Post on 22-Mar-2020
4/26/2019
1
Fibers Update – 2019Laura Murphy – Wood Mackenzie Chemicals
• Wood Mackenzie Background• Raw Materials and the Supply Chain
• Nylon• Polyester
• Global Views• Economic Overview• Ecologic Overview• Summary
• Verisk Analytics (NASDAQ:VRSK)• Was PCI (Alasdair Carmichael)• Services:
• Asia Weekly• Global Monthly• Technical Fibers Monthly• Annual global supply demand report• Bespoke reports and studies• Raw materials
Wood Mackenzie Chemicals
Coal
Natural Gas
CrudeOil
Fibers
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Nylon 6,6 Supply Chain Issues
Force majeure declarations Adiponitrile (ADN) Supply 4 major, large scale plants Difficult to justify new plant (But Ascend and Invista have just
announced new capacities – for 2022‐2023) Capacity increases
2016 – Invista @ Orange, TX 2018 ‐ Ascend @ Decatur, AL 2019 – Invista/Solvay @ Butachimie, France 2020 – Invista @ Victoria, TX
2018 Polymer Price Increases +5‐25 c/lb for Q1 +25‐38 c/lb for Q2/Q3 More expected for next year
2012 2013 2014 2015 2016 2017 2018 2019
1 2 3 4 5 6 7 8 9 101112 1 2 3 4 5 6 7 8 9 101112 1 2 3 4 5 6 7 8 9 101112 1 2 3 4 5 6 7 8 9 101112 1 2 3 4 5 6 7 8 9 101112 1 2 3 4 5 6 7 8 9 101112 1 2 3 4 5 6 7 8 9 101112 1 2 3 4 5 6 7 8 9 1011
BASF HMD
Ascend HMD
Solvay AA Chalampe
Radici AA
BASF ‐ HMD
Invista ADN/HMD/PA66
Butachimie Strike ‐ ADN
INEOS/BASF ‐ HMD
BASF MHD/PA66
Solvay PA66
Activity
Invista ADN/HMD
Ascend HMD
Invista PA66 Harvey
Invista ADN/HMD
Radici All PA66 chain
Solvay all PA66 chain
Ascend PA66
Nylon 6,6 Forces Majeure
Source: Wood Mackenzie Chemicals
Nylon 6,6 Supply Chain Issues
Force majeure declarations Adiponitrile (ADN) Supply
4 major, large scale plants in the world Difficult to justify new plant (But Ascend and Invista have
just announced new capacities – for 2022‐2023) Capacity increases
2016 – Invista @ Orange, TX 2018 ‐ Ascend @ Decatur, AL 2019 – Invista/Solvay @ Butachimie, France 2020 – Invista @ Victoria, TX
2018 Polymer Price Increases +5 ‐ 25 c/lb for Q1 +25 ‐ 38 c/lb for Q2/Q3 +10 ‐ 25 c/lb for Q1 2019
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Forecast
Crude Oil – 2019 forecast
Apparently no critical problems from the crude oil side
Source: Wood Mackenzie
100
20
0
60
10
90
30
50
70
40
80
110
120
2019
Dollars per barrel
2014 2015 2016 2017 2018 2020
Brent
Raw Materials – Nylon 6,6
Forecast
Benzene, Propylene, Butadiene: Price forecast
Source: Wood Mackenzie Chemicals
Jan‐17 Apr‐17 Apr‐18 Oct‐19Jul‐17 Oct‐17 Jul‐18Jan‐18 Oct‐18 Jan‐20Jan‐19 Apr‐19 Jul‐190
500
1,000
1,500
2,000
Price ($/m
t)
Benzene
Propylene
Butadiene
10
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Raw Materials – Polyester
Polyester Raw Materials
0
20
40
60
80
Jan‐14 Jul‐14 Jan‐15 Jul‐15 Jan‐17 Jan‐18Jul‐16 Jul‐18Jan‐16 Jan‐19Jul‐17
+40
+45
+38+32
+37
WTI (c/lb)
PTA+MEG Formula (c/lb)
Source: Wood Mackenzie Chemicals
Polyester Supply Chain – Bankruptcies and Forces Majeure
M&G, or Mossi & Ghisolfi (PTA and resin)Bankruptcy 10/2017
Apple Grove, WV (resin plant @ 360 kt) –bought by Far Eastern and restarted
Corpus Christi (resin @1.1 Mt and PTA @1.3 Mt) –Construction halted, but 3-way JV between DAK, Indorama, Far Eastern to proceed
DuraFibers (Industrial PET fiber)Bankruptcy 9/2017
Salisbury, NC (high denier) – closedGrover, NC (fine denier) – Fiber Innovators InternationalWinnsboro, SC, (tire cord fabric) – Indorama
Fires and Forces Majeures in 2018 reduced available fiber and rawsAlpek Mexico – down for 6+ weeks after fire in structural areaEquipment issues and hurricanes plagued PSF
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Polyester Supply Chain ‐ Investments
Huvis Indorama JV (low melt) - Spartanburg 60 kt
Far Eastern purchase of M&G’s Apple Grove resin plant - $34M JV of Indorama, Alpek, and Far Eastern purchase of Corpus Christi @ $1.1B
FTC approved JV purchase on 12/24/2018 – Happy Holidays! Estimated startup 2020 for resin, PTA to be 18 months after
Fiber Industries restart of Wellman plant (staple) Parkdale / Intrinsic Textiles JV to develop CiCLO (biodegradable) technology Unifi / Polartec recent announcement to use CiCLO in fleece production Indorama/Loop Industries JV to begin US production of 100% sustainably
produced resin and fiber in Q1 2020 Indorama and DAK just bought rPET plants
US Polyester Supply Chain – Antidumping and Countervailing
PET Resin• ADD + CVD• Filed 3/2015: • Canada, China, India,
Oman• ADD (Filed 9/2017) Brazil,
Indonesia, Korea, Pakistan and Taiwan
• 5 - 276%• Dismissed (10/2018) on
Brazil, India, Korea, Pakistan, Taiwan
20
30
40
50
60
Jul‐16
Jan‐16
c/lb
Jan‐18
Jan‐17
Jan‐19
Jul‐17
Jul‐18
PET Resin to Formula Price Difference
Source: Wood Mackenzie Chemicals
US Polyester Supply Chain – Antidumping and CountervailingPET Resin• ADD + CVD• Filed 3/2015: • Canada, China, India,
Oman• ADD (Filed 9/2017)
Brazil, Indonesia, Korea, Pakistan and Taiwan
• 5 - 276%• Dismissed (10/2018) on
Brazil, India, Korea, Pakistan, Taiwan
Low Melt Fibers• ADD • Filed 6/2017: • Korea and Taiwan • 0 - 52% • Spared: Huvis - Korea
Fine Denier Staple• ADD + CVD• Filed 5/2017:• China, India, Korea,
Taiwan, • 0 – 220% • Spared: Toray -
Korea and Tainan Spinning –Taiwan
20
30
40
50
60
Jan‐16
Jul‐16
c/lb
Jan‐17
Jan‐19
Jul‐17
Jul‐18
Jan‐18
30
32
34
36
38
40
Jul‐18
Jan‐17
c/lb
Jan‐18
Jul‐16
Jan‐16
Jul‐17
1.2d Staple to Formula Price Difference
10
15
20
25
30
35
40
Jul‐18
c/lb
Jan‐16
Jul‐16
Jan‐17
Jul‐17
Jan‐18
Low Melt to Formula Price Difference
DTY Filament• ADD + CVD• Filed 10/2018:
China, India• Beginning stages
of investigation50
55
60
65
70
Jan‐16
c/lb
Jan‐18
Jul‐17
Jan‐17
Jul‐16
Jul‐18
150d DTY to Formula Price Difference
150d DTY to Formula Price Difference
Low Melt to Formula Price Difference
1.2d Staple to Formula Price Difference
PET Resin to Formula Price Difference
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Fine Denier Staple• ADD + CVD• Filed 5/2017:• China, India, Korea,
Taiwan, • 0 – 220% • Spared: Toray - Korea and
Tainan Spinning –Taiwan
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28
30
32
34
36
38
40
42
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46
Jan‐17
Jul‐16
c/lb
Jan‐16
Jul‐17
Jan‐18
Jan‐19
Jul‐18
1.2d Staple to Formula Price Difference
Source: Wood Mackenzie Chemicals
US Polyester Supply Chain – Antidumping and Countervailing
PET Resin• ADD + CVD• Filed 3/2015: • Canada, China, India,
Oman• ADD (Filed 9/2017)
Brazil, Indonesia, Korea, Pakistan and Taiwan
• 5 - 276%• Dismissed (10/2018) on
Brazil, India, Korea, Pakistan, Taiwan
Low Melt Fibers• ADD • Filed 6/2017: • Korea and Taiwan • 0 - 52% • Spared: Huvis - Korea
Fine Denier Staple• ADD + CVD• Filed 5/2017:• China, India, Korea,
Taiwan, • 0 – 220% • Spared: Toray - Korea
and Tainan Spinning –Taiwan
20
30
40
50
60
Jan‐16
Jan‐17
c/lb
Jul‐16
Jul‐17
Jan‐18
Jul‐18
Jan‐19
25
30
35
40
45
50
Jan‐16
Jan‐18
c/lb
Jul‐16
Jan‐17
Jul‐18
Jul‐17
Jan‐19
10
15
20
25
30
35
40
Jan‐16
c/lb
Jul‐18
Jan‐17
Jul‐16
Jul‐17
Jan‐18
Low Melt to Formula Price Difference
DTY Filament• ADD + CVD• Filed 10/2018:
China, India• Beginning stages
of investigation50
55
60
65
70
Jan‐18
c/lb
Jan‐16
Jul‐18
Jul‐16
Jan‐17
Jul‐17
150d DTY to Formula Price Difference
150d DTY to Formula Price Difference
Low Melt to Formula Price Difference
1.2d Staple to Formula Price Difference
PET Resin to Formula Price Difference
US Polyester Supply Chain – Antidumping and Countervailing
Low Melt Fibers• ADD • Filed 6/2017: • Korea and
Taiwan • 0 - 52% • Spared: Huvis -
Korea
10
20
30
40
50
Jul‐18
c/lb
Jul‐17
Jan‐17
Jan‐16
Jan‐19
Jul‐16
Jan‐18
Low Melt to Formula Price Difference
Source: Wood Mackenzie Chemicals
US Polyester Supply Chain – Antidumping and Countervailing
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PET Resin• ADD + CVD• Filed 3/2015: • Canada, China, India,
Oman• ADD (Filed 9/2017)
Brazil, Indonesia, Korea, Pakistan and Taiwan
• 5 - 276%• Dismissed (10/2018) on
Brazil, India, Korea, Pakistan, Taiwan
Low Melt Fibers• ADD • Filed 6/2017: • Korea and Taiwan • 0 - 52% • Spared: Huvis - Korea
Fine Denier Staple• ADD + CVD• Filed 5/2017:• China, India, Korea,
Taiwan, • 0 – 220% • Spared: Toray - Korea
and Tainan Spinning –Taiwan
20
30
40
50
60
Jul‐16
c/lb
Jan‐19
Jan‐18
Jan‐16
Jan‐17
Jul‐17
Jul‐18
25
30
35
40
45
50
Jan‐16
c/lb
Jan‐18
Jul‐16
Jan‐17
Jul‐17
Jul‐18
Jan‐19
10
20
30
40
50
Jul‐18
c/lb
Jan‐16
Jan‐18
Jan‐17
Jul‐16
Jul‐17
Jan‐19
DTY Filament• ADD + CVD• Filed 10/2018:
China, India• Beginning stages
of investigation50
55
60
65
70
c/lb
Jan‐16
Jul‐17
Jul‐16
Jul‐18
Jan‐17
Jan‐18
150d DTY to Formula Price Difference
150d DTY to Formula Price Difference
Low Melt to Formula Price Difference
1.2d Staple to Formula Price Difference
PET Resin to Formula Price Difference
US Polyester Supply Chain – Antidumping and Countervailing
DTY Filament• ADD + CVD• Filed 10/2018:
China, India• Beginning stages of
investigation• 4/2019 – Critical
circumstances petition filed –means retroactive penalties potentially
50
55
60
65
70
75
Jul‐16
c/lb
Jul‐18
Jan‐16
Jul‐17
Jan‐17
Jan‐19
Jan‐18
150d DTY to Formula Price Difference
Source: Wood Mackenzie Chemicals
US Polyester Supply Chain – Antidumping and Countervailing
PET Resin• ADD + CVD• Filed 3/2015: • Canada, China, India,
Oman• ADD (Filed 9/2017)
Brazil, Indonesia, Korea, Pakistan and Taiwan
• 5 - 276%• Dismissed (10/2018) on
Brazil, India, Korea, Pakistan, Taiwan
Low Melt Fibers• ADD • Filed 6/2017: • Korea and Taiwan • 0 - 52% • Spared: Huvis - Korea
Fine Denier Staple• ADD + CVD• Filed 5/2017:• China, India, Korea,
Taiwan, • 0 – 220% • Spared: Toray - Korea
and Tainan Spinning –Taiwan
20
30
40
50
60
Jul‐18
Jul‐16
c/lb
Jan‐16
Jan‐19
Jan‐17
Jul‐17
Jan‐18
25
30
35
40
45
50
Jan‐19
Jul‐18
c/lb
Jan‐17
Jul‐16
Jan‐16
Jul‐17
Jan‐18
10
20
30
40
50
Jul‐18
Jan‐16
c/lb
Jan‐18
Jul‐17
Jul‐16
Jan‐17
Jan‐19
DTY Filament• ADD + CVD• Filed 10/2018:
China, India• Beginning stages of
investigation• 4/2019 – Critical
circumstances petition filed –means retroactive penalties potentially
50
55
60
65
70
75
Jan‐19
Jan‐18
c/lb
Jul‐17
Jan‐16
Jul‐16
Jan‐17
Jul‐18
150d DTY to Formula Price Difference
Low Melt to Formula Price Difference
1.2d Staple to Formula Price Difference
PET Resin to Formula Price Difference
Source: Wood Mackenzie Chemicals
US Polyester Supply Chain – Antidumping and Countervailing
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1
0
4
2
3
5
6
2016
Millions
2017 2018
+152%
+29%
Cotton
Other
Rubber/Plastics
US imports from China of youth and adult mattresses made from rubber/plastics, cotton, and other materials
Source: USITC
US Polyester Supply Chain – Antidumping and Countervailing
US polymer prices
The outlook for PA66 (nylon) fibres is becoming increasingly difficult
Source: Wood Mackenzie Chemicals.
0.40
0.60
0.80
1.00
1.20
1.40
1.60
1.80
2.00
2.20
Jan‐17Jan‐16 Jul‐16 Jul‐17 Jan‐18 Jul‐18 Jan‐19 Jul‐19
PET Resin, Del
PA6, CFR
$/lb
PP, Del
PA66, CFR
Some World Views
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How has demand growth been supplied?
Source: Wood Mackenzie Chemicals
Fiber Demand by Fiber Type, 1980‐2018
8
40
0
50
70
80
30
90
100
10
20
60
110
Million tons
1980 1985 1995 20052000 2010 20151990
+8
+55
+33
+4.8
+3.2%
Wool
Acrylic
Polypropylene
Nylon
Cellulose
Cotton
Polyester
World fiber demand with estimates through to 2030
Fiber Demand by Type, 1980‐2030
Source: Wood Mackenzie Chemicals
0
50
100
150
19901980
Million tons
1985 1995 2000 2005 2010 2015 2020 2025 2030
+4.8
+55
+82
+6.3
+3.2%
+2.9%Polypropylene
Wool
Polyester
Cellulose
Acrylic
Nylon
Cotton
How will this new demand be supplied?
Source: Wood Mackenzie Chemicals
The expected breakdown of this new fiber supply, 2018‐2030
8
40
5
15
10
0
20
25
30
35
45
2018
Million tons
2020 20302024 2026 20282022
+27
1.5+2
+10
+1.0
Acrylic
Wool
Polypropylene
Nylon
Cellulose
Cotton
Polyester
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Global polyester production by region
Global production – ex‐China
Source: Wood Mackenzie Chemicals
10
25
0
20
5
15
20001990 2030
Million tons
2010 2020
1413
16
+9
+6
+8
6.6%
‐0.9%
2.9%
2.6%
3.2%
S.Asia AmericasIndia Europe A/ME/Turk JKT
Global polyester production by region
China jumps from 26% of global polyester production to 71% in 18 years
Source: Wood Mackenzie Chemicals
40
60
30
10
20
70
50
80
90
0
Million tons
1990
37
2000 2010 2030
55
19
2020
+59
+23
8.4%
6.7%
5.8%
5.2%
3.3%
China India S.Asia Americas Europe A/ME/Turk JKT
Global polyester production by region
China jumps from 26% of global polyester production to 71% in 18 years
Source: Wood Mackenzie Chemicals
0
10
40
20
50
60
30
70
80
90
1990
Million tons
2000 2010 2020 2030
19
37
55
S.AsiaChina India EuropeAmericas A/ME/Turk JKT
26%
74%
Others
China
2000
31
32
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Global polyester production by region
China jumps from 26% of global polyester production to 71% in 18 years
Source: Wood Mackenzie Chemicals
50
30
0
10
70
20
40
60
80
90
19
Million tons
1990 2000 2010 2020 2030
37
55
JKTChina S.AsiaIndia EuropeAmericas A/ME/Turk
26%
74%
China
Others
71%
29%
China
Others
2000
2018
Global fiber mill consumption
Strong growth for most major fibers
• Source: Wood Mackenzie Chemicals, USDA; Cotton is USDA and season 2016/17 is set to calendar 2017
35
25
10
15
20
0
5
30
40
45
AcrylicCotton WoolCel staplePSFPFY
Million tons
PP F+S Nylon F+S
+5%
+7.5
+2%
+1.7
+1.8
+3%
+1.3
+6%
+0.8
+4% +4%
+0.7‐2%
‐0.2 0.0
0%
2016
2020
2018
2017
2019
Fibers and the US Economy
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US Production Index for Fiber, Yarn and Thread Mills (2012=100)
Production for fiber, yarn and thread mills has gone down since its peak in 1998
Source: US Federal Reserve
1970 1975 1980 1985 1990 1995 2000 2005 2010 2015 2020
200
50
100
300
150
250
Production In
dex
100
+2%-3%
US Economy – Part 1
US Production Index for Other Mills (2012=100)
US Economy – Part 2
Downstream mills are showing the same trends as fiber and yarn mills
Source: US Federal Reserve
1970 1975 1980 1985 1990 1995 2000 2005 2010 2015 202050
100
300
150
200
250
Production In
dex
100
Fabric Mills
Textile Furnishing Mills
Textile/Fabric Finishing/coating mills
Textile Product Mills
Other Textile product mills
Carpet and Rug Mills
US Production Index for Other Mills and Apparel (2012=100)
US Economy – Part 3
Apparel production has fallen off the cliff
Source: US Federal Reserve
1970 1975 1980 1985 1990 1995 2000 2005 2010 2015 2020
600
0
100
200
300
400
500
Production In
dex
100
Fabric Mills
Textile/Fabric Finishing/coating mills
Carpet and Rug Mills
Textile Product Mills
Textile Furnishing Mills
Other Textile product mills
Apparel
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US Production Index for Other Mills and Apparel (2012=100)
US Economy – Part 4
Since 2012 – some winners and some losers
Source: US Federal Reserve
2012 2013 2014 2015 2016 2017 2018
120
70
60
80
90
100
110
Production In
dex
Textile Product Mills
Fabric Mills
Apparel
Textile Furnishing Mills
Fiber Mills
US Seasonally Adjusted Annual Rate
US Economy – Part 5
US Automotive Production
Source: US Federal Reserve
10
4
2
6
8
12
14
Millions
1980 1990 2000 2010 *2019
Cars
‐2.88%
US Seasonally Adjusted Annual Rate
US Economy – Part 5
US Automotive Production
Source: US Federal Reserve
2
4
6
8
12
0
10
14
Millions
1980 1990 2000 2010 *2019
Lt. Trucks+2.51%
40
41
42
4/26/2019
15
US Seasonally Adjusted Annual Rate
US Economy – Part 5
US Automotive Production
Source: US Federal Reserve
4
10
12
2
6
8
0
14
Millions
Cars
Lt. Trucks
1980 1990 2000 *20192010
Total
Med/Hvy
‐0.33%
Sustainability and Pollution
Sustainability is the looming issue
• How to satisfy demand in a sustainable way• Recycled pre‐ and post‐ consumer waste volumes are small• Huge growth from emerging countries
• Population and income growth• Fast fashion, affordable fashion, rising demand for hygiene products
• Recycling and waste disposal systems are lagging and unprofitable• Business model is for export to emerging economies
• How to measure environmental and social impact of different fibers?• What needs to be measured? • How to measure?• And then, so what?
• Microfiber pollution – who’s problem is it? Does labeling a shirt matter?
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And finally…
There is lots of positive news
• Fiber Industries restart of the Wellman polyester staple plant• Investment by PHP and SANS of polyester HDI capacity• Huvis/Indorama JV for low melt spinning in Spartanburg• Parkdale / Intrinsic Textiles JV to develop CiClo (biodegradable) technology• Indorama / Loop Industrties JV to begin production of 100% sustainably produced resin and fiber• Carpet companies upgrading older plants, converting to polyester• US Auto industry – 4th largest sales year in 2018• 5% tire capacity increase last year, with more planned through 2022• Ford cancels Mexico plant, expands US one• Indorama and DAK bought rPET plants• New USMCA expected to close some loopholes• Chinese investment in US spinning mills (Shandong Ruyi in AR, Keer in SC)• US keeps improving environmental footprint of cotton• SewBots to for Tshirt production, now available as a rental• China grows cotton on moon in January – but temperatures kill the budding plant quickly
And I like to end on positive news….
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Connect with Laura
laura.murphy@woodmac.com1‐610‐388‐1392 (office)1‐423‐802‐6161 (mobile)
Contact Information
Laura MurphyResearch Director, FibersWood Mackenzie Chemicals
Disclaimer
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available to clients of Wood Mackenzie under terms agreed between Wood Mackenzie and those clients. The use of these materials is governed by the terms and conditions of the agreement under which they were provided. The content and conclusions contained are confidential and may not be disclosed to any other person without Wood Mackenzie's prior written permission. Wood Mackenzie makes no warranty or representation about the accuracy or completeness of the information and data contained in these materials, which are provided 'as is'. The opinions expressed in these materials are those of Wood Mackenzie, and nothing contained in them constitutes an offer to buy or to sell securities, or investment advice. Wood Mackenzie's products do not provide a comprehensive analysis of the financial position or prospects of any company or entity and nothing in any such product should be taken as comment regarding the value of the securities of any entity. If, notwithstanding the foregoing, you or any other person relies upon these materials in any way, Wood Mackenzie does not accept, and hereby disclaims to the extent permitted by law, all liability for any loss and damage suffered arising in connection with such reliance.
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