Michael Bermish, a senior consultant for PCI Xylene and Polyester in the United Kingdom, said last week that due to the recovery of the end market, demand for the North American polyester fiber market is rapidly increasing. From 2010 to 2012, the US polyester fiber production is expected to increase at an average annual rate of 7%. By 2012, the US polyester fiber output will reach approximately 780,000 tons. The growth of polyester fiber production mainly comes from the recovery of four major end markets, including apparel, home decoration, carpets, and industrial/automotive.
Analysts believe that demand for the North American polyester fiber market has been positively affected by the United States-Dominican Republic-Central America Free Trade Agreement (DR-CAFTA), which stipulates that CAFTA member countries including Costa Rica, El Salvador, Guatemala, Honduras and Nicaragua Textile and garment processors will be able to circulate freely with locally produced yarns, and they will not need to levy import and export tariffs; yarns and fabrics produced in the United States or other countries of agreement may enter the United States with zero tariffs. Under the influence of this policy, Central American textile and garment processors began to switch from the United States to importing polyester fibers, which greatly reduced the import of polyester fibers to other regions.
Pomish said that in 2010, the production of polyester fibers in North America increased by 21% over the previous year, the largest increase in recent years. Since 2007, polyester production in North America has been steadily increasing, but production in 2010 has still not reached the peak level of the 1990s.
Pomish pointed out that due to the sharp increase in cotton prices, consumers are looking for alternative products to cotton, thus pushing up the demand for polyester fiber. The current U.S. cotton price has reached a record high. The main reason is that during the economic recession, the closure of U.S. cotton processing plants led to a significant reduction in U.S. cotton production from 2009 to 2010. Meanwhile, the flood disasters in Pakistan and Australia and India’s ban on exporting cotton made the supply tight. The cotton market is even worse. Affected by such factors as the sharp rise in cotton prices and the decline in supply, textile mills have replaced polyester with cotton as raw materials, which has stimulated the price of polyester fibers to a certain extent.
However, rising raw material costs are threatening the profitability of the polyester fiber industry. Pomish said that the current price of paraxylene, the main raw material of polyester, rose sharply in the United States, rising sharply from 67 cents/lb in January to 82 cents/lb in February, an increase of over 22%, compared with the same period last year. Compared with prices, the increase was as high as 46%. However, the cost of polyester raw materials in Asia is also rising substantially, and its price advantage has disappeared. Imports of terylene fibers from Asia are limited.
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