POLYESTER DEMAND, PRICES UP

Byline: Michael McNamara

NEW YORK--This year is shaping up to be the best for polyester since the beginning of the decade.
Spurred by an increased demand for staple and filament, along with the emergence of recycled polyester, the window of opportunity for the fiber to gain market share is opening wider. Since the mid-Eighties, that share has been dropping as the popularity of cotton mounted.
U.S. producers, who say they are sold up through the year, note that they are also being helped by China, which continues to buy large amounts of polyester from the Far East. That, they said, is taking a huge slice out of what the Far East is exporting to the U.S.
Earlier this year, the rising price of cotton was seen as the catalyst for increased polyester demand. Now, however, while cotton seems to have leveled in price, polyester prices are moving up again, reflecting growing demand against a tight supply as well rising raw material costs.
The three primary U.S. polyester manufacturers--DuPont, Hoechst Celanese and Wellman--all raised their prices 7 percent in May.
On Friday, DuPont said it was raising prices on Dacron staple for the second time this year. The 9 to 13 percent increase will be effective with shipments of Aug. 27. DuPont also is increasing prices 5 to 7 percent on Dacron filament, also effective Aug. 27.
Then on Monday Hoechst Celanese said it was raising the price of its staple fiber for apparel, home fashions and nonwoven applications by up to 15 percent, effective Aug. 29. The company is also raising its price on polyester filament by up to 8 percent, also effective Aug. 29. Still, even with the increases, mills said they are using as much--if not more--polyester than ever.
"Our order position on polyester fabrics is stronger than it has been at this particular time of the year than any time I can remember," said Alfred Greenblatt, president of the apparel, automotive and home fashions units of Guilford Mills. "And the fiber producers all raised their prices, so they must know something. Still, with regard to long-term growth, I am taking a wait-and-see position."
"Our polyester consumption is definitely up in all three categories, in staple, filament and recycled," added Howard Ackerman, Malden Mills Industries' general manager for apparel. Ackerman noted that most of Malden's business comes from polyester-based fabrics.
"For our product line--most specifically activewear--polyester plays a key role," Ackerman said. "As for the recycled polyester, while it isn't our biggest growth area in terms of raw fiber [poundage], from a percentage standpoint, it is our fastest-growing area."
Polyester, with a 25 percent market share at retail, trails only cotton, which commands 57 percent, according to The NPD Group, Port Washington, N.Y., a consumer research group. According to industry estimates, the North American polyester staple business is about 3.5 billion pounds, while the filament segment accounts for 2 billion pounds.
Two of the three polyester producers, Wellman and Hoechst Celanese, pointed to the fiber as keying increased profits in their most recent quarters. At DuPont--which with the three months ended June 30 posted its best quarter in fibers in 4 1/2 years--Dacron polyester performance was relatively weak, but it is "showing signs of tremendous improvement," according to Bob Pruyn, the company's textiles director.
Wellman, boosted by increased sales of polyester, had a 25.8 percent jump in second-quarter earnings to $16.1 million in the quarter ended June 30. Sales in that period rose 7.4 percent to $229 million from $214 million.
"The apparel markets seem to be embracing polyester, as we're seeing some modest shifts in blend levels," said Jim Casey, president of the fibers division of Wellman. "We also had a lot less pressure from imported fiber."
Hoechst Celanese reported earnings of $12 million against a loss of $24 million in the first quarter ended March 31. Sales for the quarter rose 6.6 percent to $1.6 billion from $1.5 billion.
The company's fibers and film segment contributed 46.5 percent of total sales, rising 11 percent to $749 million from $675 million a year ago. The company said textile fibers sales were up in all product lines, offsetting lower selling prices, but declined to disclose operating profits. At the time, Ernest H. Drew, chairman and chief executive officer, noted that an improving economy led to higher sales in textile fibers, while costs for certain raw materials increased.
"With the very tight situation as it exists in the cotton business, polyester stands to increase, somewhat, its market share all over," said Donald Lehman, president of Hoechst Celanese's textile fibers division.
"But while the rising price of cotton initially helped polyester, I think the fiber, because of its characteristics, has made a major statement to its users, most notably in ready-to-wear, activewear and sportswear," Lehman added. "We hope that continues. We're actually in a better position than we thought."
HC executives said the company's polyester business should grow about 5 percent in 1994, compared with earlier estimates of 2 to 3 percent.
As for DuPont's fibers business, Lycra spandex and nylon led the way as operating earnings in the second quarter rose 60.9 percent to $177 million from $102 million. Sales increased 12.5 percent to $1.7 billion from $1.5 billion.
"There's no doubt our Dacron business will be helped by the higher price of cotton," DuPont's Pruyn said. "Firms are going toward heavier polyester blends, especially in sportswear.
"But you have to remember," he added, "while our staple business was struggling, our filament business has been doing pretty well all along."
Filament is generally used in more luxurious applications for drape and softer hand. It sells for about 15 to 20 percent more than staple.
As for the recycled polyester, made from plastic soda bottles, the product has made significant inroads. With about 100 million pounds of annual production currently it is still a very small part of the overall polyester market but "it is a growth area," said Wellman's Casey.
So far, its biggest gains have been made in fleece activewear, a historically strong cotton market.
"Right now we are appealing to a particular consumer," Casey added. "The next hurdle is the ready-to-wear and sportswear markets. If we can get in there, we'll really have made some strides."

To Read the Full Article
SUBSCRIBE NOW

Tap into our Global Network

Of Industry Leaders and Designers

load comments
blog comments powered by Disqus