EUROPEAN NONWOVENS RECORD SOLID PERFORMANCE WITH NO NEGATIVE CONSEQUENCES FROM BREXIT OR TRUMP, YETMay 3rd, 2017
BY ALAN OSBORN, in London; and EUGENE VOROTNIKOV, in Voronezh, Russi
EUROPE’S nonwovens producers again served up a solid performance in 2016 against the background of (uneven and) uncertain trading conditions for the industry.
As usual, the just-published returns from EDANA, the representative organisation for the USD30 billion nonwovens industry in Europe, show some important national variations. But the overall message is that producers are in control of their markets, aware of the long-term challenges and clued-up in rising to them. On the corporate front the major development by far last year was the merger between Finland’s industrial giant Ahlstrom, a powerful global force in nonwovens since the 1990s on top of its other interests, and Sweden’s Munksjö, a specialty paper company and a leading world producer of decor papers (used to upgrade the surface of wood-based panels). The huge merger, just finalised in April this year, will create, in Ahlstrom-Munksjö, a global leader in fibre-based products with annual net sales of around EUR2.2 billion, approximately 6,200 employees and 41 production and converting facilities in 14 countries.
Overall, the production of nonwovens in Europe grew by 2.5% in volume in 2016 to reach 2,378,700 metric tonnes with the European Union (EU) countries slightly outperforming non-EU European countries. Jacques Prigneaux, EDANA’s market analysis and economic affairs director, said that Germany, Italy and Spain all witnessed growth, with Spain at the top with a 5% year-on-year rise. Turkey, which had led the European nonwovens growth league for some years, remained stable. Elsewhere there were “minor declines”.
Looking at the various production processes of nonwovens, EDANA said that increases of 2.2% and 2.9% respectively were reported for fibre-based materials drylaid and short-fibre airlaid technologies. Wetlaid remained relatively stable. Spunmelt nonwovens recorded a growth rate of 3.3%, reaching a production total of 1 million metric tonnes in Europe for the first time. The highest growth rate was observed in material produced via the air-through bonding process, with a 13.1% increase. Commenting on end-uses, Mr Prigneaux said that while the primary end-use for nonwovens continued to be the hygiene market, with a 30.7% share of deliveries (by weight), “significant growth areas for nonwovens were recorded in other sectors such as agriculture and garments (both recording double digit growth), air filtration (up 3.2%), construction (up 4.5%) and food and beverage (up 4.2%)”. Against this, a minor decline of 1% was recorded in the nonwovens supplies to the automotive industry while the medical and personal care wipes sectors both remained relatively stable with a very slight fall of 0.4%.
Continuing the trend of recent years, filtration was again seen as “a major avenue of potential growth for nonwovens” in the words of Marines Lagemaat, EDANA’s scientific and technical affairs director. “Nonwoven filtration media has now evolved to a performance standard that more than matches market requirements, offering benefits such as enhanced air quality, reduced energy cost and longer service life. There remain very substantial further growth opportunities for these products in the industrial and automotive sectors for example,” he told Nonwovens Report International. A particular factor in the European Union (EU) will be the legal requirement for all new buildings to meet near “zero-energy” regulations in the energy performance of buildings directive (2010/31/EU) by 2020/21, and even sooner for public buildings. EDANA represents manufacturers of downstream roll goods, films, laminates and composites, plus industrial utilisers including the filtration, construction, automotive segments, as well as nonwovens materials producers and converters, including those making absorbent hygiene products, medical items and wipes.
Supporting these positive market outlook claims at FILTREX Europe, the leading nonwovens filter media conference and tabletop exhibition, staged in Geneva, Switzerland, in April this year was the first ever FILTREX Innovation Award – won by Freudenberg Filtration Technologies, of Germany for its ‘micronAir blue’ filter. Described as a four-layer particle filter featuring a patented two layered filter media focusing on PM10 and PM2.5 particles as well as a combi-filter that protects against harmful gases and an anti-allergen filter layer, the new filter material, to be used principally in cars, eliminates almost 100% of occurring allergens and protects against microorganisms such as bacteria and fungal spores, said Freudenberg.
Expanding on his analysis, in an interview with Nonwovens Report International, Mr Prigneaux acknowledged the importance of filtration as a market for nonwovens “especially in air filtration in Asia”. Against this was a shadow over the use of nonwovens in liquid filtration where the proposed take-up of electric cars “could be a challenge in the long term.” He explained that the move away from liquid fuels meant reduced demand for filtration. “But then you get growth in the market for battery separators,” he said and the need to keep substances separate in batteries created a new demand for nonwovens. “One market disappears but a new one is being created. It won’t be today or tomorrow, it’ll be more like 2030 or something like that. I don’t see fuel cars being replaced globally by battery cars on a large scale before then but it’s a trend we have to take into account,” he said.
Mr Prigneaux said that nonwoven imports into Europe were growing faster than exports but the trade balance was still positive. Considering the rise in imports from Saudi Arabia of spunbond below 25gsm, which had been noted last year, he said that some 16,000 metric tonnes of the increase last year came from Saudi Arabia “so more or less one additional line of capacity is entering”. This was mainly for the nonwovens hygiene market, he said. In general, some 15% to 16% of local consumption in Europe was coming from imports. “Compared to other industries like the fibre industry this is very low but competition is increasing from outside suppliers,” he said.
There were no suggestions of dumping or unfair trade practices at present, Mr Prigneaux said. There had been an increase in polypropylene prices to European manufacturers while Saudi Arabia obtained raw materials like polymers cheaper but “there is currently no obvious sign of dumping though we stay vigilant,” he said.
Another factor confusing the trade balance was the seemingly relentless move by European companies to set up manufacturing plants in the US. “If we look at North America, 2015-16 was a transitional period when several European producers decided to invest directly in the US and maybe the exports of European nonwovens to North America increased, if only temporarily, as companies tried to keep up supply as they launched their product. Since 2012 there’s been a trend of growing exports to North America and decreasing imports as a result of this but I don’t know if will continue,” he said, adding that it was “too early” to say how the UK’s departure from the EU would affect the industry, but there had been “no real impact for nonwovens for the time being” following President Donald Trump’s taking office. On the proposed Transatlantic Trade & Investment Partnership (TTIP), which Mr Trump has said he may abandon, Mr Prigneaux noted that “we export with zero per cent duties but we import with 4.3 per cent duty from the US.” In other words, TTIP “would have been more to the advantage of the US than the EU for nonwovens”. Other EU trade initiatives, such as the recently concluded Comprehensive Economic and Trade Agreement (CETA) with Canada, its free trade agreement with Vietnam and a renewed trade talks with the four founding members of the South American Mercosur bloc (Argentina, Brazil, Uruguay and Paraguay), are all expected to promote European non-wovens trades through the lowering or abolition of duties.
The positive take on the nonwovens situation expressed by EDANA was echoed by Nina Kopola, president and CEO of the leading Finnish company Suominen, who said that “the markets generally for nonwovens are pretty good: there is consistent growth in the developed and the developing world and if we look at wipes, which is our biggest segment but not the only one, that also continues on a good level.” In an interview with Nonwovens Report Ms Kopola that while Europe was still behind North America in the use of flushable wipes “in Europe the usage of wipes is broadening”.
“We’re told that single use products are not good environmentally but it can be looked at differently,” she said. The usage of water, astringent chemicals and energy could be reduced by using flushable as opposed to washable products. “It’s not a question of black and white, that flushables are bad and washables are good,” she said.
Ms Kopola spoke shortly after release of Suominen’s 2017 first quarter results which showed a rise in net sales of 9% to EUR112.9 million and a 13% rise in operating profit to EUR6.3 million. The company said that consumer confidence in the Euro zone continued to rise: “Nonwovens manufactured by Suominen are used mainly in daily consumer goods, which means the development of demand is affected by both the general economic situation and consumer confidence. North America and Europe are Suominen’s main market areas,” she said. But competition remained tight “especially in nonwovens for baby wipes and flushables”.
Ms Kopola expressed satisfaction that Suominen had arrested a shrinkage in its market share which she agreed had suffered “a bit of a setback” over the past year. “We were shrinking with each quarter showing less than in the previous quarter but in the latest quarter “now we’re back on the growth track”. This was due to the launch of new products and the application of product technology including the company’s recently-announced Designer Series pattern selection for nonwovens for baby care and household wiping applications which has involved an investment of over EUR60 million. “We’ve launched new products. We’ve not entered the price game but we offer higher value to customers through the differentiation of our products based on the use of technology,” Ms Kopola said. She said that competitors who tried to increase their market share by cutting prices would find that this was “not sustainable.” They could easily lose markets for price reasons, she said.
On the company’s manufacturing base, Ms Kopola said it would continue to manufacture in Europe but it was also solidly based in the USA. In fact, the largest single project in the company’s investment program is a new wetlaid production line focusing on high value-added products at its Bethune plant, in South Carolina. But Ms Kopola said the company was also looking at Asia: “We’re going to broaden our geographical scope,” she said.
Separately, in announcing a “revised vision” for the company in its quarterly statement, Suominen said its goal was “to elevate the overall perception of the role of nonwovens in society”.
Moving further east into the less mature market territory of Russia, nonwovens are being eyed by the Russian government as a sector that could offer it the chance of diversifying and modernising its textile sector, creating functional materials for which the state is a ready buyer. The government plans to invest up to Russian roubles RUB10 billion (USD174 million) in developing Russia’s domestic nonwovens industry over the next two years (2017-
2018), according to recent statements by Denis Manturov, Russia’s minister of
industry and trade, made during a government meeting on Thursday, April 27.
Manturov stressed to his ministerial colleagues how growing nonwovens production (along with technical textile) has become a priority for the Russian federal
government. Manturov commented that while demand within Russia for domestically produced standard textiles has been falling, “demand for nonwovens from the major consuming industries, such as construction, defence and some others, has increased.”
That said, a spokesperson for the industry and trade ministry said priority for government support to the sector would be given to producers focusing on exporting products, in particular to western markets.
Manturov added that allocated government funds would be provided to leading nonwovens producers through direct subsidies, and via indirect support such as covering interest
rates on loans borrowed by producers designed to boost production and acquire modern manufacturing equipment. The minister said that officials were also considering how the government might support growth in the production of raw materials used by the Russian nonwovens sector.
Russian non-wovens manufacturers include Freudenberg Politex, Komitex JSC, Nomatex, Regent Neotex, and Sibur. It also has an industry lobbying group, the Russian Association of Nonwovens Producers.