ESC-Fibres Consultation

CONSULTATION ON NATURAL FIBRES
FAO Headquarters, Rome, 31 January – 1 February 2007 (Philippine Room, C277) Current Market Situation for Jute and Kenaf; Sisal and Henequen; Abaca and Coir
This note is based on information contained in the bulletin “Jute, Kenaf, Sisal, Abaca, Coir and Allied Fibres: STATISTICS” of December 2006.
POLYPROPYLENE Oil prices have exhibited a strong upward trend in the recent past, reaching historical high levels, in nominal terms, of US$ 70 per barrel in 2006. The oil price hike has been reflected in a strong upward trend in polypropylene prices. Polypropylene prices increased by nearly 20 percent in 2005 and 10 percent in 2006 reaching US$1 500 per tonne in September 2006.

Polypropylene Prices US$ per tonne Raffia Grade, Western Europe 1600

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JUTE, KENAF, and ALLIED FIBRES In the calendar year 2006, jute export fibre prices increased marginally by 2.3 percent to US$386 per tonne and continued to be sustained at the high level of 2005. The upward trend in prices, since the middle of the year 2004, is possibly the result of jute’s increased competitiveness, relative to polypropylene polymer, due to increases in oil and consequently, synthetic fibre prices. Nevertheless, prices continue to remain below the minimum level of the indicative price range. In the 2005/06 season, global output of jute, kenaf and allied fibres increased by 15 percent to 2.77 million tonnes. This increase was entirely due to expansion in output in both Bangladesh and India.

Oct-05

imports of raw fibre into India amounted to 97 000 tonnes. continues to be strong. Global exports of jute products in the calendar year 2005 amounted to 758 000 tonnes. production amounted to 17 000 and 13 000 tonnes. twine and hessian. unfavourable weather has resulted in lower yield and fibre of lesser quality. Nevertheless. It is estimated that for the current season demand for raw fibre exports is expected to further strengthen. production in other countries in Asia has. at least early in the season.Production in these countries amounted to 990 000 tonnes and 15. in conjunction with a high likelihood of an indefinite strike of jute mill workers may offset some of the upward pressure on prices. in general. Global exports of raw fibre in 2005/06 amounted to 480 000 tonnes. as well as in a deterioration in the fibre quality. in conjunction with delays in 2006/07 crop fibre deliveries. the intention of the Union Government to dilute the reservation norms of mandatory jute packaging by 10 percent for grain and sugar packing. During the 2005/06 season. fuelled by increasing prices for polypropylene.9 million tonnes. has been firm. Nevertheless. followed an upward trend. During the last five years. domestic demand for raw material is expected to be firm. CURRENT SITUATION. output of jute fibre increased by 23 percent to approximately 18. port and road services. provided that the demand for jute products will continue to be firm. whilst the country has evolved into a significant importer. In spite of the strong demand for manufactured jute products. as compared to 739 000 tonnes in the previous year. the area under jute has declined. have exerted upward pressure on prices. the industry experiences a number of problems related to the recent political unrest and the consequent disruption of the power supply and rail. raw fibre imports in Pakistan amounted to 128 000 tonnes. Such a strong demand. Pakistan. as compared to 73 000 tonnes in 2000. as well as fibre quality. India and Pakistan have contributed to a strong demand for jute fibre amounting to 440 000 tonnes. thus affecting jute harvesting. at world level. Primary export demand for jute products. such as jute yarns. In Nepal and Vietnam. Page 2 . in Bangladesh. Exports of jute products in the calendar year 2005 increased by 8 percent from 2004 to 208 000 tonnes. as compared to 350 000 tonnes in 2004/05. the lack of rainfalls and the subsequent shortage of retting water may have resulted in a delay of supplies reaching the market. For the 2006/07 season. Demand. China has been active in the jute market and it is expected that the positive trend in imports will continue in 2007. The reason for the decrease in raw material output is twofold. is expected to continue importing increased quantities of fibre. the most significant importer of raw fibre. In a similar line. official data suggests that in the 2006/07 season. For the 2006/07 season. have resulted in sustaining jute fibre prices at high levels. as farmers allocate a relatively larger share of land to rice. Second. During the 2005/06 season. exports are expected to be some 10 percent higher than those of the 2005/06 season. some 10 percent less than that of the previous season. Recent data suggests that output for the 2006/07 season in these countries has increased by 6 and 2 percent respectively. Additional pressure on prices may be exerted by freight cost increases and the Chittagong port congestion surcharge that are likely to be passed to importers rather than being absorbed by traders and processors. Relatively low stocks. The absence of heavy rainfalls during the summer has resulted in a lack of retting water. import requirements from China. it is estimated that raw fibre import requirements from Bangladesh will amount to approximately 120 000 tonnes. Carry-over stocks from the previous season are relatively low at approximately 100 000 tonnes. First. Currently. in conjunction with tight supply and nearly depleted inventories in Bangladesh. In India. In the 2006/07 season. production in the 2005/06 season amounted to 36 000 and 43 000 tonnes respectively. Bangladesh jute fibre production is estimated to decrease to approximately 900 000 tonnes.3 million tonnes respectively. resulting in local requirements for raw material of approximately 700 000 to 750 000 tonnes. In 2005. For the 2005/06 season China produced 83 000 tonnes and imports of raw fibre for the calendar year 2005 amounted to 56 000 tonnes. In Thailand and Myanmar. Jute and kenaf production in China has exhibited a downward trend during the last decade.

3 2000 Ja n -0 3 Ja n -0 4 0 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 SISAL AND HENEQUEN The global market for sisal has remained strong.b Mongla ) . Page 3 Se p -0 6 . 1 200 1 100 1 000 900 800 700 600 500 400 300 Jan-02 May-02 Jan-03 May-03 Sep-02 Sisal Fibre Prices Indicative UG 1 200 3L 3L Brazil No. and the market for African fibre in particular has strengthened further in the course of 2006. remained more stable in 2006. African UG prices increased from below US$800 per tonne in early 2004 to stabilise at around US$900 through 2005. 3 US$/Tonne UG 800 400 Indicative Brazil No.Jute Fibre Export Price 1993-2006 600 'BWD' f.b.b. 3 Se p -0 3 Sisal Prices. following a decline in 2005 to the lowest level since 1999. Mongla . and by the end of 2006 were reported at levels of over US$1 000. The market for Brazilian sisal.o. in real terms. Chittagong -Chalna (from Jan. Both African UG and Brazilian No 3 fibre are currently at prices well above the ceiling of their indicative price ranges set by the IGG at its last meeting in December 2004. they remain below the levels of the 1970s. deflated by the World Bank MUV index of manufacturing prices.US$/mt 500 BWD f. African sisal is now strongly demanded for various non-traditional applications. however. which has benefited from China’s growing import demand since 2004.o.o. Production of sisal in Brazil is estimated to have increased by 7 percent in 2006. Brazilian No 3 increased from US$540 in early 2004 to fluctuate between $750 and $800 through 2006. 97 f. Nominal and Deflated Se p -0 4 Jan-04 May-04 Jan-05 May-05 Jan-06 May-06 0 Sep-06 3L deflated 1976 1978 1980 1982 1984 1986 1988 1990 1992 Sep-03 Sep-04 Sep-05 1994 Se p -0 5 No 3 Deflated 1996 1998 2002 2004 2006 Sisal prices (in nominal terms) are the highest since 1974.US$ per tonne Indicative Price Range Jute Fibre Export Price 400 250 200 0 Ja n -0 5 Ja n -0 6 M a y-0 3 M a y-0 4 M a y-0 5 M a y-0 6 No. Tanzania reports an increase in production in 2006 of 25 CURRENT SITUATION.

With a CURRENT SITUATION. Shipments from Tanzania increased by 5 percent. European prices remain considerably lower. Global production is estimated to have increased by around 6 percent. as East African exports are largely now in the form of raw fibre destined for a range of other uses. Prices in the United States were around US $26 per bale. Imports of raw sisal to Europe declined notably in 2005. particularly in the United States. despite the recovery in production. Sisal Baler Twine 30 Indicative Price US$ per Bale 25 20 15 10 2001 2002 2003 2004 2005 2006 Europe US Imports of fibre by China grew from less than 2 000 tonnes in 1999 to around 30 000 tonnes in the past three years. clearly above the indicative price level set by the IGG on Hard Fibres in 2004 of US $23 per bale. Madagascar’s trade recovered to around 2004 levels. while production in Kenya has fallen slightly. Sisal twine prices strengthened further in 2006. Page 4 2006 .percent to 35 000 tonnes. with supply in excess of demand. in response to the firm market and to restricted availability of Brazilian fibre. The indicator (average) price remained at around US$100 per bale through much of 2002. 160 140 120 100 80 60 40 20 0 1995 Sisal and Henequen production 140 120 100 80 60 40 20 0 T ho u sand to n nes Exports Raw + Manufactured Sisal Brazil Madagascar Tanzania Kenya '000 tonnes Brazil Kenya Mexico Tanzania Madagascar 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 Exports of sisal (fibre plus manufactures) from Brazil declined by a further 4 percent in 2006. due particularly to reduced purchases by Portugal for manufacture and re-export of the material in the form of twine. ABACA Prices of abaca have continued to climb since the slump of 2002. sourced mainly from Brazil. The global baler twine market is increasingly dominated by Brazil. an increase of 25 percent from 2005. while those of Kenya contracted slightly.

following an increase of 6 percent in 2004. COIR The information on coir prices obtained by FAO is rather variable. yarn and twine in the first half of 2006 are little different from 2005 levels. which is dominated by the Philippines. which has been followed by very small increases in subsequent years. The past two years have seen a small increase in trade in manufactures. 100 Abaca Production '000 tonnes (fibre equiv) World Abaca Exports 100 70% Total. Indi cati ve pri ce JK 2002 2003 2004 2005 2006 2007 World abaca production. US $/bale Philippines: Abaca Prices Max. Manuf + Fibre % manufactures in total (right scale) 65% 60% 55% 50% '000 tonnes 75 50 Manufactures Fibre 45% 0 1998 1999 2000 2001 2002 2003 2004 2005 2006 40% 50 1999 2000 2001 2002 2003 2004 2005 2006 International trade in abaca. There was an expansion of 6 percent in 2004. Indicative price 210 190 170 150 130 110 90 70 2001 S2 Indicator (average) price G Min. The expansionary impact of new plantings coming to production in the Philippines in 2006 was offset by typhoon damage. coupled with a decline in exports of raw fibre. Page 5 .recovery in demand. and it is not always easy to discern any clear trend in the market. an increase of 50 percent over 3 years and an increase of 15 percent in the previous 12 months. prices have risen to US$154 by December 2006. CURRENT SITUATION. has continued to expand from the reduced level of 75 000 tonnes in 2001 to reach almost 90 000 tonnes in 2006. The latest information on export prices from Sri Lanka shows that prices of fibre. Total shipments increased very slightly in 2005 and 2006. in total fibre equivalent terms has expanded in line with production since 2002. and thus the proportion of manufactures in the total exports from the Philippines has slowly continued to increase.

from 245 000 tonnes in 2005 to 270 000 tonnes in 2006.Sri Lanka Coir Yarn and Twine Prices (monthly) 1 200 Sri Lanka Coir Fibre Prices (monthly) 800 Twine Bristle Fibre 800 US $/t US $/t 400 Twisted Fibre Mattress Fibre Yarn 400 0 Jan 2003 Jan 2004 Jan 2005 Jan 2006 0 Jan 2003 Jan 2004 Jan 2005 Jan 2006 Production of brown fibre in India increased by 10 percent to 314 000 tonnes in 2006. while white fibre production contracted slightly to 96 000 tonnes. Fibre exports from India increased by 17 percent to 65 000 tonnes in 2006. India’s exports are dominated by manufactured products. Brown Coir Production 400 300 '000 tonnes 200 100 0 1998 1999 2000 2001 2002 2003 2004 2005 2006 India Sri Lanka Thailand International trade in coir fibre and related products is dominated by Sri Lanka and India on the export side and the United States and European countries on the import side. While Sri Lanka’s exports are mostly in the form of fibre. while exports of products contracted slightly to 50 000 tonnes. CURRENT SITUATION. India’s yarn producton continued to increase. Page 6 . although China and Japan are also significant fibre buyers.

Coir Fibre Exports 200 150 Exports of Coir Manufactures 80 India '000 tonnes Total Far-East 100 '000 tonnes India 50 40 Sri Lanka Sri Lanka Thailand Other 0 1997 1998 1999 2000 2001 2002 2003 2004 2005 1 99 7 1 99 8 1 99 9 2 00 0 2 00 1 2 00 2 2 00 3 2 00 4 2 00 5 2 00 6 Coir Fibre Imports 200 Coir Product Imports 100 United States '000 tonnes 150 100 50 0 2000 2001 2002 2003 2004 2005 China Europe 50 Others Europe United States 0 2000 2001 2002 2003 2004 2005 CURRENT SITUATION. Page 7 2006 0 .