Interview with Mr Angelo Radici

The signs of recovery coming from the major world economies show a slow but steady strengthening involving all industrial sectors, including chemical fibres. In chemicals and textiles, the depletion of inventories in the production chain of several segments — above all technical and industrial applications — caused by a turnaround in demand during the course of 2009 has resulted in an increase in business activity in Europe and America, spurred by the cautious rebuilding of minimum stocks.

Apparel is now the most critical end use, in view of the high stock levels throughout the entire synthetic fibres and textiles chain.

The recovery appears to be constant but slow for many reasons. It is still difficult to find credit and there is widespread excess production capacity, which also affects chemical fibres and reduces investments. Moreover, the slow pace of the upturn is a consequence of reduced available income caused by the high unemployment rate, which reduces final consumption and durable goods purchases, in particular. Indeed, in 2009, world industrial consumption of chemical fibres recorded a rise of 1.3% compared to a fall of 5.5% in 2008. For 2010 an increase of 2% is forecast.

The recovery can be mostly attributed to the rise in industrial consumption in China, the leading textile producer in the world with a 48% market share. The expansive fiscal policy of the Chinese government has stimulated not only growth in domestic consumption of textile products but also an excessive expansion of production all along the chain, in the face of depressed world demand for textile products due to the economic crisis. As a result, the rise of 7% in China mill consumption of chemical fibres in 2009, in a situation of reduced export demand, translated into into a heavy increase in stock levels by the end of the year.

During 2010, China will have to deal with the excess inventory from the prior year in one of two ways: by pushing hard on exports, which will surely hit against the limit set by weak worldwide demand, or by encouraging stronger domestic demand, which, given the current scenario, appears to be the best way to go.