Cotton Fiber Consumption Remains Below Peak

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1 Overview

2 Cotton Fiber Consumption Remains Below Peak million tons of mill-use 3-1% versus 26/7 peak y = e.177x R² = % versus Source: ICAC

3 Drivers of Fiber Demand Growth Population Economic growth Fiber price levels Principal Drivers of Fiber Demand world population (billions) global GDP (trillions 25 USD) World Population World GDP Cotton prices relative to competing fibers Source: World Bank

4 Growth in Global Fiber Demand million tons of mill-use Man-Made Wool Cotton +18.7x versus x versus x versus 196 Source: ICAC

5 Man-Made Fiber Mill-Use million tons of mill-use MM Filament MM Staple +953% versus 1975 (1.5x) % versus 1975 (6x) Source: Fiber Organon

6 Man-Made Fiber Mill-Use Composition of Man-Made Fiber Mill-Use in Staple 37% Growth in Man-Made Fiber Mill-Use million tons of mill-use MM Filament MM Staple +325% versus 1991 Filament 63% % versus 1991 Source: PCI Fibres

7 Man-Made Filament Mill-Use Composition of Man-Made Filament Mill-Use in Poly propy lene 1% Nylon 1% 51% Textile 31% Industrial 17% Carpet Growth in Man-Made Filament Mill-Use million tons of mill-use Cellulosic Polypropylene Filament Nylon Polyester -51% +135% +35% Polyester 82% 9% Textile 7% Industrial 3% Other % versus 1991 Source: PCI Fibres

8 Man-Made Staple Mill-Use Composition of Man-Made Staple Mill-Use in Polypropylene 5% Nylon 1% Polyester 92% Cellulosic 2% Growth in Man-Made Staple Mill-Use million tons of mill-use Nylon Cellulosic Polypropylene Polyester -79% -51% +3% +226% versus 1991 Source: PCI Fibres

9 Determining Cotton s Share Many different fibers to measure against What is the fiber universe to compare cotton usage against to determine share? - Exclude industrial uses? - Exclude filament? PCI Fibres indicates certain end-uses for mmf staple and filament where cotton is not competitive - Automotive applications, sacking/luggage, tarping/tenting, roping are examples Future work could delineate these applications Change in Different Measures of Cotton s Share 65% 6% 55% 5% 45% 4% 35% 3% 25% 2% cotton s share of different compositions of mill-use 6% 57% 46% All Fibers Staple & Textile Filaments Staple Fibers Only 5% 31% 27% Sources: ICAC & PCI Fibres

10 China

11 199/ / / / / / / / / / 2/1 21/2 22/3 23/4 24/5 25/6 26/7 27/8 28/9 29/1 21/11 211/12 212/13 213/14 214/15 /16 Chinese Cotton Mill-Use Growth in Chinese Cotton Mill-Use China s Share of Global Cotton Consumption 12 1 million tons of mill-use 199/91 23% China ROW % in 27/8 versus 199/91-35% in /16 versus 27/8 27/8 /16 41% 3% Source: ICAC

12 Chinese Polyester Mill-Use Growth in Chinese Polyester Mill-Use million tons of mill-use 3 China s Share of Global Polyester Consumption 199/91 18% China ROW % in versus /8 59% 1 5 /16 64% Source: PCI Fibres

13 Chinese Polyester Mill-Use Growth in Chinese Polyester Mill-Use Shares of Chinese Polyester Consumption - Staple vs. Filament million tons of mill-use Polyester Filament Polyester Staple +288% in versus /91 27/8 53% 37% Filament Staple % /16 28% Source: PCI Fibres

14 Chinese Polyester Filament Use Growth in Chinese Polyester Filament Use million tons of mill-use Polyester Filament 3 China s Share of Global Polyester Filament Mill-Use 199/91 17% China ROW % in versus 199 In 94% Textile 5% Industrial 1% Other 27/8 /16 61% 69% Source: PCI Fibres

15 Chinese Polyester Staple Use Growth in Chinese Polyester Staple Use million tons of mill-use Polyester Staple 3 199/91 China s Share of Global Polyester Staple Mill-Use 19% China ROW /8 55% % versus 1991 /16 56% Source: PCI Fibres

16 Cotton and Polyester Prices Cotton and Polyester Staple Prices cents/lb A Index CC Index China Polyester Separation Between Cotton & Chinese Polyester Prices cotton prices less Chinese polyester prices in cents/lb A Index less Chinese Polyester CC Index less Chinese Polyester -2 Sources: Cotlook & Emerging Textiles

17 9/22/25 7/22/26 5/22/27 3/22/28 1/22/29 11/22/29 9/22/21 7/22/211 5/22/212 3/22/213 1/22/214 11/22/214 9/22/ Polyester Prices in different countries cents/lb USA CHINA PAKISTAN TAIWAN Sources: Cotlook & Emerging Textiles

18 Cotton s Share - China 7% 6% 5% 4% 3% 2% 1% Change in Different Measures of Cotton s Share 8% cotton s share of different measures of mill-use in China 69% 67% 58% All Fibers Staple & Textile Filaments Staple Fibers Only 35% 31% 27% Separation Between Cotton & Chinese Polyester Prices cotton prices less Chinese polyester prices in cents/lb A Index less Chinese Polyester CC Index less Chinese Polyester Sources: Cotlook & Emerging Textiles

19 Trade Fiber & Yarn

20 Chinese Polyester Production Chinese Polyester Production & Mill-Use million tons Production 3 Mill-Use 25 2 China produces 7x as much polyester as the next largest country India (4.5 mil. tons in ) India produces 3x as much polyester as the next largest country Indonesia (1.5 mil. tons) Three countries have production near the level in Indonesia Taiwan, Korea, U.S Source: PCI Fibres

21 Chinese Polyester Production & Use Chinese Polyester Production & Mill-Use million tons Production Mill-Use China s mills consumed more polyester than it produced until 27 Since 27, China s polyester production surplus has grown to 2.4 million tons () This 2.4 million tons exceeds Indonesian production (ranked 3 rd in ) by more than one million tons China is the world s top exporter of polyester Source: PCI Fibres

22 Chinese Polyester Production & Use Filament & Staple Chinese Polyester Filament Production & Mill-Use Chinese Polyester Staple Production & Mill-Use 25 million tons 25 million tons Production - Filament Production - Staple 2 2 Mill-Use - Filament Mill-Use - Staple Source: PCI Fibres

23 Chinese Polyester Filament & Staple Exports Chinese Polyester Filament Exports Chinese Polyester Staple Exports 2.5 million tons 2.5 million tons Source: GTIS

24 Chinese Polyester Filament & Staple Exports Chinese Polyester Filament Exports () Destination Country Volume in Tons (share) Turkey 242, (12%) Vietnam 21,39 (1%) South Korea 178,427 (9%) Pakistan 166,466 (8%) Egypt 135,671 (7%) U.S. 115,513 (6%) Brazil 74,653 (4%) Indonesia 68,265 (3%) Mexico 59,63 (3%) Bangladesh 56,479 (3%) Rest of World 72,5 (35%) Chinese Polyester Staple Exports () Destination Country Volume in Tons (share) U.S. 28,15 (22%) Pakistan 12,348 (13%) India 7,65 (7%) Indonesia 52,438 (6%) Mexico 47,463 (5%) Israel 4,14 (4%) Vietnam 39,752 (4%) Russia 31,78 (3%) Brazil 31,576 (3%) Turkey 28,318 (3%) Rest of World 273,372 (29%) Source: GTIS

25 Major Apparel Import Markets 1% cotton-dominant share of t-shirt import weight China s Share of All Apparel Imports of All Fibers 9% U.S. 36% 8% 7% 6% EU-28 39% 5% 4% 3% 2% US - China US - ROW EU - China EU - ROW Japan - China Japan - ROW -28 ppt -12 ppt -19 ppt -6 ppt -37 ppt -28 ppt Change 24-6 to Present Japan 68% Note: China s share of total apparel derived from import values for HS chapters 61 & 62 in (US & Japan) or 214 (latest available for EU). Sources: US ITC, EuroStat, Japan Customs. Share data are ratios of weight volumes of HS 6191 (cotton-dominant) and the sum of HS 6191 & HS 6199 (mmf-dominant).

26 Cotton Incorporated Survey of Industry Expectations Top Reasons for Companies with Plans to Use More Cotton Consumer Demand 56% Price Fashion 26% 31% 68% of industry contacts plan to use more cotton in 216 Sustainability Quality Technologies 15% 15% 13% Cotton Incorporated Cotton Usage Survey, figures for reasons sited are for respondents those planning to use more cotton in 216

27 Where Polyester Comes From

28 Polyester What is it? Both are derived from naphtha - The only end-use for PTA is polyester - There are other end-uses for MEG - Both PTA and MEG are actively derived and are not by-products of other processes Naphtha PTA MEG Polyester fiber is made by combining 71% PTA (purified terephthalate acid) 29% MEG (monoethylene glycol) Polyester Note: Image and polyester derivation information provided by PCI Fibres

29 China Oil Production and Consumption 12 million barrels per day China s Share of Global Oil Consumption 1 Production Consumption Germany 9% China 8% Russia 14% Japan 17% India 9% Russia 9% USA 52% 213 Japan 11% USA 46% China 25% Source: EIA - International Energy Statistics

30 In 214, China became the largest net importer of crude oil in the world million barrels per day China 6.1 USA 5.1 Japan 4.2 India 2.7 South Korea Germany France 1.6 Spain Italy Taiwan 1 Source: EIA - International Energy Statistics

COTTON REPORT. Kai Hughes. Cotton Production & Trade Trends. Executive Director International Cotton Advisory Committee

COTTON REPORT. Kai Hughes. Cotton Production & Trade Trends. Executive Director International Cotton Advisory Committee COTTON REPORT Kai Hughes Executive Director International Cotton Advisory Committee Cotton Production & Trade Trends International Cotton Advisory Committee WORLD COTTON AREA AND PRICES US cts/lb 18 15