primary research, involving phone
calls to marketing and sales executives in the market, for additional
strength to the issues and trends in the business, that were identified
originally by secondary research. Primary research interviews included
those with executives in the industry. Generally, executives contacted for
this information are experts in this field having a wide gamut of
knowledge in this field.
Following steps were carried out for the study.
Step-1 : Situation analysis
Step-2 : Preliminary investigation
Step-3 : Study Design
Step-4 : Data Source and collection
Step-5 : Analysis of data
Step-6 : Conclusion
Step-7 : Report writing
3.3.1 SITUATION ANALYSIS
Following activities were carried out in situation analysis.
Preliminary information about the firm. it’s products, the industry,
the market, competitors and general environment around the firm.
Familiarity of the situation surrounding the problem.
3.3.2 PRELIMINARY INVESTIGATION
The global synthetic fibre industry caters to the gaps where the natural
fibre fails to bridge in. With growing of population and the need for
cultivation puts tremendous pressure in the field to develop substitute
fibre which will cater to the need of the civilization. Whereas the growing
concern for envirionment is pressurizing the envirionment for
biodegradable fibres in one hand on the otherhand fashion trends and
changes in technology and political changes are making the market place
full of adventures and challenges.
Fibre market is studied from the global prespective in general with
their impact on the polyester industries in India.
In India the market is studied for emerging trends in the polyester staple
fibre business .
3.3.3 STUDY DESIGN
Management Dillema
(Prospects of the PSF
bussiness)
Management Question What is the Current/future PSF
business scenario?
Project Question What is the trend of PSF and
what should be RIL’s Stratergy to be a market leader in PSF bussiness?
Project Design
Primary research
Meeting experts Studying journalsand news letters
Secondary research
Studying Browsing Browsibooks and company ngtrade reports sites intranetandpublications
DATA COLLECTION
ANALYSIS
CONCLUSION
REPORT WRITING
3.3.4 DATA COLLECTION
The research data is of two types
viz. primary data and secondary data.
3.3.4.1 PRIMARY DATA
Primary data has been collected through
discussions with experts for their opinion in the relevant
field.
3.3.4.2 SECONDARY DATA
Secondary data was collected from a varied
source -
1. Trade Publications and trade bulletins
2. Browsing internet
3. Browsing intranet
4. journals and magazines
Various references are enlisted in the annexure &
bibliography.
4 ANALYSIS OF DATA.
Projections were done on the basis of time series trend analysis. Seasonal
factors impacting the trends is taken care off by considering yearly data
alone. Trend analysis & Regression analysis of data was done with respect
to demand determinants to extrapolate projections up to 2010. MINITAB
was used extensively to do statistical calculations and projections.
5 CONCLUSIONS
Conclusion is derived from secondary research are verified by consulting
experts in the field.
REPORT WRITING
First the world fiber scenario is seen from the current perspective. A
tremendous growth is seen in the fibre production capacities in this
decade. How synthetic fibre overtook the natural fibre production
capacities and how polyester emerged as a prime fibre with a tremendous
growth potential is analyzed. The report also throws light into how the
polyester base is shifting to the east. Finally the RIL PSF business is
studied in detail.
Part I
COMPANY PROFILE
7.0 RELIANCE POLYESTER STAPLE FIBER BUSSINESS
7.1 INTRODUCTION
This section deals with the ril polyester staple fibre bussiness.
Polyester staple fibre is a versatile fibre and is a close substitute of
cotton and viscose. It blends easily with any other natural and
regenerated fiber. This section deals with the product,production
facilities, pricing, psf demand and supply and ril market share.
Reliance is amongst the five largest producer of Polyester Staple Fibre in
the world. It offers a complete range of products for a variety of
applications, on time and at the right price has given it a market
leading position in the country and a preferred vendor status with the
world's leading spinners and composite mills.
RecronTM Staple Fibre is available in both, Fibre and TOW forms and is
procurable even in the remotest locations through our vast network of
offices and agents.RecronTM Staple Fibre, the most wanted substitute
for cotton. Reliance is the fifth largest producer of PSF in the world
with 386,000 tonnes of capacity available per annum. Today, PSF is
the lowest cost fibre for the Indian spinning industry, as compared to
cotton, viscose and acrylic fibres. Market development initiatives have
opened up an entirely new demand segment for PSF - cotton
substitution on open end and ring frame machines. RIL started
producing PSF in 1986 at Patalganga in Maharastra, and since then
there has been no looking back. Besides having two manufacturing
sites at Patalganga and Hazira, there are capacities of Apollo Fibres
Ltd. (Hosiarpur), India Polyfibres (Barabanki) and Orissa Synthetics
(Dhenkanal).
7.1.1 RELIANCE GROUP
The Reliance Group founded by Dhirubhai H. Ambani (1932-2002) is
India’s largest business house with total revenues of over Rs 99,000
crore (US$ 22.6 billion), cash profit of
Rs 12,500 crore (US$ 2.8 billion), net profit of Rs 6,200 crore (US$ 1.4
billion) and exports of Rs 15,900 crore (US$ 3.6 billion).
The Group’s activities span exploration and production (E&P) of oil and
gas, refining and marketing, petrochemicals (polyester, polymers, and
intermediates), textiles, financial services and insurance, power,
telecom and infocom initiatives. The Group exports its products to
more than 100 countries the world over. Reliance emerged as India’s
Most Admired Business House, for the third successive year in a TNS
Mode survey for 2003.
Reliance Group revenue is equivalent to about 3.5% of India’s GDP.
The Group contributes nearly 10% of the country’s indirect tax
revenues and over 6% of India’s exports. Reliance is trusted by an
investor family of over 3.1 million - India’s largest.
7.1.2 RELIANCE INDUSTRIES LIMITED
Reliance Industries Limited (RIL) is India’s largest private sector
company on all major financial parameters with gross turnover of Rs
fibres fall in two categories - synthetics and cellulosics. Synthetic fibres
are primarily made from petrochemicals whereas cellulosics are mainly
regenerated wood pulp with chemical and physical treating. These fibres
can be either long, highly strong yarn called filament yarn (which is
oriented and fully drawn and is straight) or in staple form (much smaller
in length and crimpy like natural fibres). Filament yarns are woven or
knitted as they are. They are also woven into fabrics of textured yarn by
combining with other types of filament yarns, twisting yarns and texturing
in accordance with the aim of the product. The filament yarns are
processed into circular, triangular, oval, hollow and other cross-sections
that have even better properties. The staple fibres can be easily blended
with other types of fibres. They are woven into fabrics by blending with
cotton, wool and linen fibres to suit the aim of the product. The principal
manmade fibres include polyester, nylon, acrylic and viscose. Chemically,
polyester (or many esters) is primarily a family of polymers wherein the
monomers belong to the category “esters”. The most commonly used
polyester is the polymer of diglycol terephthalate and is called
polyethylene terephthalate (PET).Nylon is a group of polymers, which can
be classified as polyamides. Today several types of nylon are produced
with properties tuned to meet customer specifications. The most
commonly used ones are nylon-6 (which is manufactured from
caprolactam) and nylon-66 (made from adipic acid and hexamethylene
diamine). The special characteristics of manmade fibres combined with
availability and cost factors have seen an enormous increase in their use
in the global textile industry (see table ‘Features of Fibres’ for a
comparison of manmade fibres with cotton). Materials &
ProcessPolyester: Purified terephthalic acid (PTA) or Di-methyl
terephthalate (DMT) - both manufactured from paraxylene) - and
monoethylene glycol (MEG) - made from ethylene - are combined and
polymerised to form polyester chips. PTA has several advantages and is
more popular than DMT. The PET chips are melted and drawn to form
yarn and then cut to fibre; extruded into films or blown to yield bottles
(see chart ‘Refinery to Finery’). For generating fibres and yarns, the
molecules in polyester have to be oriented in a single direction (which
increases the strength and tenacity of the fibre). Drawing and texturising
is done to orient the partially oriented yarn (POY) - produced after the
PET melt passes through spinnerets - thereby yielding polyester filament
yarn (PFY). For generating polyester staple fibre (PSF), the initial POY is
cut in small parts and than provided a wavy shape so that it can be
blended with naturally crimpy natural fibres. Acrylic Fibres: Acrylic chips
are manufactured by polymerisation of acrylonitrile. Acrylonitrile is
manufactured from ammonia and propylene. Nylon: Caprolactam - the
raw material for nylon-6 chips - is manufactured using benzene and
ammonia. The conventional source of both these products is
hydrocarbons. Viscose fibres are cellulosic fibres made from purified
regenerated cellulose. The cellulose known as rayon grade wood pulp or
dissolving pulp is obtained from soft woods
4.0 World Fiber Scenario
4.1 INTRODUCTION
There is tremendous growth of fiber business in the last 50 years with lot of Changes in the market, technology, the processes etc. With advancement in technology Manmade fiber Grew more rapidly than natural fiber from nineties. Among the manmade fiber Polyester superseded the others from eighties. The filament growth became stronger than staple from mid eighties. The Business shifted from late nineties from USA /Europe to Asia specially China. India is also emerging. Lot of developments are being done in specialty fiber for getting higher margin. The manmade fibre industry will grow to 10.5 million tonnes by 2005 and to nearly 13.0 million tonnes by 2010.
GROWTH OF FIBER BUSSINESS IN LAST 50 YEARS
WORLD FIBRE CONSUMPTION Vs. POPULATION Year Total population(Bn) Total fibre Prod(Mn Tonnes)1950 2.56 9.41960 3.04 14.91970 3.71 21.81980 4.46 29.51990 5.28 40.82000 6.08 52.6
2003 6.34 57.7Table-1
Fiber business had increased by about 6 times in the last 50 years
.Among these the total manmade fibre consumption has grown by a
blooming 20.5 times leaving behind the natural fibre growth at a rate of
2.9times.
fibre business growth7
6
5
4
3
2
1
01950 1960 1970 1980
year
70
60
50
40
30
20
10
01990 2000 2003
Total population(Bn) Total fibre Prod(KTA)
World Fiber ConsumptionMn tonnes(Figs from 2004 onwards are projected figures)
Population ConsumptionYear Natural * Manmade TOTAL billion kg / capita
2010 38.8 129.9Table-4 Consumption of fibres from 1950,fig from 2004 are estimated
cotton/wool/silk WORLD CONSUMPTION OF FIBRESmanmade
180.0
160.0
140.0
120.0
100.0
80.0
60.0
40.0
20.0
0.0
1950 1960 1970 1980 1990 2000 2003 2010
Y E A R
Manmade fibers accounted for 35.10 million tonnes (+4.9%), comprising a 55.8% market share. Cotton, wool and silk declined by 0.6% to 22.61 million tonnes Among The Synthetic fibers Growth of polyester is Phenomenal .Polyester
have grown by 14 times while acrylic and polyamide fibres have grown by 2
times and 7 times respectively.
Growth 1970 to 2003 Polyester 14 timesPolyamide 2 times
Acrylic 3 timesTotal 7 times
Table-5
World Production of Synthetic Fibers in Mn Tonnes Polyester Polyamide Acrylics Others TOTAL Polyester Polyamide Acrylics Others
FILAMENT AND STAPLE Taking capacities for filament and staple together for all their various plants and JVs across the world, the largest polyester fibre producers in 2003 (in '000 tons) are as follows.
1 NAN YA 975 (in Taiwan, USA)2 TUNTEX/XIANG LU 925 (in Taiwan, Thailand, China)3 RELIANCE 890 (in India)4 FAR EASTERN TEXTILE 708 (in Taiwan, China)5 HUVIS 653 (in Korea, Indonesia)6 TEIJIN 652 (in Japan, USA, Mexico, Germany,Indonesia, Thailand)7 YIZHENG 630 (in China - part of Sinopec)8 HUALON 567 (in Taiwan, Malaysia)9 SINOPEC 512 (in China - excl. Yizheng)10 KOSA 508 (in USA, Mexico, Germany)
Source: PCI Fibres & Raw Materials
Table-17 POLYESTER FILAMENT YARN
Taking just polyester filament yarn, the list for 2003 (in '000 tons) is as follows
388 (83% textile filament*)340 (all textile filament; in China) 320 (all textile filament; in China) 320 (all textile filament; in China)306 (74% textile filament*)303 (65% textile filament*; in Korea)
*Among other filament products are included high tenacity industrial filament, textile monofil and filament spunbonded fabrics.
Source: PCI Fibres & Raw Materials
Table-18 POLYESTER STAPLE FIBER
And for polyester staple, the list for 2003 (in '000 tons) is as follows.
1. TUNTEX/XIANG LU 4752. SANFANGXIANG GROUP 460 (in China)3. RELIANCE 4564. YIZHENG 440 (part of Sinopec)5. WELLMAN 418 (in the USA and Ireland)6. NAN YA 4007. HUVIS 3858. TEIJIN 3469. SINOPEC 335 (excl. Yizheng)10. FAR EASTERN TEXTILE 32010. AKRA (DAK) 320 (in the USA and Mexico)
Source: PCI Fibres & Raw Materials
Table-19 GLOBAL RANKINGS - 2010
Taking capacity for filament and staple together for all their various plants and JVs across the world, the largest polyester fibre producers in 2010 (in '000 tons) are expected to be as follows.
1. SHAOXING YUANDONG2. YIZHENG3. RELIANCE4. NAN YA5. FAR EASTERN TEXTILE 6. TUNTEX/XIANG LU7. ZHEJIANG RONGSHENG 8. INDO-RAMA + ASSOC. 9. HUVIS10. SANFANGXIANG GROUP
1620 (in China)1540 (in China - part of Sinopec)
1350 (in India)1250 (in Taiwan, USA, Vietnam,
China) 1110 (in Taiwan, China)1025 (in Taiwan, Thailand, China)930 (in China)896 (in Indonesia, Thailand, India) 873 (in Korea, Indonesia, China)860 (in China)
Thus, of the top ten in 2003, only six are expected to remain in the top ten for 2010. Source: PCI Fibres & Raw Materials
Table-20 POLYESTER FILAMENT YARN - 2010
Taking just polyester filament yarn, the list for 2010 (in '000 tons) is expected to be as follows.1. SHAOXING YUANDONG2. RELIANCE3. NAN YA4. ZHEJIANG HENGYI5. YIZHENG6. FAR EASTERN TEXTILE7. ZHEJIANG RONGSHEN 8. ZHEJIANG TIANFENG 9. ZHEJIANG ZONGHENG 10. ZHEJIANG TONGKUN
920 (all textile filament)744 (all textile filament) 720 (all textile filament)660 (all textile filament; in China)640 (86% textile filament; part of Sinopec) 550 (82% textile filament)530 (all textile filament)530 (all textile filament; in China) 525 (all textile filament; in China) 500 (all textile filament; in China)
By 2010, all the biggest polyester filament producers except Reliance of India will befound in China, even if they also have operations elsewhere (such as Nan Ya andFar Eastern Textile). Source: PCI Fibres & Raw Materials
Table-21POLYESTER STAPLE FIBER - 2010
And for polyester staple, the list for 2010 (in '000 tons) is expected to be as follows.
1. YIZHENG2. SANFANGXIANG GROUP 3. SHAOXING YUANDONG 4. RELIANCE5. HUVIS6. TUNTEX/XIANG LU7. FAR EASTERN TEXTILE 8. INDO-RAMA + ASSOC. 9. NAN YA10. SINOPEC
900 (part of Sinopec)860700606605575560532530495 (excl. Yizheng)
By 2010, all the bigger polyester staple producers except possibly Reliance and Indo-Rama will be found in China, even if they also have operations elsewhere (such as Huvis, Tuntex, Far Eastern Textile and Nan Ya). Source: PCI Fibres & Raw Materials
4.3.3.2 POLYESTER STAPLE AND FILAMENT GLOBAL
CONSUMPTION PATTERN
25
20
15
Staple
10 Filament
5
0 1960 1970 1980 1990 2000 2010
4.3.3.3 STRONG GROWTH DRIVERS FOR POLYESTER IN INDIA
Quota removal by developed quantries (18% of the world current
production will be either from India or China) Big Boom in textil export.
Textile Exports to increase from current $13bn to $50bn by 2010.
Polyester based textile growth will increase with the increase in
population and change in demographic pattern and with the increase in
the percentage of consumer class. GDP growth rate rate is expected to be
more than 8 %. Polyester consumption is still low in India with a per-
capita consumption of 1.4 Kg whereas in Pakistan it is 3 kg, China 4 kg
and Indonesia 5 kg. There is a growing demand for non apparel
application worldwide 23% of global demand, whereas in India it is
negligible. Polyster is slowly replacing Cotton, Viscose and Acrylic fibres as
more and more polyester is used for its versatility and low price.
4.3.3.4 CHINESE POLY ESTER INDUSTRY STRUCTURE
CAN WE BEAT THEM ???
Chinese industry is dominated by more than 200 players which is
highly fragmented . Few companies are integrated -PTA-MEG-
Polyester and most of the companies rely on imports.
There are Several small capacity players-Government subsidized ,
without any viable cost or Quality model , these will call in for fierce
turbulence and may not survive in Post 2005 era.
Imbalance growth across the chain.(PX-PTA-MEG-PET)
MNC polyester manufacturer find it very difficult to
come to India as Reliance is a formidable force in Indian market
Several Chinese Manufacturers are going for Chinese M/C for High
IRR. They will fail in the long run.
Chinese Industry is Quantity driven where as Indian Industry are
quality driven.
4.4 FUTURE FIBER
Today’s challenge - eco friendly fiber !!!
Today’s main fibers in the world
- Cotton and polyester
- How eco-friendly they are ???
Cotton
•Massive land for growth
•Huge pesticide
•Massive water
•Very slow biodegradation
•Polyester
•Huge Fossil resource getting depleted
•Not bio degradable
Future fiber
• Raw material of finite resources
• Bio degradability of the product
• Eco-friendliness of the process
•Improved Quality
4.5.1 SHIFTING FOCUS OF POLYESTER TO ASIAN COUNTRIES
The last decade has seen a fundamental shift in the world polyester
production from the predominantly western part of the world to Asia. In
the 80’s the top ten polyester producers of the world had only two Asian
companies ETeijin and Toray, while the rest were all from USA/Western
countries.
Today seven Asian companies are firmly entrenched amongst the top ten
producers of the world - Nan Ya on the top followed By Tuntex, Teijin, Far
Eastern, Hualon, Reliance and Indo Rama. Firms like Hoechst, which was
a top ranking polyester company in the 90’s, is not in the current list. The
new entrants are Kosa (Koch-Sabanchi group), Tuntex, Hualon, Reliance
and Indo Rama who are now emerging as serious new global polyester
players.
China, Taiwan, Korea, India and Indonesia are key countries that have
surged ahead in the polyester market posting growth figures of 10%, in
spite of a major financial breakdown in the Asian economy in the year
1999. In 2000 the figure stood at 8.5%. On a longer term this figure is
expected to stabilize at 6.5~7%, against the world average of 5 ~ 5.5%
in decade (2000 -2010). Based on this, the estimated capacity of
polyester in Asia by the year 2010 is expected to touch 30 million tonnes.
China is expected to emerge as the biggest player in Asia leaving behind
Taiwan, Korea, and the other countries in the world. Its polyester
capacity will more than double in 10 years time, and it is expected to
occupy 33% of the Asian market share. Besides this, some new groups
will also emerge in Asia and dominate world polyester by way of mergers,
acquisitions and consolidation. Countries like Taiwan and Korea are likely
to shift capacities outside their ountries, while India is likely to face a
shortage of polyester in the face of increasing domestic demand. Growth of
polyester in other Asian countries like Indonesia, Malaysia, Thailand,
Philippines, Pakistan, and Vietnam will be slow.
4.6 CHINESE TEXTILE INDUSTRY: ITS STRENGTHS AND WEAKNESSES
When the Chinese textile industry is preparing to launch its conquest of the
world markets from 2005 when quotas on the international textile trade
are the lifted, it might be interesting to have a hurried look at the strengths
and weaknesses of that industry.
Just about a quarter century ago, the Chinese textile complex, according
to Mr Herwing Strolz, director general, International Textile Manufacturers
Federation, was in a shambles, unable to meet even the needs of its
growing population. In 1978, it had about 23 million spindles and
490,000 looms, most of them obsolete and in doubtful working condition.
Fibre consumption by its textile industry was about 2.66 million tonnes in
1975, just around 11 per cent of the total world consumption.
But by 2000, fibre consumption by the Chinese textile industry had risen to
about 13 million tonnes, about 25 per cent of the world total. Even after
scrapping, one million old spindles, its spinning capacity amounted to 35
million spindles in 2001, of which 20 per cent was less than 10 years old.
It had by then, nearly 700,000 rotors of which 60 per cent were less than
10 years old.
Modernisation of its weaving sector has been even more impressive. In
2003, it had 660,000 looms of which 12 per cent were shuttleless
(against none in 1978) and of them, more than 90 per cent were less
than 10 years old.
Thus by 2009 China had emerged as:
i) The world’s largest textile economy;
ii) it became the biggest exporters of textiles and clothing;
iii) it was the largest single producer of cotton and man-made fibres;
iv) its textile industry accounted for nearly 10 per cent of its GDP and 20
per cent of its industrial output; and
v) its textile industry accounted for 13 per cent of the workforce
employed by its manufacturing sector.
Despite all this wonderful progress, the Chinese textile industry is still
suffering from certain weaknesses such as:
i) Outdated and small man-made fibre manufacturing units;
ii) large obsolete production capacities still existing in the cotton weaving
sector;
iii) existence of certain loss-making units in the public sector; iv)
neglected finishing and printing sectors; and
v) low value addition of its textile production.
A question that is bound to arise here is: what is the strategy adopted by
the Chinese textile industry to achieve the present impressive growth?
China’s success in the global textile market, according to Mr Strolz, has
its roots in the early recognition that the development of its textile
complex had to start from where it was most competitive i.e. at the
apparel end of the pipeline. It was here that its low labour costs would
give it an unbeatable advantage for a long time to come, considering the
virtually non depletable reservoir of labour from the rural areas in future.
Once the take-off stage in apparel had been left behind, investments
would automatically be attracted into the capital intensive upstream
sectors, be it textiles or fibres.
Although the process from backwardness to bigness took only 25 years
when considering the size of the industry today, China had no instant
success when trade performance is taken as the yard stick. In fact, it was
only in July 1988, 10 years after the announcement of the Deng reforms
that in value terms, China’s apparel export caught up with the textiles.
After that, however, apparels performed the role that was intended for it.
Apparel exports grew by over 420 per cent in the 13 year period to 2001, as
against 140 per cent for textiles.
So storming has been the advance of the apparel sector that textiles
could not follow. In the big noise which is currently made about China’s
export performance, it is often forgotten that China is also one of the
leading textile importers of the world. The main reason for this lies in the
fact that many fabrics needed by its export -oriented apparel industry are
not manufactured in the country either at all, or in sufficient quantity and
quality Growing textile imports by China are partly the result of an
obsolete weaving industry in which shuttle loom is the dominant
technology and partly neglect of the finishing and printing sectors.
According to the Chinese customs statistics, only 4.3 per cent of textile
imports in 2001 was classified as general trade. The rest was processed
materials. China is aware that its future competitive strength in the world
market will depend essentially on the strengthing and diversifying of its
textile base. It might be interesting to note that China continues to
introduce new machinery in its textile industry at almost breakneck pace.
It is no surprise that textile machinery manufacturers all over the world
are looking at China as market with great potential. That is what causes
apprehensions in the minds of textile manufactures elsewhere in the
world, whether they will be able to survive in the new quota free era.
4.6.1 THE CHINA FACTOR
It has been widely observed by now that the country most critical to the
course of future cotton and textile trade developments is China. Even
though India and Turkey are acknowledged as serious players in this
segment the industry's watchful gaze is chiefly focused on China. It is
popularly being seen by industry specialists as a wild card which will
dictate terms and trends to the global textile market in the years to
come.
China sits snugly with the majority share of 25% of the entire world’s
textile market exports, while India lags far behind at a mere 5%. Given the
fact that India has about the same potential and resources as China for the
textile export market, it is important to look at the factors that impede its
growth in an otherwise promising scenario.
Amongst the key reasons for China’s higher productivity are its low cost-
high quality mass production, a favourable physical environment for
foreign companies, an optimistic work culture and a technology ‘imbibing
attitude- factors that are wanting in India. However, a comparison
between the two countries also shows that China’s weaknesses are
India’s strength. China’s drawback is essentially a people’s problem: the
local staff in the industry suffers from low educational background,
limited functional specialities and a lack of international mindset. On the
other hand, India has a talented local staff with an extremely high
education level, which also has the potential of moving up the
management hierarchy.
However, India has glaring infrastructure problems that cannot be
ignored. Its power supply remains poor and erratic at best. The cost of
capital, which is comparatively low in China, is high in India. This does
not allow the industry to implement rapid technological advances in
machinery and processes, most of which are completely obsolete.
Moreover, it also has a strong culture of trade unions, with strong political
affiliations that complicate business issues and retard productivity. The
discrepancy between the wages of labour and management are high in
India leading to considerable dissatisfaction and unrest. In contrast,
China enjoys a disciplined and dedicated workforce that has very little
disparities in the remunerations between its labour force and the
managerial class.
Funds for modernisation are extensively granted to the Chinese industry
while in India it is still lacking.
The infrastructure of any country is the basic foundation upon which it
stands. Or moves. India with a GDP growth suffers from a sluggish
growth rate, even as its neighbour China rears its head with an 8%
growth rate.
For a considerable period now lack of modernisation has been staring at the
face of the Indian industry, which banks primarily upon a labour
intensive approach. The textile industry is no exception and is replete
with obsolete machinery.
Industry heads voice the need for cheaper capital to be able to make
these much-required changes, and are not satisfied with the
government’s half-hearted efforts. There is also a significant lack of effort
in the areas of research and development pertaining to the textile
industry, something that has been addressed very seriously in countries
such as China.
The power available to Indian industries is inconsistent in quality due to high
levels of voltage fluctuation. Furthermore, frequent power cuts force
industries to invest heavily in self-generating power plants. Indian
industries also pay the same tariff rates for both peak and normal hours,
while in a country like China the tariff at normal hours costs much less.
Besides power, other infrastructure issues such as cost of capital is also
appreciably cheaper in China as compared to India, which pays very
steep interest on the much needed working capital. It has also to contend
with higher rates of import duties.
5.0 INDIA’S TEXTILES : SCENARIO
5.1 INTRODUCTION
Textile is one of India’s oldest industries and has a formidable
presence in the national economy in as much as it contributes to about 14
per cent of manufacturing value -addition, accounts for around one -third
of our gross export earnings and provides gainful employment to millions
of people. They include cotton and jute growers, artisans and weavers
who are engaged in the organised as well as decentralised and household
sectors spread across the entire country. The industry is largely foot-
loose and has a wide sectoral dispersal particularly in handloom and
powerloom sectors. It has a wide spectrum of fibres consisting of cotton,
jute, silk, wool, man-made and synthetic fibres as well as blends of one
or more fibres. It enjoys possibly the widest linkages, both forward and
backward, and contributes directly not only to the livelihood but also to
the empowerment of largely the weaker sections of the society living in
rural and semi-urban areas.
The growth of the industry over the years has been characterised by
expansion in dimension, changes in fibre-mix, adoption of heterogeneous
technology matrix and increase in availability of goods for home
consumption and exports. In the spinning segment, the spindleage
increased from about 21 million in 1981 to about 38million in 2003 which
is the second largest in the world after China and has a world share of
38%. The production of spun yarn has also increased accordingly from
about 1240 million kgs. in 1981-82 to about 3520 million kgs. in 2002-
03. The production of fabrics has also increased from 12300 million sq.
meters in 1981-82 to 36200 sq. million meters in 2002-03. The rapid
growth in the decentralised garment segment in the past decade or so
has added to the dimension of the textile industry. The garment segment
began initially as an export -oriented effort but it has grown in volume and
diversity and the export of ready made garments now accounts for over 40
per cent of the value of total textile exports. The value of production of
ready-made garments for domestic market is estimated to be three times
as much as for export market. The fibre-mix pattern has also
undergone changes due to improved availability of man-made fibres and a
shift in consumer preference towards this fibre. The ratio of cotton to man-
made fibre is now about 65:35. The fibre mix pattern of fabrics has also
undergone change and cotton-based fabrics which accounted for over 70
per cent of the total fabrics production till 1988, now accounts for about 42
per cent production. The remaining 58 per cent is contributed by blended
and 100 per cent non-cotton cloth.
The significant growth in textile industry so far has led to an increase in
the availibility of textile products for both home consumption and
exports. Thus, the per-capita availability of cloth has increased from17 sq.
meters in 1982 to about 31.24 sq. meters in 2003-04. Likewise, exports
of textile products have grown significantly from $ 5797 million in 1991-92
to $ 12501 million in 2002-03. The growth in exports further seems to rise
to up to $ 50000 by 2010.
5.3 PRODUCT DEVELOPMENT
The future growth, particularly in export markets, will come mainly
from exports of value -added items including made-ups and apparels. It
is, therefore, imperative that our industry must gear up to integrated
consumer tastes and preferences in their production and develop
marketing infrastructure so as to service both domestic and international
requirements timely and effectively. The industry can contribute towards
development of marketing infrastructure through their own association
and export promotion councils. The Government has set up seven
National Institute of Fashion Technology Centres providing skilled human
resources to the apparel and textile industry. Besides, the Government has
equipped certain Powerloom Service Centres, Weavers Service Centres
and Training Institutes. The industry can take help from these
organisations in meeting their design requirements. It has also been
decided to set up a National Design Centre for Handlooms.
5.4 INFORMATION TECHNOLOGY
The efforts to increase the competitive strength of the industry as a
whole will depend on how fast the industry can integrate various I.T.
solutions including ERP solutions, CAD/CAM and other I.T.-based tools for
improving the speed and quality of production, reducing time lag in
deliveries, marketing and incutting down overall time overrun. In fact,
countries like Japan and USA are adopting I.T. solutions like Quick
Response (ARS) which are reportedly capable of cutting down apparel
pipeline time substantially and thus effect significant savings in cost.
Some variants of these solutions may also be tried in our apparel sector
in particular so that we can compete with these advanced countries
successfully. I.T. solutions can easily be adopted by small and medium
units and these units have the added advantage of adaptability and
flexibility in production, which large units often do not have
5.5 JOINT VENTURES
It is important to note that the production environment in textiles all
over the world is undergoing changes. Countries are trying to
complement their own comparative advantage, whether in technology or
in raw materials or in finance, by forging joint ventures or production or
marketing tie-ups with other countries to increase their overall
competitive strength. The Indian textile industry may also like to explore
this route for enhancing comparative advantage and convert it into
competitive strength.
5.6 EXPORT.
Till the phasing out of the Multi Fibre Agreement (MFA) by the end
2004, the Government has made all efforts to streamline the textile quota
regime, so as to benefit the textile trade and industry. The new policy
seeks to achieve continuity and stability with competition. The policy has
also attempted to simplify procedures, ensure time-bound action in case of
apparels and encourage fast utilisation of quotas. The Policy also
attempts to give a boost to Technology Upgradation Fund Scheme (TUFS) by
linking with investments under Manufacturer’s Entitlement and New
Investment Entitlement.
5.7 TEXTILES IN THE NEW MILLENNIUM
Needless to say that the textile industry has several challenges ahead
and re-orientation of the industry, both organic and systemic, is required to
enhance its competitive strength and improve its global positioning in the
new millennium. In this effort, the Government’s initiative, some of which
have been outlined above, may not be sufficient. The industry including
the textile machinery sector and related organisations must supplement
these initiatives in a more proactive manner, so that the industry
achieves cost reduction, attains quantum jump in quality production
and improves delivery systems.
5.8 INDIAN TEXTILE INDUSTRY : A FUTURISTIC PROFILE
The Textile Sector in India ranks next only to Agriculture. It accounts
for 20 per cent of the country's industrial output and 30% of the foreign
exchange earnings. About 21 INDIAN TEXTILE INDUSTRY CONTRIBUTES TO -
per cent of the country's
work force is employed in
this sector. But presently, the
Indian textile industry stands
at the cross-roads. It is facing
challenges and
exciting opportunities at the
3% of GDP• 14% of total industrial production
• 21% of total work force• Employing around 35 million people
• 27% of gross export earnings • 10% of total excise revenue
Table-27
same time, following a focus thrust on this sector in the planning process,
economic liberalisation and globalisation of trade. It can either flourish or
perish.
5.9 MAN-MADE FIBRE
Till the early seventies, the Indian man-made fibre textile industry was
miniscular. Fibre flexibility introduced by the Government's Textile Policy
of 1985 has, however, helped man-made fibres to grow rapidly in the last
two decades. Falling input prices and ease of maintenance have
popularised man-made and blended fabrics among the common masses.
They are also increasingly being used in industrial applications. India's
man-made textile industry is capable of expansion in terms of raw
material base and yarn and fabric conversion facilities. Today, it accounts
for almost 32 per cent of the fibre/yarn base. Given the Indian
advantages of lower production costs, dominance of medium-sized units
capable of catering to a small lot and volume orders, large domestic
consumption which could neutralise adverse effects of overseas demand
fluctuations and decline in production in the developed countries, the
Indian synthetic textile producers have an edge. This will release more
cotton for value-added exports.
5.10 SPINNING AND WEAVING
With 39.02 million spindles and 4.69 lakh rotors, India has almost 19
per cent of the world spindlage. The spinning sector has kept itself
healthy through timely investments and technology upgradation.
Consequently, it is doing excellently in exports Since 1947, the mill the
powerlooms has grown from 24,000 to almost 16.92 lakh. A Technology
Upgradation Fund Scheme is being mounted during the Ninth Plan.
Upgrading technology level in the weaving sector by installing shuttleless
or automatic looms and related accessories would ensure productivity
enhancement and production of defect-free fabrics with value addition.
5.11 PROCESSING
Processing and finishing are the weakest links in the Indian textile
industry today. A conscious drive has been initiated to upgrade it by
incentives in investment to the high-tech processing machinery,
strengthening testing infrastructure by upgrading or setting up new
laboratories, developing natural and vegetable dyes for commercial scale
application, providing support for eco-friendly processing and other such
measures. This would help improve the garment quality, contributing to
value addition and higher unit value realisation in exports and hence a
larger market share.
5.12 INDIA'S POSITION IN WORLD TEXTILE ECONOMY
The Indian textile industry has a significant presence in the world textile
economy by virtue of its contribution to world textile capacity and world
production of textile fibre/yarn :-
India's position in World textile economy. It contributes about 23% to the
world spindleage and about 6% to the world rotorage and has second
highest spindleage in the world after China. It has the highest loomage
(including handlooms) in the world and contributes 61% to the world
loomage. (Though this position cannot be considered as a 'strength'
because in quantum terms we may have the highest loomage in the
world, in terms of high-tech shuttleless looms, our contribution is only
about 2.8% to the world loomage.) It contributes about 12% to the world
production of textile fibres and yarns (including jute). It is the largest
producer of Jute, second largest producer of silk and cellulosic fibre /
yarn, third largest producer of cotton and fifth largest producer of
synthetic fibres/yarns.
5.13 COST COMPETITIVENESS OF TEXTILE INDUSTRY
India's position in comparison with other countries
India has inherent strengths in terms of strong multi-fibre raw material
base, low cost of labour, intellectual capital, dynamic and vibrant
entrepreneurship. It is diluted to a great extent due to severe disadvantages
suffered by the Indian textile industry in certain other areas affecting its
productivity, quality and cost competitiveness.The main disadvantaged
factors are high interest cost, high power tariff, structural anomalies and
technological obsolescence which is pervading all segments of the industry.
As per ITMF study for the year 2003 of seven countries , i.e., Brazil, China,
India, Italy, Korea, Turkey and USA. Power cost works out to be the highest
in India in comparison to other countries. The power cost in total cost of
spinning, weaving and knitting is in the range of 3% to 13%, while in India it
is in the range of 6% to 17% except woven textured yarn Fabric in which
case Italy is highest with 28%. -source "compendium of International Textile
Statistics - 2004"I.
5.14 CONSUMER BUYING BEHAVIOUR
The success of any product now lies in customizing it for the Indian
market and working closely with manufacturing facilities and research
centers in India. Now, Reliance CDMA phones come with the Indian
flavour- unique polyphonic rings and colour displays ; the Samsung
stables have the Metallica and Woofer series of TVs revolving around the
song and dance routines of Hindi film industry; and Electrolux Kelvinator
with their ‘Hindi-speaking’ washing machine catering to the Indian
housewife.
The Indian market does lap up a foreign tag but it does so only with some
level of customization. The realization that Indians are different from the
Americans and the Europeans made the multinationals rework their
marketing strategy. From introducing their products in a hurry without
bothering to gauge whether the Indian consumers liked them or not, they
had to graduate to develop products specially made for the Indians.
These localized products are targeting the Indian consumers not as a single
entity but also focusing on the distinctly different preferences of the urban,
small town and rural Indians.
•During 2001
-Per capita purchase of textiles was 19 meters
-In purchases of Man made /Blended and Mixed fabric
•Overall share of Man made /Blended and Mixed fabric stands at 58%
•Urban India share of Man made /Blended and Mixed fab50% , Rural
India share of Man made /Blended and Mixed fab60%
-Purchases of Cotton Fabric
•Overall share in purchases of Cotton Fabric- 40%
•Urban India purchases of Cotton Fabric- 44% Rural India purchases of
Cotton Fabric-38%
Regional Buying Trend
•Man made / Blended and Mixed
-Over 50% of the Man made / Blended and Mixed fabric purchased by
North and West
-West leads in purchases of Man made fabric
-North leads in purchases of Blended/Mixed fabric
•Cotton Fabric
-Maximum cotton purchases by Eastern region: 40%
•Silk
-Maximum silk purchases by Southern region: 57%
Per Capita Purchase -
Meters-Table28
Urban Rural All India
Cotton 11 6 7
% Share 44 38 40
Man-made 3 2 2
% Share 12 11 11
Blended / mixed 10 8 9
% Share 41 50 47
Pure silk 1 0 0
% Share 3 1 1
Woollen 0 0 0
% Share 1 0 0
All Textiles 24 17 19
Source : Textile Compendium 2009
Region Wise Fabric Purchase -2008Billion Meters -Table29
North South East West Central TotalCotton 1.4 1.8 3.0 1.1 0.3 7.7
PSF deficit shows to be increasing by 2010 deficit will reach a staggering 532.25 KTA with a present rate of domestic production of 608 KTA. PSF demand by the year 2010 is likely to touch 1138 KTA.
6.4 DEMAND AND SUPPLY
Textile spinning mills are the principal consumers of natural and
manmade fibre in India. Consumption of PSF in India has increased with
growth in the textile industry and attendant growth in the industry's
average spinning capacity.
The demand for PSF in the last three years has been increasing at a
compound annual rate of 27 per cent. The main reasons cited for the
growth are as follows:
Shortage of cotton,
Increased export of PC yarn and fabrics,
Easy availability of PSF due to sufficient production and
Competitive prices of PSF.
The prices of input materials for PSF can vary drastically, depending on
the exchange rates of the rupee and the prices of oil __ PTA and MEG are
basic raw materials of the PSF industry and they are both
petrochemical elements. In the current year, the prices of input
materials have risen significantly.
This is coupled with the serious problem of dumping. It is a major
threat as
countries such as Korea and Japan, have been dumping their produce in
the local
market. The local industry suffers, as the dumped produce is cheaper
than the
locally manufactured PSF. To counter this, an anti-dumping resolution
has been
passed.
PSF serves as a substitute for cotton. As a result, the demand for
cotton can be easily replaced by PSF. It is in the interest of the cotton
growers that less and less PSF and more cotton are consumed. At the
same time, the textile sector is in a position to exert immense
pressure on the government, as the textile sector prefers to have PSF
rfibercoEMAND GROWTH DRIVERS
at low prices to manufacture mixed fabrics.
With time, the demand has been saturated with supply. The product
has achieved maturity. Looking at the demand growth for PSF over the
last several years, it can safely be assumed that the demand will
continue to outstrip supply in the future. With the local mills running to
full capacity, imports are used to bridge the demand\ supply gap.
6.5 DEMAND DETERMINANTS
Except for the fibre consumption downstream and the fibres exported and imported demand is going to be affected by a lot of economic ,non economic factors.
Table -39
The economic factors: Condition
Income – Mainly per capita income GDP growth rate >8%
Price of the goods Polyester Price is low
Inflation <8%, after economic reforms
Economic Outlook Very bright-Going to be thesuperpower
The Non –economic Factors:
Population Going to be the most populous country
Properties of the fiber. Excellent
Technological advancement for fiber /textile m manufacturing and Economic scale size is changing-lots ofapplication. research is going on.
Usability of fiber in different human need Apparel>Home>Industrial
Priority of textile spending to other spending People are highly fashion conscious
Climate Tropical
Inter fiber competition Polyester in less costlier than otherfiber
Culture/Fashion Fashion fabric
1. Consumption pattern of people are likely to increase .Per capita
fibre consumption of India at present is around 2.3% which is
likely increase to 3.2% by 2010.
2. Fashion trends are changing which calls in for more polyester
consumption.
3. Industrial applications like geo textiles filtration media,tyre
cord,ropes ,tents and tarpolines.
4. Medical applications- suturing anti microbial,bandages .
5. Filling applications like bedding,pillows quilts etc.
6. Construction reinforcement material.
7. Used extensively in FRPs for defence applications etc.
8. Short -cut fibres have paved their way into the paper making.
Application as fashion fabrics in making carpets, nonwovens,
uphoslery etc
6.5.2 MACRO ECONOMIC FACTORS AFFECTING DEMAND
Indian economy is poised for a very high growth(>8-10%).
In India Textile consumption directly vary with per capita NNP (
Net National Product),in case of China it is half of NNP.
Indian manufacturing is now become globally competitive .
Growing population,by 2050 India will be the most
populouscountry of this planet.
Change in demographic profile.(350 million people of -Productive
age group)-2025 in the peak.
A booming textile sector-domestic market of more than US $25
Billion (Year 2002)-Export market US- ($50Billion by 2010)
Textile outsourcing by developed nation : Now is an emerging
story.
Textile industry has high potential to grow .
The BRIC Report(Brazil,Russia,India,China):Indian-economy in
the year 2030: Third biggest economy after Japan.
6.6 DEMAND PROJECTIONS
Whereas the spun yarn shows a growth of 4%,the filament yarn
shows a
compounded growth rate of 11% .The share of polyester consumption
have
grown from 87% in 1997-98 to 94% in 2002-03 which shows a
compounded
annual growth rate of 7%. In the weaving sector the non cotton and
blended
fabric growth rate is 8% and 1% respectively. This growth rate is a major
driver
for polyester consumption demand. Over the previous decade,
local
demand of yarns has increased on an average annual basis by 4.8% to
about 3 million tonnes in 2003/04. During this period the ratios of the
yarn types have drastically changed and polyester continued its
triumphal procession.
The share of polyester in filament yarns has gone up from 74% to
91% and in non-cotton spun yarn blends from 58% to 74%. The
growing filament demand in India resulted from a shift in consumer
preference towards synthetics particularly in rural areas, the
consumption rose from 49% to 66% over this period. Cotton demand
in the same areas dropped from 51% to 34%. Two of the fastest
growing end-uses for filament in India have been stimulating this
growth.
Firstly, sarees - traditional Indian dress for ladies - before the
widespread of synthetics were made for the high-end of the market
out of silk and for the low-end out of cotton. The introduction of high
taxes on polyester by the Indian government was to protect the own
cotton industry. As a result, polyester became an expensive fiber with
high in demand among rich people only. The growing demand for
polyester sarees substituted more and more silk in the high-end
market. After tax reductions on polyester, a booming demand for
polyester sarees materialized which still had the image of an exclusive
piece of garment but became affordable to a larger share of Indian
ladies.
Secondly, there has been a growing polyester demand for men’s wear
trousers and suitings.Changing purchasing patterns have been
influenced by its wearing comfort, easy care and advantages in price.
Previous year’s polyester output has increased by 7.2% to 22.26
million tonnes. Above average growth has been observed in filament
markets, rising by 7.6% to 12.87 million tonnes. Staple fibers went up by
6.6% to 9.39 million tonnes.
6.7 POLYESTER FILAMENT YARN
Polyester filament yarn is growing @ 6% carg over 97-98 prodn
.Looking at the downstream industries polyester filament yarn
consumption is growing @ 11% and polyester cloth consumption is
increasing @Share of Staple and Filament in India
•In India annual demand for Yarn has increased on an avg 4.8 % to
3.0 million ton.
•During this period the ratios of yarn shifted from cotton to polyester
•The share of polyester in filament has grown from 74% to 91 %
•The share of polyester in non cotton spun blend from 58% to74 %
•Polyester in rural India shifted from 49 % to 66 %
The development over the last decade has shown that 82% of the additional volume consumed has come from synthetics. While cellulosics’ increase averaged at 0.6% annually, cotton showed an average annual growth of 1.7% and synthetics jumped up by 5.9%. In other words, 14 out of 17 million tonnes of additional demand was met by synthetic fibers over the period 1993 to 2003. This trend is commonly expected to continue. The growth of synthetic fibre is expected to reacha 40 KTA by 2010. the growth of manmade fibre iis in the rising trend due to better technology,cost effctive and novel manmade fibres produced over the years. 8.4.2 PROJECTION FOR NATURAL FIBRE GROWTH
Growth of natural fibre is sluggish it is expected to reach 25 Mn
Tonnes by 2010. Total manmade fibre consumption has grown by a
blooming 20.5 times leaving behind the natural fibre growth at a rate
of 2.9times. Nevertheless, in apparel end-uses, accounting for more
than half the world’s fiber demand, natural fiber is preferred for
reasons of comfort. Relative pricing disadvantages as well as natural
restrictions argue against a cotton-dominated textile industry.
Technical innovations to imitate nature and to make fibers more
natural will be the key to success. This would also address growing
public concerns about the environment by making fibers biodegradable
and manufacturing them from renewable resources.
8.4.3 WORLD FIBRE CONSUMPTION Vs POPULATION
KTA
billion WORLD FIBRE CONSUMPTION Vs POPULATIONLog. (KTA)
Log. (billion)70.00 7.00
60.00 6.00
50.00 5.00
40.00 4.00
30.00 3.00
20.00 2.00
10.00 1.00
0.00 0.00
YEAR
Wo
World fibre consumtion and population increase seem to be highly correlated. World population of 6.34 billion corresponds to an
average per capita consumption of 9.9 kg. Manmade fibers accounted for 35.10 million tonnes (+4.9%), comprising a 55.8% market share. Cotton, wool and silk declined by 0.6% to 22.61 million tonnes. On a world basis, demand for fibers from the first two groups has
increased by 2.7%. As in the recent years, the manmade fibers
performance exceeded that of cotton in terms of the growth rate..
Since the beginning of the 90’s manmade fibers have been the most
important fiber type in terms of volume. Manmade fibers managed to
perform with an average annual growth rate of 4.7% while natural
fibers accounted for a mere 0.4% annual increase in average. With
some exceptions in the early- and mid-eighties, filament yarns have
developed stronger than staple fibers. Over the past fifteen years,
filament yarns - most commonly further processed via texturing or
twisting - have enjoyed an average annual growth of 6.0%. Staple
fibers have increased by 1.4%, of which cotton and wool by 0.5% and
manmade staple fibers by 2.8%. Staple fibers are the raw material for
spinning of staple fiber yarns (synonym: spun yarn) and for
manufacturing of drylaid nonwovens.
8.4.4 NATURAL Vs MANMADE FIBRE CONSUMPTION
NATURAL Vs MANMADE FIBRES Natural *Manmade
45.00
40.00
35.00
30.00
25.00
20.00
15.00
10.00
5.00
0.00
YEAR
After the mid 80’s manmade fibre consumption zooms past the natural
fibre growth. The growth rate of natural fibres is @ 0.4% whereas the
growth rate of manmade fibre is @ 4.7%. World natural fibre
consumption shows a compounded growth rate of 2.1 % from 22.75
KTA to 26.89 KTA in 2010.The trend line shows that the growth rate is
decreasing.This may be due to the advent of synthetic fibres with
more and more competitive prices and with better feel. World
Consumption of mmf have increased from 1.68 kta to 33.5 kta per
annum a 13.56 times rise in the last 50 years.
Consumption pattern seems to be increasing from 9.0 kg per cap to
around 10 kg per cap by 2010. This is due to the changing buying
behaviour and fashion consciousness among the people. Still now the
consumption of India is as low as 2.1 kg against 5.5 kg in the US and
regression analysis- cloth availability in sqcm vs gnp, gdp, population,
gds, gdcf & index of industrial production.
The regression equation is CLOTH AVAILIBILITY SQCM = 75007 - 0.010 GNP at current price
+ 0.092 GDP at current price + 0.293 Population - 1.12 Gross domestic savings + 1.20 Gross domestic capital formatio - 1665 Index of Industrial production
S = 10278 R-Sq = 95.7% R-Sq(adj) = 93.7%Analysis of VarianceSource DF SS MS F PRegression 6 30389620851 5064936809 47.94 0.000Residual Error 13 1373335380 105641183Total 19 31762956231
The p value and the R-sq value shows that the the prediction is highly significant.
Cloth availability is the basis on which the consumption of the amount of
yarn produced is computed. The rate at which the availability of
cloth is growing shows that the consumption pattern is changing.
People are becoming more fashion conscious and the buying behaviour
change is also taking its toll.
8.5.7 PROJECTION FOR COTTON YARN PRODUCTION
COTTON yarn prodn in Mn kg-Table79
Year
1990-91
1991-92
1992-931993-94
1994-95
1995-961996-97
1997-98
1998-991999-00
2000-01
2001-022002-03
2003-04
2004-05
2005-06
The regression equation is
prodn
1510
1450
15231622
1586
18942148
2213
20222204
2267
22122177
2475
2552
2630
Regression Analysis:COTTON yarn versus CLOTH AVAILI, GNP at curre, ...
COTTON yarn prodn in Mn kg = - 147 + 0.0127 CLOTH AVAILIBILITY SQCM
- 0.00123 GNP at current price + 0.00118 GDP at current price - 0.00443 Population + 0.00656 Gross domestic savings - 0.0126 Gross domestic capital formatio + 36.2 Index of Industrial production
S = 98.24 R-Sq = 96.1% R-Sq(adj) = 90.7%
Analysis of Variance
Source DF SS MS F PRegression 7 1198668 171238 17.74 0.003Residual Error 5 48252 9650Total 12 1246920The p value and the R-sq value shows that the the prediction is highly significant.
PROJECTION FOR COTTON YARN PRODN IN Mn Kgs -Table-80
Regression Analysis: BLENDED yarn versus CLOTH AVAILI, GNP at curre, ...
The regression equation is BLENDED yarn prodn in Mn kg = - 1937 + 0.00333 CLOTH AVAILIBILITY SQCM
- 0.00124 GNP at current price + 0.00173 GDP at current price + 0.00061 Population - 0.00225 Gross domestic savings - 0.00240 Gross domestic capital formatio + 12.7 Index of Industrial production
S = 35.69 R-Sq = 98.0% R-Sq(adj) = 95.3%
Analysis of Variance
Source DF SS MS F PRegression 7 318520 45503 35.72 0.001Residual Error 5 6369 1274Total 12 324889The p value and the R-sq value shows that the the prediction is highlysignificant.
PROJECTION FOR BLENDED YARN PRODN IN Mn Kgs-Table822003-2004 2004-2005 2005-2006 2006-2007 2007-2008 2008-2009 2009-2010
Blended yarn constitute of any of the combination of cotton,polyester
viscose and acrylic components in a ratio as per requirement. The
more the demand for blended yarn the more will be the demand for the
components.
Regression Analysis: TOTAL yarn p versus CLOTH AVAILI, GNP at curre, ... Table -83
NONCOTTON yarn prodn in Mn kg TOTAL yarn prodn in Mn kg
1990-91 104 1824
1991-92 118 1805
1992-93 119 1895
1993-94 134 2067
1994-95 153 2090
1995-96 196 2485
1996-97 162 2794
1997-98 177 2973
1998-99 191 2808
1999-2000 221 3046
2000-2001 247 3160
2001-2002 280 3101
2002-2003 319 3081
The regression equation is TOTAL yarn prodn in Mn kg = - 2070 + 0.0147 CLOTH AVAILIBILITY SQCM
- 0.0028 GNP at current price + 0.0031 GDP at current price - 0.00297 Population + 0.0044 Gross domestic savings
- 0.0129 Gross domestic capital formatio + 43.3 Index of Industrial production
S = 123.2 R-Sq = 97.8% R-Sq(adj) = 94.8%
Analysis of Variance
Source DF SS MS F PRegression 7 3393061 484723 31.95 0.001Residual Error 5 75852 15170Total 12 3468913The p value and the R-sq value shows that the the prediction is highlysignificant.
PROJECTION FOR TOTAL YARN PRODN IN Mn Kgs-Table-842003-2004 2004-2005 2005-2006 2006-2007 2007-2008 2008-2009 2009-2010
Regression Analysis: COTTON CONSU versus COTTON yarn , BLENDED yarn The regression equation is COTTON CONSUMPTION in tonnes = 420 + 0.878 COTTON yarn prodn in Mn kg
+ 0.534 BLENDED yarn prodn in Mn kg
S = 39.37 R-Sq = 99.1% R-Sq(adj) = 98.9%
Analysis of Variance
Source DF SS MS F PRegression 2 1627342 813671 525.07 0.000
Residual Error 10 15496 1550Total 12 1642839The p value and the R-sq value shows that the the prediction is highlysignificant.
Regression Analysis: PSF consumpt versus BLENDED yarn, NONCOTTON yarn The regression equation is PSF consumption in tonnes = - 149695 + 834 BLENDED yarn prodn in Mn kg
+ 699 NONCOTTON yarn prodn in Mn kg
S = 28370 R-Sq = 97.9% R-Sq(adj) = 97.5%
Analysis of Variance
Source DF SS MS F PRegression 2 3.75848E+11 1.87924E+11 233.49 0.000Residual Error 10 8048402646 804840265Total 12 3.83897E+11The p value and the R-sq value shows that the the prediction is highlysignificant.
Regression Analysis: VSFCONS in t versus BLENDED yarn, NONCOTTON ya
The regression equation is VSFCONS in tonnes = 136 + 0.0307 BLENDED yarn prodn in Mn kg
+ 0.216 NONCOTTON yarn prodn in Mn kg
S = 13.06 R-Sq = 70.9% R-Sq(adj) = 65.1%
Analysis of Variance
Source DF SS MS F PRegression 2 4153.8 2076.9 12.17 0.002Residual Error 10 1705.9 170.6Total 12 5859.7The p value and the R-sq value shows that the the prediction is highlysignificant.PROJECTION FOR VSF CONSUMPTION -Table-92
Regression Analysis: ASFCONS in t versus BLENDED yarn, NONCOTTON ya The regression equation is ASFCONS in tonnes = 25.0 + 0.115 BLENDED yarn prodn in Mn kg
+ 0.0724 NONCOTTON yarn prodn in Mn kg
S = 12.40 R-Sq = 80.5% R-Sq(adj) = 76.5%
Analysis of Variance
Source DF SS MS F PRegression 2 6334.3 3167.1 20.58 0.000Residual Error 10 1538.8 153.9Total 12 7873.1The p value and the R-sq value shows that the the prediction is highlysignificant.
PSF PRODN IN KTADEFICITPoly. (PSF consumption in KTA)
y = 1.1154x 2 + 28.998x + 81.744
1000R2 = 0.9859
800
600
400
200
0
-200(70.8)
(137.9)
(208.4)
-400 (292.0)(366.0)
(445.9)-600 (532.3)
-800
YEAR
8.5.18 PSF DEMAND SUPPLY ANALYSIS AND RIL MARKETSHARE
PSF consumption in KTA
PSF DEMAND/SUPPLY & RIL SHARE PSF PRODN IN KTA
RIL MARKET SHARE
RIL PRODN 1200 90%
85%
80%
1000 74%71% 70%
67%
800 61% 61% 61% 61% 60%
54% 53%56%
49% 51% 50%600 47%
42% 43%4040%
36%
400 31% 30%25%
20%
200
10%
0 0%
YEAR
9.1 CONCLUSION The world textile industry will be facing the greatest challenge in its
history from the last release of quota trade on 1st Jan 2005 when the
remaining 49% of quotas will be eliminated. An initial foretaste has
been observed in the previous two years after China became a WTO
member. The country managed to drastically increase its clothing
exports by 40% to more than $50 billion, at the same time the nation
is a major importer of textiles, mainly fiber intermediates and fibers,
to fuel the local garment industry. This makes clear the country’s need
to further expand domestic upstream capacities in spinning and fiber
intermediates. This ongoing development in China and to a minor
extent in other Asian countries highlights the enormous challenge to
fiber companies located in the western hemisphere. Strategies for
survival in higher cost economies are becoming inevitable to position
its comparative edge. From the variety of measures, the focus of
present industry is on technical innovations to gain sustainability.
The development over the last decade has shown that 82% of the
additional volume consumed has come from synthetics. While
cellulosics’ increase averaged at 0.6% annually, cotton showed an
average annual growth of 1.7% and synthetics jumped up by 5.9%. In
other words, 14 out of 17 million tonnes of additional demand was met
by synthetic fibers over the period 1993 to 2003. This trend is
commonly expected to continue.
Nevertheless, in apparel end-uses, accounting for more than half the
world’s fiber demand, natural fiber is preferred for reasons of comfort.
Relative pricing disadvantages as well as natural restrictions argue
against a cotton-dominated textile industry.
Technical innovations to imitate nature and to make fibers more
natural will be the key to success. This would also address growing
public concerns about the environment by making fibers biodegradable
and manufacturing them from renewable resources.
Representative for developments may be Lenzing’s Lyocell and Cargill
Dow’s PLA fiber.
Lyocell, the 100% cellulosic fiber, is based on a particularly eco-friendly, closed-loop production process. In addition to the natural fibers properties, Lyocell offers high strength, both in wet and dry state. Due to its permanent crimp, fabrics contain excellent wearing comfort and color brillianceThe current season’s global cotton production is expected to be higher at about 20.05 million tonnes, representing a 5% increase over 2002. Output in most major-producing countries is estimated higher with the exception of China. Two thirds of this volume is being consumed in five countries - China (6.6 million tonnes), India (2.9), Pakistan (2.0),U.S. (1.3) and Turkey (1.3). Wool and lamb/mutton are the principle products in the sheep
industry. Consumption and prices of wool have decreased so low since
the beginning of the nineties that any valueadded sometimes exceeds
the value of manufacturing the wool. The dwindling demand for wool
can be ascribed to consumer acceptance of synthetic manmade fibers.
Changes in consumer behavior towards lighter weight, casual clothing
have additionally supported this substitution.World wool production
has continued its long-established downward trend, the volume
declinedby 2.1% to 1.24 million tonnes. Half the wool output comes
from Australia and New Zealand, directing nearly all the output for
shipments abroad, mainly China, the largest wool processing country.
World population of 6.34 billion corresponds to an average per capita
consumption of 9.9 kg.Manmade fibers accounted for 35.10 million
tonnes (+4.9%), comprising a 55.8% market share. Cotton, wool and silk
declined by 0.6% to 22.61 million tonnes.
On a world basis, demand for fibers from the first two groups has
increased by 2.7%. As in the recent years, the manmade fibers
performance exceeded that of cotton in terms of the growth rate..
2
Since the beginning of the 90’s manmade fibers have been the most
important fiber type in terms of volume.Manmade fibers managed to
perform with an average annual growth rate of 4.7% whilenatural
fibers accounted for a mere 0.4% annual increase in average.With
some exceptions in the early- and mid-eighties, filament yarns have
developed stronger than staple fibers. Over the past fifteen years,
filament yarns - most commonly further processed via texturing or
twisting - have enjoyed an average annual growth of 6.0%. Staple
fibers have increased by 1.4%, of which cotton and wool by 0.5% and
manmade staple fibers by 2.8%. Staple fibers are the raw material for
spinning of staple fiber yarns (synonym: spun yarn) and for
manufacturing of drylaid nonwovens.The reasons for this unbalanced
development are manifold. Filaments have favorable manufacturing
costs and do not depend on natural restrictions in terms of the raw
material availability.Technological progress in spinning equipment has
led to outstanding yarn properties enabling filaments to branch out
into new markets that have been traditionally occupied by spun yarn
applications. This trend has been supported and enforced by consumer
acceptance.
The following consumption pattern exemplified for the Indian market
proves this trend. In
addition to that, it will show the commanding position of polyester.
Over the previous decade, local demand of yarns has increased on an
average annual basis by 4.8% to about 3 million tonnes in 2003/04.
During this period the ratios of the yarn types have drastically changed
and polyester continued its triumphal procession.
The share of polyester in filament yarns has gone up from 74% to
91% and in non-cotton spun yarn blends from 58% to 74%. The
growing filament demand in India resulted from a shift in consumer
preference towards synthetics particularly in rural areas, the
consumption rose from 49% to 66% over this period. Cotton demand
in the same areas dropped from 51% to 34%. Two of the fastest
growing end-uses for filament in India have been stimulating this
growth.
Firstly, sarees - traditional Indian dress for ladies - before the
widespread of synthetics were made for the high-end of the market
out of silk and for the low-end out of cotton. The introduction of high
taxes on polyester by the Indian government was to protect the own
cotton industry. As a result, polyester became an expensive fiber with
high in demand among rich people only. The growing demand for
polyester sarees substituted more and more silk in the high-end
market. After tax reductions on polyester, a booming demand for
polyester sarees materialized which still had the image of an exclusive
piece of garment but became affordable to a larger share of Indian
ladies.
Secondly, there has been a growing polyester demand for men’s wear
trousers and suitings.Changing purchasing patterns have been
influenced by its wearing comfort, easy care and advantages in price.
Polyester
Previous year’s polyester output has increased by 7.2% to 22.26
million tonnes. Above average growth has been observed in filament
markets, rising by 7.6% to 12.87 million tonnes. Staple fibers went up
by 6.6% to 9.39 million tonnes. Double-digit growth rates occurred in
China, Pakistan and the Kingdom of Saudi Arabia on a small scale
level. The small group of countries that have also managed to increase
the output volume is mainly located in Asia. This resulted in a further
shifting of manufacturing to the Asian region, now accounting for a
83% share. Meanwhile, Europe and the Americas have further lost
ground, especially in textile filament and staple fibers.
Polyamide
Negative volume changes in Europe and the Americas together with
modest increases in Asia characterized the world polyamide fibers
industry, resulting in a stagnating volume at 3.93 million tonnes.
While staple fibers continued their long-term downward trend, filament
yarn applications have shown a mixed performance. Yarns for
industrial end-uses were the only segment with increasing demand
over 2002.
Polypropylene
The production of polypropylene fibers increased by 0.7% to 2.99
million tonnes. Textile yarns are mainly the basic raw material for
niche markets. Such yarn is much required in sport and functional
clothes. In the meantime, an increasing consumption for stocking and
socks wins recognition. Additionally to carpets, polypropylene filament
yarns became established in several home textile and industrial
applications helping to disengage from the poor image of former times.
The development in price proves this acceptance is on the rise.Locally
restricted, polypropylene yarns are ranked before commodity polyester
filament applications in termes of prices. Polyester, suffering from
huge overcapacity, has partly replaced polypropylene in weaving end-
uses. Formerly known as a 100% polypropylene fabric tends to be
containing a polypropylene and a polyester layer.
Textile Yarn
The textile filament yarn segment serves a broad range of applications
from apparel to home textiles. In 2003, output increased by 6.4% to
14.6 million tonnes. Some 83% of the textile end-uses come from
polyester, that managed to further grow by 7.6% to 12.0 million
tonnes. China,India, South Korea,and Taiwan account for 77%of all
manufactured polyester textile filaments. .
Micro filaments are on their way to becoming commodities. Large new
capacity of some ten thousands of tonnes of sea island yarns in PR
China has led to a drastic drop in prices by about 50% in the Asian
market.
Polyamide textile filaments stagnated at 1.6 million tonnes with a
decreasing consumption for fine yarns . This decline was more than
offset by favorable conditions for coarser yarns and micro filaments for
underwear and sports clothing.
Cellulosic textile filament yarns discontinued their downward trend and
increased by 3.9% topping 0.4 million tonnes.
Polypropylene filaments, predominantly used in carpets, showed a
further tendency to enter new market niches for textile applications.
The demand for upholstery, sport and functional textiles show a
healthy growth.
According to the spinning process, textile yarns are split into in POY
and FDY. Partially oriented yarns, accounting for about 75% of the
world market, require further processing before manufacturing fabrics.
With respect to the volume, texturing is the most popular process to
finally draw the yarns, giving them a comfortable feeling called “textile
touch”.
Air-jet textured yarns take in a 8% market share in terms of number of
positions
Industrial Yarn
The market of high-tenacity yarns essentially comprises polyester,
polyamide, polypropylene and viscose yarns, predominantly used in
the automotive industry as reinforcing or composite materials.
Polyamide leads the world market with a 44% share, followed by
polyester comprising a 38%Share.Polypropylene with major usage in
ropes, nets, twines and belts also increased.
Spun Yarn
Staple fibers are the raw material for the spun yarn and nonwovens
production. The global amount of staple fibers being further processed
slightly increased by 1.4% to 38.83 million tonnes with natural fibers
taking in a 58% share. With the exception of cellulosics and polyester,
production of all the remaining types declined in a range from 0.2% to
1.9%. The global supply of staple fibers can be split into the following
three subsequent processing technologies:
Short Staple
The world short staple spun yarn production increased by 1.3% to
30.8 million tonnes. The three spinning technologies - ring, rotor and
air jet spining - cover with their different focus on applications the
entire range concerning fineness and input material.
China, the unquestioned leader in terms of production and installed
equipment in this sector, rose production by 16% to 9.3 million
tonnes. This is three times the output of second ranked India.
The output of spun yarn in India remained almost at the level of the
previous years at 3 million tonnes. The majority of 69% was cotton
yarn, followed by 20% blends and 11% non-cotton yarn. One bright
spot in last year’s performance was the 17% rise in the hosiery sector.
The Indian textile industry witnessed a 5% decline in spinning and
composite mills at 1,784, leading to a decline in installed spindles by
roughly 6% to 33.88 million. The number of rotors remained at nearly
379,000 despite below-average shipments of some 3,500 new
positions. The cyclic investments in rotor spinning capacity has
continued. India is considered by many U.S. firms the primary
alternative to China. Over the long term, competitiveness may
diminish as strong economic growth leads to greater domestic demand
for textiles and apparel, and for the labor and capital to make these
goods. Apparel will continue to decline, like sheeting and bath
products. Technical products may remain strong, but in relative
volume, they are nothing compared to cotton and polyester/cotton
short staple.The major producing nations like China, India, Pakistan,
United States, Brazil and Turkey produced more than 19 million tonnes
in 2003. This comes to a 63% share of the global industry.
Long Staple
While the long-staple spinning industry has traditionally focused on the
processing of wool, today it is increasingly dominated by manmade
fibers.Long staple fiber production marginally decreased by 2.0% to
3.9 million tonnes, of which wool comprised approximately 1.27 million
tonnes (clean basis).
World yarn production
The global amount of filament and spun yarns accounted for 53.5
million tonnes representing a 2.4% increase over 2002. Although short
staple yarn still dominates the world market with a 57.5% share,
filament yarns have shown a more dynamic development over the
period with an average annual growth rate of 5.1% comprising a
33.4% share compared with 20.7% in 1980. Short staple yarns just
account for an average annual growth rate of 1.9% over this period.
Oveview
The development at consumer side has been steady-going due to
increasing world population and economic improvements as well as the
desire for fashionable and diversified clothing.Although this appears to
be a rather healthy growth, the increasing imbalance on the supplyside
may cause some concerns. The dominating factor driving this
imbalance has been regional advantages of low labor costs. Formerly
geographically advantaged industries adjacent to the big consuming
regions were in a favorable position. When quota-free textile trade will
come into operation in 2005, countries such as PR China, India,
Pakistan, Turkey, Indonesia, Vietnam and Bangladesh will gain higher-
than-average benefit from this opening of the industrialized markets.
What is it, that those countries have in common? They have all
embarked on the strategy to expand their textile and garment industry
which is regarded as crucial to economic development. Outstanding
success, over recent years, in the pursuit of this policy has led to a
widening gap between production and final consumption on a global
scale. Furthermore the dependency on just a few markets, which
account for a large proportion of global textile demand, has sharply
increased. Following the guiding theme “big is beautiful”, the entire
textile chain has been subject to fundamental changes. Quite a
considerable amount of garment production is being sourced by a few
multi-billion-dollar retail companies and huge foreign direct
investments from industrialized to emerging countries have further
strengthened this shifting of capacity. The retail sector is already in a
process of restructuring and more consolidation will mean even further
increases in the influence of the retailer in the re-allocation of the
textile value chain. Will this sourcing in low cost countries prove
sustainable? Yes, but it will also offer other countries a fair opportunity
to gain attractiveness. Growth in today’s booming markets will not be
endless, but constrained by shortages in energy and raw materials.
Economic growth will result in greater domestic demand for textiles
and apparel as well as higher labor costs in the long run. Secondly,
retailers already strongly interfering into the manufacturing and
distribution flow, will avoid a single-region dependency, and search for
alternatives. However, some concerns may arise due to efforts to
impose regulations in terms of trade protectionism by means of yarn
or fabric forward rules and tariffs. These measures cannot help the
industry in Western Europe or the United States to revive. Major parts
of the big volume apparel market have already left and they will not
come back. Instead, the industry’s only chance will be in concentrating
on superior quality and innovative products. Naturally, every single
innovation must enjoy an absolutely reliable and effective protection
against imitations. The particular focus in the western hemisphere is
linked to the labor market. The combination of automation and loss of
market share to foreign competitors caused the loss of several million
manufacturing jobs over the previous years. Stimulating domestic
demand through tax cuts and record low interest rates has just been
creating jobs in China or its neighboring countries. However, anything
else than commonly respected rules on how to practice world trade
and global manufacturing will even worsen this situation. An
unrestricted evolvement of the market forces will eventually increase
economic welfare the most. From that point of view, a liberated textile
trade may disclose unexpected opportunities to the world textile
industry. Although there is still a way to go until free trade is
established, as some import tariffs, non-tariff barriers and subsidies
will remain beyond 2005, it may be a promising step after phasing-out of
the quotas from January 2005 onwards. Today’s dynamics force
everybody to be part of the appropriate chain for tomorrow’s success in
the global gamble. It is becoming even more crucial to have the right
partners, full market knowledge and the technical capability to master
the challenges ahead.
The demand for PSF is increasing .Players in China,Taiwan,Indonesia
are coming up with major expansions.Inhouse domestic producer
Indorama is also expanding with around 160000 TPA. Demand for
short staple is increasing. The current market share of RIL at 67% is
going to reduce to 40% by 2010 with the existing capacities. With
increasing price of PTA and MEG the margins are getting squeezed. So
capacity and speciality are going to be the major strategy for existing
players in the field.Micro fibres have started becoming a
commodity.Demand by 2010 is likely to increase to about 1138 KTA.
With the lifting of quota from next year the world will become a
common playground for everybody. It is high time that RIL too should
expand its capacity to maintain market leadership.
Bibliography
Books/Reports/Journals/Articles
1. Globalising Indian Textiles-Threats And Opportunities-Chandan Gokhle & Dr Vizay Gokhle
2. Man Made Fibre - C.Moncrief 3. Fibre Spinning- Zieabeki 4. Annual Report,2002-03: Ministry Of Textiles,Goi. 5. Icra Sector Focus Series: ‘Cotton Yarn Spinning In India:
Competitive Advantage And Prospects” 6. Bussiness Research Methods - Donard R Cooper & Pamela S
Schindler7. Bussiness Environment - V.K.Garg8. Industrial Marketing - Analysis Planning And Control- R.
Reeder,E.Briety&B.H.Reeder.9. Hand Book Of Statistics-1995/1996part -1/2-Association Of
Synthetic Fibre Industry10. Hand Book Of Statistics-1996/1997part -1/2-Association Of