From the Sector

Price Trends

• The nearby cotton futures contract on the Intercontinental Exchange was down just 1% in December and closed the year at $1.84 per kilogram. A year earlier, the March contract closed at $2.30 per kilogram.  
  
  Cotton futures have been inverted for nearly three years because of supply chain disruptions that prevented normal on-time deliveries of international shipments. With the easing of container shortages and increased sailings, cotton futures are gradually reverting to the normal pattern in which contracts for forward delivery exceed nearby contracts by the cost of insurance, storage and interest between delivery months. The May and July 2023 contracts also finished 2022 at $1.84 per kilogram. In November, the May and July contracts were each several cents per kilogram lower than the March contract.
• The Eastern Market Indicator of prices for fine wool in Australia rose 9% in December to US$9.06 per kilogram. A year earlier, the EMI was $9.66. Australian analysts note that sheep for meat, cattle, and grain production, are competing alternatives for the use of land, and wool prices must continue upward if production is to be maintained in 2023.
• Prices quoted by the Indian Jute Balers Association (JBA) at the end of December converted to US$ fell 2% from a month earlier to an average of 74 cents per kilogram. The decline occurred entirely because of a weakening exchange rate. Prices in Rupee rose marginally. A year earlier, quoted prices averaged 84 cents per kilogram. The 16-percent decline year-on-year was caused about equally by a decline in quoted prices in Rupee and a weakening of the exchange rate.  
  
  The Indian jute industry is almost entirely focused on domestic demand, while half of total demand in Bangladesh comes from exports. Because of shortages of higher quality jute, export prices in Bangladesh are reportedly rising.
  (https://www.wgc.de/en/produkte/jute)
  
  India extended the anti-dumping duty at the end of December on jute and jute products imported from Bangladesh and Nepal for a period of five years. Bangladesh had urged the Indian government not to accept recommendations for extension, while the Indian industry was lobbying to ensure the duty remained in place. The duty rates range from approximately $6 per tonne at current exchange rates for low-quality fibres to $350 per tonne for finished products. The duty was originally imposed in January 2017 and was to expire at the end of 2022.
• Prices of silk in China rose 2% during December to US$28.0 per kilogram. Prices in yuan fell marginally during the month, but the RMB rose 3% against the USD. Prices of textile-grade silk in China were essentially unchanged at the end of 2022 compared with the end of 2021. However, prices closed 2022 about 40% above the average level pre-Covid. https://www.sunsirs.com/uk/prodetail-322.html and  https://businessanalytiq.com/procurementanalytics/index/raw-silk-price-index/ .
• Coconut coir fibre in India quoted in US$ remained in a narrow range, averaging $0.205 per kilogram in December. Prices in Rupee have been stable, and changes in dollar prices reflect changes in the exchange rate.

 
Production
 
World Natural Fibre Production in 2022 is estimated as of early January at 32 million tonnes, approximately one million below production in 2021 and down 900,000 tonnes compared with the estimate in early December.

World cotton production is estimated at 24.2 million tonnes in 2022/23 (August to July), 700,000 tonnes lower than in 2021/22 (ICAC.org). World cotton production rose from 20 million tonnes to 25 million between 2020/21 and 2005/06, but there has been no growth in the nearly two decades since.  
 
World production of jute is forecast down nearly 400,000 tonnes in 2022 because of inadequate rainfall during the harvest period to permit proper retting. Production in India is estimated up by 100,000 tonnes to 1.7 million tonnes, but production in Bangladesh fell by nearly one-third to just one million tonnes.
 
Production of coir, flax and sisal in 2022 are each estimated based on recent trends. Coir and flax have each been trending upward over the past decade, while world sisal production has been largely stable.

World wool production is forecast up 5% in 2022 to 1.09 million tonnes (clean), the highest since 2018. The Australian Wool Production Forecasting Committee issued its third estimate of 2022/23 production in December, keeping the estimate unchanged from September. Above-average rainfall in Australia, and across most of the Southern Hemisphere, is resulting in better pasture conditions and a rebuilding of sheep numbers. Sheep numbers shorn in Australia are climbing from 67 million in 2020/21 to 72 million in 2021/22 and to an estimated 75 million in 2022/23. https://www.wool.com/market-intelligence/wool-production-forecasts/  
 
According to the International Sericulture Commission (https://www.inserco.org/), silk production in China dropped from 170,000 tonnes in 2015 to 53,000 in 2020, with further declines estimated during Covid. Consequently, world silk production dropped from 202,000 tonnes in 2015 to 92,000 in 2020, and estimates of production during 2022 remain below 100,000 tonnes.

Society and the economy are facing existential challenges. In addition to the consequences of climate change, these include the realisation that energy and many resources are no longer available in the usual quantities, so that their efficiency must be significantly increased in the short term. Lightweight construction, especially with fibre composite materials, can and will make an important contribution here, e.g. in wind power plants or hydrogen storage systems. As an umbrella organisation, Composites Germany represents the capabilities and interests of the German fibre composite industry. With the re-entry of Composites United, Composites Germany will combine the forces of the two leading composites networks in Germany and its position will be significantly strengthened. Changed framework conditions make the re-entry possible and necessary.

VDMA and Leichtbau BW will continue to support the work of Composites Germany as associate members and contribute the know-how of their members. Together, the organisations will promote sustainable lightweight construction as a key technology for Germany, focusing on composites materials, says Prof. Klaus Drechsler of Composites United, one of the two board members of Composites Germany. As a network and mouthpiece of the composites industry, Composites Germany bundles the interests of its members. The aim is to continuously expand activities, promote innovations and technologies, develop new markets and new value chains, and anchor training and further education, adds his board colleague Dr Michael Effing of AVK. The agreement was concluded on 29 November 2022 during the JEC Forum DACH in Augsburg, where both associations were cooperation partners of the event.

• Potential loss of competitiveness, caused by the EU’s inaction of the energy crisis, and Chinese and US subsidies to domestic industry

Following yesterday’s European Council summit and its conclusions on the measures to tackle the energy crisis, the European textiles industry is extremely concerned about the fast loss of competitiveness of Europe and demands urgent action to save the industry.

The chain of factors determining this sharp decline in competitiveness is twofold. First, the energy cost in Europe is more than 6 times higher than in the US, China, and neighbouring countries. This factor alone has almost erased the business case for producing in the EU. At present, many textiles and clothing companies are producing at net loss or have shut down production. The industrial conditions have worsened in such a way that there is no business case to invest in Europe or buy products produced or processed in the EU. It is only the sense of responsibility of the entrepreneurs towards the European society that is keeping the plants and production running.

Secondly, while the EU is passive and extremely slow in articulating a credible and effective response to the energy crisis, the main international competitors and trade partners (China, India and the US respectively) have developed comprehensive state-aid frameworks for their domestic industry despite not being affected by this crisis at all. The latest example is the 369-billion-dollar scheme of the Inflation Reduction Act rolled out by the Biden administration.

Recent trade data  already indicate a loss of global competitiveness: imports to the EU have grown tremendously in 2022 (+35% year-to-date). It is also evident that the surge in imports goes in parallel with the surge of natural gas price. It is expected that energy prices will remain high and volatile, opening the door for imports to gain substantial market shares in the EU.

The chart indicates the development of the Title Transfer Facility (TTF) until September 2022 since Eurostat data for Q4 2022 has not been published yet. Euratex is aware that the market situation has eased somewhat since in the past months, but the crisis remains because gas prices are still extremely high in comparison to last year. This suggests that the current loss of competitiveness of the EU manufacturing will not be recovered even with lower energy prices, unless measures are taken to correct the unlevel playing field on which the EU industry has to operate in the international markets. Only with an ambitious and comprehensive relaunch plan at EU level, Europe will be able to restore its credibility as a global manufacturing powerhouse and investments.

If the status quo is maintained, not only the EU will not be able to recover its competitive position on the global business stage, but it will also fail its plans to reach zero-net emissions and achieve circularity. It is evident that these ambitions - that the industry is passionately supporting - need massive capital investments. However, in the current scenario an investments diversion can only be expected to markets where governments are actively supporting those investments and energy costs are much lower – regardless of their fossil- or non-fossil origin.

The European textiles industry – the whole value chain, from fibres, nonwoven, to fabrics, clothing manufacturers - are facing unprecedented pressure deriving from the current geopolitical situation, the new macroeconomic conditions and unfair competition from third states. The situation is going to worsen if no emergency action is taken, especially because a recession is expected in the coming months.

The main structural component of the EU manufacturing are SMEs: these are economic actors that are particularly exposed to the current crisis as they do not have the financial leverage to absorb the impact of energy prices for much longer. Urgent EU action is needed to ensure their survival.

EURATEX calls on the EU political leaders in the Commission, in the European Council and in the national capitals to:

1. Raise the ambition and adopt a comprehensive approach at EU level: energy, state-aid and trade policy must be brought together in a single strategy with concrete emergency solutions and with a clear SME dimension;
    
2. Let all hesitations aside and adopt a meaningful price cap on natural gas wholesales, that should be ideally no higher than 80 euro/MWh. In parallel, it should also be ensured that electricity prices are brought to a sustainable price level;
    
3. Change the European posture on state-aid, even temporarily. An ambitious plan of investments and state-aid in green technologies to support the industrial transition should be rolled out.

Such a plan, however, should not be conceived as a retaliation against our most necessary and like-minded trade partners. Access to finance and markets must be safeguarded for all those actors who are capable and willing to invest in Europe, on the basis of reciprocity. In   these challenging times for geopolitical stability, ensuring strong trade ties with our traditional allies and partners is of utmost importance. The roll-out of an investment and state aid plan should not interfere, but rather support, the dialogue with the US (and other partners) and the deepening of our trade and investment partnership. Such a dialogue should be accelerated in the context of the TTC as well as at WTO level.

AVK, the Federation of Reinforced Plastics, has once again awarded its Innovation Awards to a range of companies, institutes and their partners in 2022. Three innovative composites from each of the three categories Products & Applications, Processes & Methods and Research & Science were honoured during the JEC Forum for Germany, Austria and Switzerland in Augsburg at an award ceremony on 29 November 2022. A professional jury, composed of engineers, scientists and trade journalists, presented the awards for 2022 in three categories.

List of award winners in the three categories:
Products & Applications category
First place: LAMILUX Composites GmbH, Rehau, Germany: Lamilux Sunsation® – the new standard under the sun
Second place: Carbo-Link AG, Fehraltorf, Switzerland: CL RESTRAP – Reinforcement of concrete girders using flexible, prestressed CRP tapes
Third place: Borgers SE & Co. KGaA, Bocholt, Germany: blue label by Borgers ®

Innovative Processes & Methods category
First place: BaltiCo GmbH, Hohen Luckow, Germany: Rod laying technology as an additive manufacturing process
Second place: Schmidt & Heinzmann GmbH & Co. KG, Bruchsal, Germany: Pole Position, a positioning system for polarisation imaging
Third place: NETZSCH Process Intelligence GmbH, Selb, Germany: SensXPERT, process optimisation driven by material data to increase the efficiency of thermosets and fibre composites

Research & Science category
First place: Institute for Textile Machinery and High Performance Textiles at the Technical University of Dresden: Spherically curved fibre-reinforced plastic composite components made from near-net-shape fabrics
Second place: Leibniz-Institut für Verbundwerkstoffe GmbH, Kaiserslautern, Germany: HyKoPerm – a measurement system for an industry-specific characterisation of textile impregnation behaviour
Third place: Technical University of Munich, Chair of Carbon Composites: Manufacturing processes for a tension-strut-supported pressure vessel that can be adapted to suit a given space

The plan of the European Commission to propose a price cap on wholesale gas price at 275€/MWh would be a bitter disappointment for the European textiles and clothing manufacturers, said EURATEX.

November 22nd, EURATEX stated in a letter to EC President, Ursula von der Leyen, that any price cap above the level of 80€euro/MWh would not help the EU industry – the textile sector in particular – to survive the current crisis. Indeed as early as July 2021, the wholesale gas price in the EU was below 30€/MWh. Now, the EU industry is facing gas and energy prices that have exceeded any coping capacity: from the record-high 320€/MWh last August, the price has reached to 127€/MWh today. Still, it is more than 300% than the business as usual prices.

The very existence of the European industry is at stake and with it the European sustainability agenda – and Europe’s capacity to implement it. Furthermore, Europe will lose its strategic autonomy, which guarantees essential goods and services are made available on the European Internal Market. If we continue on this path, the EU will soon become totally dependent on foreign imports with no leverage to implement its sustainability agenda, let alone lead the transition to a circular economy on the international stage.

At present, the EU industry is facing a dire international competition with the industry in China, India and the US working at energy prices of around 10$/MWh. In addition, these competitors are benefitting of sky-high subsidies from their own governments: the rollout of the US $369bln industrial subsidy scheme is just the latest example.

EURATEX Director General, Dirk Vantyghem, believes that “while the EU Industry is under immense, unprecedented pressure, a price cap at 275€/MWh would be meaningless: the European industry will be permanently pushed out on the market. The industry is at the heart of the European way of life and the fundament of our social market economy. The EU must save its industry to save Europe. The moment to act is now.”

Dr. Harald Weber will become the new managing director of the VDMA Textile Machinery Association on 1 January 2023. The 44-year-old industrial engineer succeeds Thomas Waldmann, who has held the position since 1991 and will retire at the end of the year.

After completing his doctorate at the Technical University of Darmstadt and working as a lecturer at the University of Applied Sciences Mittelhessen (THM), Dr. Weber joined the VDMA in 2011. Since then, he has been responsible for the topics of technology and innovation in the Plastics and Rubber Machinery Association.

Dr. Janpeter Horn, Chairman of the VDMA Textile Machinery Association and Managing Director of August Herzog Maschinenfabrik, commented on the change of personnel: "From his previous work in the plastics industry, Dr. Weber has profound knowledge and experience in topics that are also gaining in importance in textile machinery manufacturing. Examples include recycling and the circular economy, as well as digitalisation and especially the communication standard OPC UA."

Dr. Horn added: "We combine our warm welcome to Dr. Weber with a big thank you to Thomas Waldmann. 30 years as managing director at the Textile Machinery Association also stand for constantly changing framework conditions. Mr. Waldmann has always had his finger on the pulse of the industry and, together with his team, has represented the special interests of the member companies: From technology policy to challenges of market access to the leading trade fair ITMA and the European association CEMATEX. ITMA 2007 in Munich was certainly a highlight. The executive board of the association wishes Mr. Waldmann all the best for the new phase of his life that is now beginning."

After the DOWNPASS Standard entered into force as a zero-tolerance standard on 1 January 2017, its first major revision is due in 2022/23. The stakeholder-based approach has again sought feedback from professional and relevant public communities for its first major revision, as it did originally when it was first developed: In addition to animal welfare organisations, veterinarians and agricultural scientists, many trade partners and consumers have also contributed to the discussion with their wishes and requirements.

A central aspect of the DOWNPASS standard is the exclusion of all goods from live animals. Down and feathers may neither come from moulting nor from live plucking. Accredited independent auditing organisations are responsible for monitoring and inspecting the manufacturers' supply chains on site worldwide. Intensified monitoring of high-risk areas is mandatory, but its frequency is left to the discretion of the auditors, who inspect farms both announced and unannounced.

Down and feathers, which are used as filling material for DOWNPASS labelled finished products, may only be obtained after slaughter. This must be clearly verifiable. In this respect, all poultry farms that have animals slaughtered for the purpose of food production are covered - regardless of whether these come from parent or rearing farms or from farms that both rear ducklings and goslings besides keeping parent animals.

Parent vs. rearing farms - new mandatory requirement
The vast majority of all poultry farms raise chicks themselves for food or to keep them later as adults for egg laying. So, when the current DOWNPASS speaks of rearing farms or rearing, the term always covers both variants.
Pure parent farms that do not raise chicks themselves but buy in the adult ducks and geese to lay eggs are rare. For this, the standard had an optional additional module that referred to waterfowl, i.e. jointly to ducks and geese.

Since live plucking of ducks is not known and this has been confirmed by veterinarians and agronomists, the DOWNPASS 2019 had enabled the optional auditing of pure goose parent stock farms, being no rearing farms, via an annex. This hitherto voluntary option has been tested in practice over the past three years and met with consistently positive feedback from both producers and trade partners. Therefore, the auditing of goose farms will be a mandatory part of the new version of the DOWNPASS standard in the future. The option for the voluntary goose parent audit will be dropped as well as the one for the simultaneous auditing of duck and goose parent farms.

Sustainable Chemistry for the Textile Industry (SCTI™) has appointed Dr. Isabella Tonaco as Executive Director, effective November 1, 2022. With a mandate to inspire and trigger action at a global level, she will lead SCTI to drive transformational change in the textile and leather industries.
 
Launched two years ago by seven of the world's leading chemical companies, the SCTI Alliance aims to enable brands, retailers and manufacturers to apply cutting-edge sustainable chemistry solutions that enhance the well-being of factory workers, local communities, consumers and the planet.
 
Dr. Tonaco will oversee SCTI activities to implement this mission. Based in Germany, she will work with SCTI member companies and stakeholders across the textile and leather value chain to help the industry achieve the highest levels of sustainability. Dr. Tonaco will report to the SCTI Executive Committee.
 
Dr. Tonaco has more than a decade of experience in sustainability and has held various strategic and commercial roles in the chemical industry. Most recently, she was Vice President of Strategy Execution and Marketing for Renewable Polymers & Chemicals at Neste, a global leader in renewable and circular solutions. Previously, Dr. Tonaco worked for BASF, where she established and executed the company's global leadership position in certified sustainable palm-based ingredients for the Personal Care industry.

As an accredited testing and certification body, the “OETI - Institut fuer Oekologie, Technik und Innovation GmbH“ (OETI for short) has been successfully responding to prevailing market requirements for 55 years and, in the process, has made a name for itself worldwide. To mark its anniversary, this international centre of excellence with its origins in Austria is taking a look back at the most important milestones in its history as well as providing interesting insights into future developments.

As renowned flooring manufacturers founded the Austrian Carpet Institute on 25th of September 1967, no one could have imagined how successful the company would become. But even back then, one thing was clear to the experts: the need to establish a carpet research and testing centre in the form of an association. Today, over five decades later, OETI is a testing and certification services provider for OEKO-TEX® certificates and labels, textiles, leather, due diligence along the textile and leather supply chain as well as for personal protective equipment (PPE), flooring technology, furnishings and indoor air quality.

In 1992, OETI was a founding member of the ‘International OEKO-TEX® Association for Research and Testing in the Field of Textile and Leather Ecology’ with independent certifications and product labels. Ever since, OEKO-TEX® has enabled companies along the textile and leather supply chain and every consumer to make responsible decisions for safe, environmentally friendly and fairly manufactured products.

In line with its focus on sustainability, OETI and its Swiss parent company, TESTEX AG, wanted to build the new OETI headquarters using low energy construction techniques and ensure its carbon-neutral operation. To achieve these goals, the highest possible thermal insulation and energy optimisation standards were applied, while the carbon-neutral power supply is generated by its in-house photovoltaics system as well as domestic renewable energy.

The new headquarters, which the company moved into in 2021, provides space for 75 employees over 2,500m2 and boasts bright and perfectly equipped office areas. The laboratory areas, the analytical/chemical laboratory and the physical / fire laboratory were also designed based on the latest methods and technologies. This makes OETI, alongside its Swiss parent company TESTEX, the second fully fledged laboratory site in the entire, global TESTEX Group.

• More ambition and joint European efforts needed

On Friday 30 September, the EU Energy ministers approved a Council Regulation proposal to address high energy prices. The Regulation focusses on the electricity prices and electricity demand reduction, on a solidarity levy from the fossil fuel sector and a retail levy for SMEs. While these initiatives are driven by goodwill, they miss the point of bringing gas prices down – the one measure that would bring the biggest impact on European industry.

EURATEX – as the voice of the European apparel and textiles manufacturers – regrets this lack of ambition: the Regulation does not foresee any meaningful action to directly support the European industry. This can accelerate the de-industrialisation of Europe and loss of industrial capacity to secure the European standard of living and implementing the Green Deal.

“We call on the EU and Member States to pursue our common European interests. The hesitation to adopt a European price cap on natural gas, accompanied by massive national spending programs to subsidise domestic gas consumption, is a dereliction of duty”, said Director General Dirk Vantyghem.

Triggering competition among Member States rather than promoting cooperation in bringing gas prices down for all European companies will also prove ineffective: indeed, the industrial structure in the European Union is fully integrated. Once a segment of the value chain perishes because of the crisis in one country, all companies based in the EU will suffer its negative effect, driving prices up in the supply chain and adding further strain to our operations. The European industry will be saved as a unified industry, or it will not be saved at all. Fragmenting the internal market will not protect any Member State’s domestic manufacturing.

In addition to a EU-wide price cap on gas, EURATEX calls on the European Commission to swiftly amend the Temporary Crisis Framework, making sure the criteria and thresholds applied do not exclude vulnerable companies from possible support (e.g. in textile finishing and services). Euratex also encourages the European Commission to revise the ETS Indirect Carbon Leakage mechanism and include the man-made fibres, non-wovens, spinning and weaving sectors.

It is high time now for the European Union, said the association – in particular for Member States and the Commission – to step up their ambition and adopt a European vision: a chaotic and fragmented approach will not mitigate the crisis but accelerate it.