From the Sector

INDA, the Association of the Nonwovens Fabrics Industry, announces the publication of a new study, North American Nonwoven Materials Annual Study 2022.

Based on actual surveys and interviews with producers, enhancing the accuracy and relevance, this study tracks machine additions, closures, and productivity improvements. This study is the industry benchmark for capacity and production information for North America and provides an estimate of operating rates, based on nameplate machine capacity, through the year 2022. The 72-page study contains 43 figures and 11 tables.

Findings from this year’s study include:

• North American capacity continues to increase with investments being made across all the processes and for a variety of end-uses. The industry’s nameplate capacity utilization has increased year-over-year, for the fifth consecutive year.
• In 2022, capacity of nonwovens in North America reached 5.565 million tonnes, an increase from the previous year of 2.4% (net growth of 128,700 tonnes) and an improvement over the previous year’s growth rate of 1.8%.
• North American imports, in tonnage, decreased 24.3% in 2022 and exports decreased 16.3% due to market stabilization after COVID. Nonwoven production tends to stay within the region, so the net trade balance (imports less exports) accounted for less than 5.5% of the region’s capacity.

"Policy makers need to consider that global dimension."
 
EURATEX released its 2023 Spring Report, which analyses latest trade flows for textiles and clothing products.

In 2022, EU trade in textiles and clothing has exceeded, for the first time in history, the €200 billion mark. This record growth of total trade is mainly due to a sharp increase of clothing imports (+36,6% in value), especially from China and Bangladesh, which outweighs Europe’s positive export performance. As a result, the EU’s trade deficit in textiles and clothing has increased to €70 billion, which is 48% higher than the year before.

Such a growing deficit is a cause for concern; the objective of the EU’s Industrial Strategy to strengthen resilience and “strategic autonomy” is not happening. Instead, the dependency has increased, and becomes critical in certain raw materials and fibres.

It also challenges the Commission’s ambition is to promote – and prevail – high quality and sustainable textile products on the Single Market – regardless where they have been produced. With imports now reaching €140 billion, it will be a challenge to effectively control the quality and compliance over these imports. Market surveillance will need to be stepped up massively, without becoming a barrier to trade.

The efforts on the EU’s export performance need to be strengthened, so as to rebalance the European trade relations with the rest of the world. EU companies are world leader in high end fashion products and in technical textiles. More needs to be done to support their activities in established markets but also emerging economies. For instance, the ongoing FTA negotiations with India should focus on improving market access and ensure “fair” competition with local companies.

The EURATEX Spring Report highlights significant differences between trade in value and in volume. EU’s export of textile products has increased by 13% in value, but actually dropped by nearly 7% in volume. This obviously reflects the very high inflation figures from last year, caused initially by the rising energy prices and changing central bank policies. This in turn leads to uncertainty with the consumer, resulting in low demand and gloomy prospects for the entire value chain.

Director General Dirk Vantyghem commented on these latest figures: “This report confirms once again that “textiles” is one of the most globalised sectors of the European economy, and hence the importance of taking that global dimension into account, when designing EU and national policies. Failing to do so may have a devastating effect on the global competitiveness of the European textile industry.

Looking forward, he added: “It is essential to stabilise inflation, restore consumer confidence and ensure a level playing field for all operators in the textile industry. On that basis, European companies can prosper and offer quality jobs to 1.3 million workers”.

The Biden administration’s Section 301 penalty tariffs on finished textiles and apparel counteract China’s unfair trade advantages and give U.S. manufactures a chance to compete, two key American textile manufacturing groups told the Biden administration. Removing tariffs, the associations said, would reward China, put U.S. manufacturers at a competitive disadvantage and do nothing to reduce inflation.

In a formal submission to the U.S. Trade Representative’s (USTR) office, which is conducting a four-year statutory review of the tariffs, the associations, representing the entirety of the U.S. textile production chain, expressed strong support for the continuation of current Section 301 penalty tariffs on finished textiles and apparel imports from China and outlined the effectiveness of U.S. tariff actions.

“In some cases, such as on finished apparel, the tariffs have worked to partially offset and counteract China’s unfair trade advantages,” the groups said. “The tariffs on finished textile and apparel items are giving U.S. manufacturers the chance to compete, and we are seeing encouraging investment and growth in moving some production and souring from China back to the Western Hemisphere.”

“The CAFTA-DR [Dominican Republic-Central America Free Trade Agreement] region has seen more than $1 billion in new textile and apparel investment this year, for example, which is historic and due to the textile and apparel rules negotiated under the agreement and sourcing shifts from China,” they added. “This investment and growing U.S. imports from the Western Hemisphere is attributable in part to the 301 tariffs on finished apparel.  The tariffs on finished items in our sector are broadly supported by textile/apparel producers in the hemispheric co-production chain, and it is essential that they remain in place, absent China reforming its practices.”

The submission was filed by the National Council of Textile Organizations (NCTO) and the U.S. Industrial and Narrow Fabrics Institute (USINFI), a division of the Advanced Textiles Association (AFA).

The groups have long advocated for a fair, transparent process to remove tariffs on textile machinery, certain chemicals and dyes and limited textile inputs that cannot be sourced domestically to help U.S. manufacturers compete against China.

They also stressed that lifting the tariffs on finished textiles and apparel products from China “will solidify their global dominance in this sector for generations to come and reward their abusive behaviors, exacerbate the migration crisis, hurt domestic manufacturers and workers, undermine our ability to recalibrate essential PPE supply chains, and blunt the positive supply chains shifts and investments in the Western Hemisphere that are happening.” They added it would “do nothing to solve the inflation crisis facing U.S. consumers and manufacturers right now.”

See the full submission here.

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.

The Enforcement Forum of ECHA agreed that the next REACH enforcement project will investigate how companies fulfil the registration, authorisation and restriction obligations for products and chemicals they import from outside the EU. The project will be done in 2023-2025 and will require close cooperation between REACH enforcement and national customs authorities in the Member States.
In its November meeting, the Enforcement Forum, responsible for harmonising the enforcement of EU chemicals legislation, agreed to focus its next project on the control of imports of substances, mixtures and articles.

This subject was triggered by high levels of non-compliance in imported goods detected in previous Forum projects, including a recent pilot project. The pilot found that 23 % of inspected products were non-compliant with requirements set by EU law and further controls are necessary.

Control of imports at the point of entry is the most effective means of checking that non-compliant substances, mixtures and articles do not enter the European market. The project will also work on further developing and strengthening existing cooperation between REACH inspectors and customs. By strengthening the control of imports, the project will also contribute to the goals of the EU’s Chemicals Strategy for Sustainability.

The Forum also agreed to publish its future advice on enforceability of new restriction proposals under REACH.

Opportunities for expanding the future role of the Forum, strengthening the control of imports and other areas were on the agenda in an open session where 41 representatives from stakeholder organisations and four candidate countries joined. Among other topics, the open session also addressed the enforceability of REACH restrictions, for example, in textiles or on the use of lead gunshot in wetlands as well as analytical methods relevant for the control of REACH duties.

The Forum’s Biocidal Products Regulation Subgroup (BPRS) re-elected Helmut de Vos (BE) for a second term as a Vice-Chair.

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.

The GoodTextiles Foundation, initiated by Dibella, has implemented a new support project in India: Each family of a small village community of organic farmers received a cow from the donations received. The herd of fifty animals helps with farming, gives milk, produces sufficient natural fertilizer and should soon provide higher crop yields and a better income.

In 2016, Dibella established the GoodTextiles Foundation with the aim of making textile value chains more sustainable. It raises funds and implements its own support projects to benefit people at all stages of the textile economy. The most recent project, "One cow for every family," has now taken the first, important intermediate step: Fifty cows arrived in the small village of Aliguda Village (Utnoor Division, Adilabad, Telangana, India) at the beginning of June 2022.

"Some of our organic cotton is grown on the farms of the village community managed by the smallholder organization Chetna Organic. During the filming of the German documentary "plan b", the farmers told us that they need more natural fertilizer to cultivate their fields ecologically and economically. The biggest wish of each family is therefore a cow. However, they cannot afford this because of the high price of the equivalent of 300 euros. That's how the idea for our next sponsorship project was born," reports Ralf Hellmann, managing director of Dibella and member of the foundation's board of directors.

In addition to the most important reason for purchase - the production of fertilizer - the cows also serve as livestock. They are harnessed in front of the plow and make the strenuous work of tilling the soil easier for the farmers. As draft animals they serve to transport heavier loads, and as milk suppliers they contribute to a family's food supply. Surplus milk that is not needed in the household also provides families with an important additional income through sale.