Overcapacity in man-made fibres has worsened situation – DG, CIRFS

July 15, 2009 - Belgium

CIRFS is the association representing man-made fibre producers in Europe. For many years it was known as the Comité International de la Rayonne et des Fibres Synthétiques, or CIRFS for short. In May this year, it changed its name to the easier and more accurate name of European Man-made Fibres Association, but still keeping the well-known initials CIRFS. The European man-made fibres industry is the second biggest in the world, much smaller in terms of volumes than China, but slightly ahead of USA and India. So CIRFS has a very important role.

To know more about the current situation of manmade fibres sector in Europe, fibre2fashion spoke exclusively to Mr Colin Purvis, Director General of CIRFS. We began by asking him about the activities carried out by CIRFS for the benefit of the man-made fibres sector, to which he said, “CIRFS has three main activities. First, it represents the European industry in its relations with the European authorities across a huge range of issues like international trade, competition, environmental regulations and much else”.

“Secondly, it collects and analyses market information on production, sales and international trade, and provides these to its members to help their marketing and planning and also publishes an annual report bringing all this information together. Thirdly, it promotes industry cooperation and initiatives on technical, research and environmental issues and is a sponsor of the Dornbirn Man-made Fibers Congress, the world’s biggest technical conference dealing with man-made fibres and the textiles made from them, also supports the work of BISFA, our affiliate organisation in setting industry standards and test methods”, he added by saying.

Next we asked him to comment on the current scenario in man-made fibres to which he replied by saying, “It is a difficult period for the man-made fibres industry everywhere in the world. The economic recession is having a big impact. European economies are depressed this year, and unemployment is rising, so consumers are spending less on textiles and apparel, and other industries using large volumes of man-made fibres like the car sector are also cutting back. And our export markets for fibres and textiles are also under pressure”.

He explained further by saying, “Starting in late 2008, we experienced a big fall in demand and production, which carried through into the early months of 2009, but now the situation is a little more stable, but still at an unsatisfactory level of business and we think that it will be into 2010 before we see any sustained improvement. The situation is made worse by the existence of global overcapacity on a huge scale, for many types of fibre but especially polyester. CIRFS estimates that for many fibre types capacity is currently beingused at less than 70%”.

He continued, “Too much capacity has been built, thanks to incentives from governments and easy financing from banks, without any proper market analysis. The biggest share of excess capacity is, of course, in China and one of the biggest factors driving down prices and profit margins, everywhere in the world. Overcapacity leads to dumping by producers which are desperate to fill their plants, and sometimes anti-dumping action may be necessary in order to prevent serious damage to the industry in the importing countries. This may be regrettable, but sometimes it is essential”.

He added by saying, “In man-made fibres everyone suffers because of the huge subsidies which some countries give to stimulate production of cotton – over US $3 billion a year. The excess cotton production which results adds to the pressures on man-made fibre producers. I think that everyone in man-made fibres also needs to be aware of society’s rising expectations about the environmental performance of the products they buy. This is spreading rapidly from the developed regions of the world to almost all emerging economies”.

“Long-term market growth depends on proving to the public that man-made fibres have a good environmental record, and that producers are taking action to reduce their impact. Any company with polluting processes risks losing market share in the future. I am sure that we will see renewed growth in man-made fibres – but not before 2010 at earliest. And we will not see a return to prosperity unless all players are much more cautious than in the past about building new capacity, and about how they trade in export markets”, he concluded by saying.

To conclude the interview we asked him as to what bottlenecks he sees in the growth of the European man-made fibres industry, to which he said, “European man-made fibre producers have a strong competitive position and the quality of their production is extremely high., since they operate in a very flexible way, with the ability to produce speciality products even in limited quantities, and to change from one specification to another with very little problem. They are one of the global leaders in fibres innovation, with a very good record of bringing innovative products to the market”.

“Their strict respect for the local and global environment meets the expectations of society. and their command of logistics and market understanding gives them a competitive advantage in marketing to the textile industry and other markets throughout the whole European, Middle East and African regions. Europe has a very strong market position in cellulosic and acrylic fibres, in niche applications in polyester and polyamide, in aramid and other speciality technical fibres, and it is the world’s largest producer of polypropylene fibres”, he added by saying.

“Of course, there are bottlenecks too. Some of the traditional textile processing activities in Europe are in long-term decline, andwill consume less fibre in the future. This is not always fully compensated by market increases in alternative technologies such as nonwovens or many technical applications and there is also the issue of distorted conditions of competition, and distress selling of fibres in the European market at dumped prices”, he said.

“These drive down margins, and make re-investment more difficult and CIRFS will continue to take action against this problem whenever necessary. I have confidence in the ability of European fibre producers to meet the market challenges and to remain one of the most flexible and innovative man-made fibre producing regions in the world”, he concluded by saying.