Global cotton stocks to prevent further fibre price hikes

Austria based manmade cellulose fiber giant, Lenzing Group presented its first half-year results for 2013. The impact of reducing sales price was clearly evident in the declining consolidated sales of Lenzing Group compared with the first half of last year.

In its half yearly report, Lenzing Group has reported a 6.8% decline in its consolidated sales compared to first half year of last year. Although fiber shipments in terms of volume were higher, it could not be compensated for the low average selling prices during the first half of 2013.

Lenzing reports that high inventory of cotton and surplus production capacity for viscose fibers in China is responsible for the global decline in the price of fibers. Based on Lenzing’s report, the UK based AgriMoney.com has stated that this fiber outlook by Lenzing is adding pressure to the falling cotton futures.

With regard to the global fiber outlook, according to Lenzing, the volume demand for the second half of 2013 will be stable and similar to that of first half. The excess production capacity in the manmade cellulose fiber sector may delay further expansion of projects. This may also necessitate price adjustments for viscose fibers in the coming months.

“Expansion projects for viscose fibers will be implemented if high profitability will be achieved”, said Lenzing’s Chief Executive Officer Peter Untersperger. However, he added that large scale investments such as new TENCEL production plant at the Lenzing site will continue as planned.

Lenzing’s Fiber Segment’s sale for this half was 893 million Euro as against 955.9 million Euro during the firs half of last year, which is a decline of 6.5 percent. The average sales price of Lenzing fiber for the 2013 first half was about 1.76 Euro per Kg.

Seshadri Ramkumar