Staple Fibers for Nonwovens. Paul L. Latten Basofil, LLC INDA Converting & Bonding Conference May 7, 2014

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1 Staple Fibers for Nonwovens Paul L. Latten Basofil, LLC INDA Converting & Bonding Conference May 7,

2 Basofil Disclaimer We focus on high performance melamine fiber and powder for wipes, abrasive cleaning, filtration media. We offer FR, UV protection and heat blocking in applications such as bedding/furnishings,aircraft seating, aerospace heat insulation, fire fighter turnout gear, brake pads, and others. 2

3 Trends Outline Price Innovation Supply Product Suppliers 3

4 Trends Summary Price: Volatile to up Supply: Polyester is king; PP and Rayon are foundational Suppliers: Big is big Product: Blend in functionality; Recycle, Natural fibers Innovation: is alive (kind of) 4

5 Fiber Price Trend 5

6 Fiber Price Trend After Hurricanes Rita and Katrina in 2005 fiber producers HAD to price month to month. That volatility is now the norm What s UP? Cotton from about 70 cpp Dec 2011 to ~95 cpp now World cotton production steady ~26 million metric tons since 2010 PP up ~3 over last year PET was up significantly last year but flat to down this year Sources: NW Markets/INDA price trend Fibre2fashion Cotton Inc Monthly Economic Letter April 2014 What s DOWN? Rayon down 4-5% over same period last year 6

7 Supply Trends Big is big World fiber market with ~85.4 million tons is dominated by oilbased synthetic fibers (a share of about 62%) 7

8 Pounds x1000 USA Synthetic Staple Production % % Polyester Olefin Polyester 78% of staple production in 2013 Most olefin production was polypropylene Source: Fiber Economics Bureau 8

9 USA Staple Fiber Shipments % CHG Polyester % Olefin % Polyester growing while PP declines PET capacity utilization 87% in 2013 Olefin capacity utilization 75% in 2013 Source: Fiber Economics Bureau 9

10 2013 USA Synthetic Staple Shipments Million Pounds Other Nonwoven Carpet Direct Export Nonwovens were 25% of domestic shipments Fiberfill was 375 million lbs Source: Fiber Economics Bureau 10

11 Pounds x1000 USA Manufactured Staple Fiber Imports Source: Fiber Economics Bureau Polyester was half of all fiber imports (1.5B lbs) Polyester & Cellulosic imports down 6-7% PP imports doubled on a small base 11

12 Fiber Supplier Trends 12

13 Big is Big - Indorama INDO POLY (THAILAND) LTD 13

14 Globalized. Diversified. Integrated. $1.5 Billion sales (fibers & yarns) Polyester is the future fastest growing polymer in the 6.5% annually... Focus on HVA (High Value Add) Fibers & Applications. Share increased to 70% Manufacturing in 8 countries. 6 R&D Centers. 8 Recycling Centers on 3 continents Transformed Trevira from inefficient & unprofitable to a turnaround story Global leader in hygiene segment #1 in PP Bico #1 European specialty fibers #1 European recycled fiber producer 14

15 Top 5 Polyester Fiber Producers 3 Capacity (million metric tons) Tongkun Hengyi Reliance Sinopec Indorama VL Source: IVL 2013 Annual Report 15

16 Big is Big - International Fibre Group #1 supplier of colored PP staple to Europe #1 supplier of colored PP staple to US Automotive market Sole UK manufacturer of colored PP staple fiber 16

17 Big is Big - Lenzing Facts and Figures 2013 Sales: EUR 1.91 bn Fiber sales volumes: 890,000 tons Staff: 6,675 Global market share for man-made cellulosic fibers was at 20% in 2013 The focus is on its specialties, especially on TENCEL Source: Lenzing 2013 Annual report Investing in a 67 k tons jumbo TENCEL site with ramp-up in mid-year

18 about Suppliers all are not producers 18

19 Fiber Traders or Brokers Significant Rayon, Lyocell, and Polyester imports have significant share of shipments. Since 2004, PET and Olefin staple production capacity declined 34 and 36%, respectively. Payment terms 19

20 Product Trends 20

21 Fiber Functionality Not much new Resiliency/Bulk Wicking Elasticity Color Softness Strength Insulation Low lint Anti-odor Anti-bacterial Moldability Biodegradable Oleophilic UV Resistance Health & Healing Flame Retardency Anti-static Strength Chemical Resistance Moisture Management 21

22 Sustainability Makes Cents Its about economics (specifically lower cost) AND image/marketing Reduced natural resource consumption reduces mfg cost Fiber business is a penny business Lower GHG emissions often mean less wasted energy Recycle is a winner sometimes reduces raw material cost if not, recycle can command premium margin Life cycle consideration is becoming the standard 22

23 Natural & Biodegradable Fibers Trending Cotton Tencel & Lyocell PLA Bamboo Why? Continued move towards renewable or biodegradable resources Applications: Hygiene, Wipes and Personal care, Filtration and others 23

24 Innovation Trends 24

25 Nonwoven Staple Innovation: Alive or Dead? Yes and Yes (or No and No) Fiber property innovation limited Old is new (re-purposed polymers/fibers) More with less (driven by sustainability and thin margins) Specialty performance and applications (include cotton) 25

26 Arguably Product Trends Driving Innovation (not the other way around) Blending Capability functionality Functional fibers performance & margin Recycle materials lower cost* Cost Volatility price/margin turbulence Thinner, lighter weight lower cost Additives/Finishes functionality, cost 26

27 Innovation Influencers Supply Leaders Demand Leaders Sustainability push Cost (raw material) instability Thin margins Equipment & additive suppliers Specialty fiber suppliers 27

28 Sustainability push BMW i3 The BMW i3 opens a new chapter of a visionary design language for BMW tailor-made for electric vehicles. The innovative LifeDrive architecture with carbon passenger compartment provides an especially roomy feeling in the interior (in part thanks to the absence of a center tunnel) and is characterized by the use of high-quality, sustainable materials. 28

29 Lots of Specialty Fibers some examples Source: Swicofil 29

30 Had you heard of? Apocynum (hemp dogbane) Nettle Casein (milk fiber) 30

31 Milk Fiber Centuries old 31

32 Epitropic Fibers Anti-static Carbon particles embedded in the surface of polyester fiber. When blended with regular fibers, it confers static conductivity. Innovative if applied more in nonwovens 32

33 Stainless Steel Fibers Apply more in nonwovens?? 33

34 Smartfiber AG Vitalization, care, skin protection and combating of free radicals. smartcel and SeaCell fibers produced exclusively for the Smartfiber AG by Lenzing smartcel sensitive fibers targeted for the application in the home textile sector (mattresses, mattress toppers, bedding and bedclothes). Reportedly suppress bed mite population improve quality of life for people suffering from allergies. 34

35 In Conclusion Price: Volatile to up Supply: Polyester is king; PP and Rayon are foundational Suppliers: Big is big Product: Blend in functionality; Recycle, Natural fibers Innovation: is alive (kind of) 35

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