Things in the man-made fiber market have gotten pretty interesting—but that’s not necessarily a good thing for the apparel industry. Instead of predictable, it’s been a wildly uncertain time as fashion rides the waves of on and off, up and down tariffs. The massive trade uncertainty is permeating every facet of fiber prices and availability, intensifying some typical impacts of supply and demand while simultaneously diminishing others.
Bruna Angel, principal analyst for fibers at Wood MacKenzie, breaks down what sourcing managers are up against as they juggle tariffs against an overabundance of virgin capacity, global demand weighing down oil prices, and tightening environmental legislation, particularly in Europe.
Q: Let’s start with the outlook for the man-made fiber market as of April 1, before the U.S. tariff announcements began.
BA: In January, we were looking at a world where we had two big concerns around fiber demand and fiber pricing. These were: [1] big capacity additions in China, which have meant that through 2024 and probably out into the 2030s we were going to have China expanding quite rapidly—not just polyester, but nylon and acrylic as well—with a relatively weaker than anticipated domestic Chinese demand. Also, with additions from India and Turkey, which are the [other] big ones. And then [2] we have quite significant and serious potential impacts from the European sustainability legislation that is coming through the second half of the 2020s and increasingly in the U.S. there’s waste legislation. Although we do see sustainable synthetic fibers, the volumes are very small and the prices are very high.
But we were seeing quite a strong U.S. market for textiles and apparel. And a Latin American market that was quite strong for textiles and apparel. And a South Asia market that was strong, as well as an India market that was strong, and an African market. So we were not thinking that 2025 was going to be a brilliant year, but we were probably going to be able to absorb the additional capacities in virgin and in recycled from PET bottle waste that were coming online without too much pressure down on prices.
Q: Ok, now let’s talk about the tariff impact. What’s been happening since March?
BA: Then we come to March when President Trump imposed the 20 percent fentanyl tariffs on China, and that had a little bit of a break on prices, but not a significant break on prices. Basically, through February and March, prices actually were relatively stable, but as soon as April came, export prices, for example, for normal textile polyester staple went down from 89 cents per kilogram to 80 cents per kilogram. And that’s a big, big jump. It was a big shock in the market.
This was not just a demand issue, because oil prices dropped so sharply. Basically, we had oil prices in March for Brent [physical cargoes of crude oil in the North Sea] at $72.5 per barrel, down to 67.7 in April and down to 63 [by mid-May]. So we had a cost reduction on the one side and a demand reduction.
Prices out of Asia outside of China also dropped, but not by as much as they did from China, and this is because there was a little bit of a switch in domestic demand in South Asia for domestic product and export demand that had been going to China. Domestic prices in Europe and the U.S. are very insulated from prices in China, and we had very little change in prices through the first quarter of the year and even into April.
In Europe, they’ve come down a tiny bit. In the U.S., they have remained relatively stable. And what has happened there is that we’ve had freight costs coming down, which would have meant that imports would have come down quite a bit. And you would have thought the domestic prices in Europe and in the U.S. would come down to match to be competitive, but they didn’t have to, especially in the U.S., because there was a bit more demand for fiber from domestic fiber producers, just so that they won’t have to pay the big tariffs. It wasn’t a major, huge jump in demand. The supply chain just wanted to make sure that they had fiber available, because at the time, we didn’t know how long the big tariffs were going to last.
If I look at my export prices for polyester staple out of China, we are looking at a 12 percent decline year on year, and this is looking at mid May. But if I compare, for example, [the week of May 11] versus April, we have actually seen a big jump in prices between the week before President Trump announced the tariff reduction for China, and this week, about a 5 percent increase in prices. So, we’re back to the prices of March. The reasons for that quick turnaround is not so much that China is exporting fiber. It is just that last week saw huge demand for fabrics and for finished apparel from Chinese producers, and therefore the Chinese yarn spinners, the fabric weavers, the knitters, they all want fiber. And really, China is the country that has the capacity to provide this. Remember, we only have the 90 days to take a fiber or a filament yarn from yarn to finished product and put it in the U.S. That’s a big ask.
So our view is that we’re going to have a bumper demand in the quarter and probably bumper production for fiber in China, and higher than anticipated prices, even though we don’t have the high oil.
Q: Where are oil prices now, compared to where we expected them to be?
BA: For 2025 the annual outlook for Dated Brent was $67.50 per barrel, this is as of June 17. In April, the forecast had declined to $66 per barrel. This latest one, is taking into account the tariff reduction and therefore not such a big impact on the global economy. However, we’re still $5.40 per barrel lower than we were in January. In China and in Asia, in particular, we see a pass through of oil, through the petrochemicals to fibers very, very quickly, which is not the case in Europe and not the case in the U.S. It’s not the case in India, necessarily. But it does happen in India, and it happens in Vietnam, in Southeast Asia. Because we believe that there is going to be a quite significant demand, we are going to see fiber prices being maintained more than what the oil and petrochemical costs would suggest.
Q: You mentioned that the impact of an increase in man-made fiber capacity out of China was a concern even ahead of the tariffs. What kind of capacity are we talking about?
BA: In acrylic, China was producing 495 KT [thousands of tons] in 2020. In 2025, it is 575 KT and then in 2030 it will be 600 KT. For polyester filament and staple, we’re talking about 39.7 million tons in 2020. 52.6 million tons in 2025, and an estimated 63.9 million tons in 2030. For nylon 6, which is the larger of the two nylons, we had 2.8 million tons in 2020, then 3.9 million tons in 2025, and 4.9 million tons in 2030—with excess capacity in all three products. And it’s not just China, but India and Turkey are also raising production, particularly polyester. Those are the big ones. And the vast majority of this is virgin fiber. There are some increases in recycled fiber production from PET bottle waste. But there is a big challenge with PET bottle waste being available for fiber because of regulation and brand targets in the packaging sector. So, this is raising the cost of recycled polyester from PET bottle waste, but China is investing hugely on the virgin side, hugely on the virgin side upstream into PTA (purified terephthalic acid), which is the big raw material for polyester.
Q: What does this mean for demand?
BA: On the demand side, we don’t have particularly strong demand. I think, as I started out, China is struggling a little bit. India is doing extremely well, but the India per capita consumption is very small for fiber. So while it is growing fast, it’s not growing fast enough to offset the slowdown that we have in China. And we have big questions about the U.S.—which we didn’t have at the beginning of the year—because if the U.S. consumer maintains its huge drop in confidence for the next quarter or so, and is facing higher prices, the economic outlook for the U.S. is risk to negative on demand. So, let’s call it weaker than anticipated demand.
And that’s why you have some economists saying, ‘Well, maybe these tariffs are not inflationary. They’re actually deflationary.’ They are deflationary if demand gets hit by the higher prices. I’m of the view that we’re probably not going to get to that point, but then I’m an optimist. I think the U.S. economy is an underlying strong economy, and may be able to weather the current uncertainty and government layoffs and probably changes to that way of life that U.S. consumers have gotten accustomed to better than anticipated, but I’m not 100 percent sure.
Q: As the tariff deadlines loom and countries are coming to the negotiating table with the U.S., what do sourcing executives need to keep an eye on?
BA: We don’t know what the administration is going to do when the end date for the pause in retaliatory tariffs comes through. Are the deals going to say you cannot have any Chinese inputs in what you export to the U.S.? And that is key, because all these countries—not so much India but Vietnam, Bangladesh, Cambodia, Pakistan—they all import a lot of raw materials in the textile supply chain from China. So, this is a huge risk assessment that supply chains are going to have to take into consideration. And the moment you have risk, you have rising prices.
