Is a Supply Shift Ahead for the Nonwovens Industry?

By Karen Bitz McIntyre, Editor | December 8, 2010

Avgol’s and FitesaFiberweb’s recent announcements that they would each add two spunmelt lines—particularly that each company will add a U.S. line—has set the hygiene industry rumor mill afire.

Avgol shelved plans to add a new line to its North Carolina operation a few years ago, and has since been reluctant to invest in its North America operation despite heavy investment in China and Russia. FitesaFiberweb, meanwhile, is just about finishing up construction on its first U.S. line in Simpsonville, SC from which it will reportedly target U.S.-based customers currently being served by its South American lines, and will add another line that will come onstream in 2013. Beyond the Avgol and FitesaFiberweb expansions, a significant amount of additional spunmelt capacity has already been announced for the region—PGI’s new line in Waynesboro, VA, Companhia Providencia’s new North Carolina operation are scheduled to be completed next year, each adding tens of thousands of tons of capacity to the market. Even before the two latest announcements, most industry observers were predicting that all of this planned capacity would be enough or even too much to satiate the hygiene market’s demand.

So then, why would Avgol and FitesaFibeweb, two companies that have always prided themselves on having a firm grasp on demand in hygiene, decide to add new lines within days of each other when so much capacity is already set for the region? One logical answer could be that Kimberly-Clark is finally moving forward on sourcing more of its nonwovens externally, something the company has hinted at for years. As recently as this summer, one executive told NONWOVENS INDUSTRY that the “development and sourcing of (nonwovens) will continue to be provided from both internal and external sources as the company expands.” This statement is vague, but Kimberly-Clark increasing its external sourcing of nonwovens is something that continues to make more sense in today’s business climate.

Such a scenario and its impact on the nonwovens industry is something that has been speculated about for years. If Kimberly-Clark, one of the world’s largest sellers of diapers, feminine hygiene items and adult incontinence products, were to stop making nonwovens, nonwovens producers would reap great benefits. In 2009, NONWOVENS INDUSTRY estimated the size of Kimberly-Clark’s nonwovens business at $1.15 billion, and many say this figure is conservative. The company admits that about 85% of its nonwovens output is consumed internally so we are talking about nearly $1 billion worth of nonwovens sales up for grabs if Kimberly-Clark started sourcing more nonwovens.

Of course, this would likely be a gradual process. Kimberly-Clark is not going to stop suddenly making nonwovens, so hopefully North America’s spunmelt manufacturers will not invest too quickly or too recklessly. Remember, it took the airlaid market nearly a decade to recover from over-investment in 1999-2000 and the machinery suppliers in that industry continue to struggle as many producers are still too skittish to invest in new machinery.

For now, the rumor mill will continue to ponder what these spunmelt makers know as they embark on extremely ambitious expansion plans in a pretty mature market. What we do know is that five large-scale lines are being built in North America. Time will tell where all of this new capacity will go.

Karen McIntyre

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