Textile Supply Chain: What Determines Current And Future Fiber Demand?

The primary determinant is the consumer!

The fiber selection in the whole textile supply chain is actually the product selection of consumers. Brands and retailers can promote and display clothing and household goods in stores, but if consumers are unwilling to pay, it is equal to zero. Effective product demand (or lack of product demand) will affect the supply chain, then affect textile manufacturers, and finally affect fiber suppliers - whether natural fibers (e.g. cotton) or synthetic fibers (e.g. polyester).

The variables that affect textile fiber demand can be divided into long-term economic (including technology) and demographic trends, as well as changes in consumer preferences.

Population and per capita income growth are the main and fundamental long-term drivers of demand for all types of services and products, including textiles. Although the growth rate of global population has slowed down, the absolute number is still growing. It is estimated that the world will have a net increase of about 700 million people in the next decade. In addition, it is predicted that the average annual growth rate of per capita GDP in the next ten years will be 2.4%, which means that the total annual fiber demand will increase by about 28 million tons on the current basis (2017 World Supply and Demand Report, PCI Wood MacKenzie).

　 Fashion pendulum

The proportion of cotton and alternative fiber in the expected demand growth will largely depend on the fiber preference of consumers, which in turn is determined by variables such as design, function, comfort, care, sustainability and relative price. These changes in demand (whether surge or recovery) are reflected in the fashion pendulum swinging between cotton and synthetic fiber.

In the past few decades, although the market share of cotton is inferior to that of synthetic fibers (mainly polyester staple fibers and filaments), cotton has always been the favorite of global consumers. For more than 20 years, the American Cotton International Association and the American Cotton Company have regularly carried out the Global Lifestyle Monitor. The survey shows that consumers still favor cotton products because it has the advantages of "more comfortable" and "softest" compared with other fiber products. Compared with synthetic fiber clothing, global consumers also believe that cotton clothing is "the most reliable", "the most trustworthy" and "more durable". Given this strong preference of consumers, cotton will be highly competitive if it meets consumer needs in other standards such as design, function and product care requirements.

　　 A preference for sustainability favours cotton

In terms of "sustainability" and "environment-friendly", which are increasingly important factors, cotton has been highly recognized by consumers in all countries for a long time, and has always maintained the highest sustainability score among all kinds of fibers. In a recent survey, 90% of respondents believed that cotton was harmless to the environment, while only 45% of respondents chose polyester fiber. In recent years, as environmental monitoring agencies point out that the continuous increase of synthetic "microfibers" in freshwater and marine aquatic environments has polluted seafood products and water supply quality, and the sustainability of clothing with different fiber contents after purchase has become increasingly important. According to the latest global lifestyle survey data, 84% of global consumers who know about fiber believe that microfiber pollution is the greatest threat to the environment from textiles. Most micro fiber pollution comes from the processing and washing of synthetic fiber clothing. Cotton and other natural fibers can be rapidly decomposed in the aquatic environment, while polyester fibers can be completely decomposed in the terrestrial environment for 125 years or more. With the growing awareness of brands and consumers of microfiber pollution and garment handling challenges, favorable evidence tends to be cotton.

　　 Product price remains the primary consideration

Although design, color, performance, care requirements and sustainability are all important factors that affect consumers' clothing purchase decisions, product price is always the primary consideration. Although cotton garments are usually competitive, they are not always the cheapest. As a high-quality natural fiber, the global cotton supply is affected by the weather conditions in the growing season and the relative economic returns of competing crops. In contrast, the price of polyester fiber (a by-product of large-scale industrial manufacturing of petroleum processing) tends not to fluctuate too much. This has been especially true in the past 25 years. During this period, China has expanded its polyester fiber production capacity on a large scale, accounting for more than 70% of the global output. According to the current demand level, it is estimated that about 40% of China's polyester fiber infrastructure is overcapacity, which leads to the price of polyester fiber being often lower than the production cost, and makes natural fibers such as cotton and wool face unfair competition.

　　 Keep cotton competitive

Demography and overall economic growth will become the basis of consumer demand. However, like other competitive products in the global market, the final decision is in the hands of consumers, who will decide what to buy or not to buy. In the case of huge overcapacity in polyester fiber production, although price is a major challenge for cotton clothing and household products, cotton may continue to maintain good competitiveness among other important factors that affect consumers' purchase decisions, such as comfort, reliability and trustworthiness. In terms of sustainability, with the global microfiber pollution problem becoming increasingly prominent, the image of cotton as the most environmentally friendly fiber in the minds of consumers will be further strengthened. Considering the real production cost, consumer care cost and final product disposal cost of polyester fiber and other synthetic fibers, the slightly higher retail price of high-quality cotton products will be very reasonable for consumers and those who make product design and purchase decisions.

About the author:

Allen A. Terhaar is the president of Terhaar Global Advisors, and serves as a senior consultant of the American International Cotton Institute (CCI) and a consultant of Supima. Terhaar once served as the vice chairman of the National Cotton Industry Association of the United States. Previously, he also served as the executive director of the American Feed Grain Association and an economic expert of the United States Department of Agriculture. Terhaar has also served as the chairman of the International Cotton Industry Promotion Forum (IFCP), the International Cotton Advisory Council (ICAC) Private Enterprise Advisory Panel (PSAP), and the U.S. Agricultural Export Development Council.