Published February 2003. 60 pages. 49 charts/figures.

Don't let the Asian nonwovens markets leave you behind. Asia is set to account for more than a third of global nonwovens production by the end of the decade, and average annual growth will be greater than Europe or North America.

As the only current analysis of the Asian nonwovens industry from a production and trade perspective, Nonwovens Markets' Asia Market Analysis helps you plan for the tremendous changes the sector's most dynamic region will bring to the industry around the world.

The book features three main sections:

1. Asian economic overview — written by economists at RISI, this section gives a detailed overview of trends in GDP, population growth, and other key drivers of Asian economies. Includes historical data as well as future projections.

2. Nonwovens production and markets — gives an overview of current and forecast future nonwovens production in eight major Asian countries by technology, and includes summaries of major producers of key nonwoven grades in the region.

3. Nonwovens trade — analyzes trends in nonwoven fabric imports and exports for seven Asian countries from 1996 through 2001 both by grade and source/destination country

EXECUTIVE SUMMARY

After experiencing a slight slowdown in growth during the late 1990s, the nonwovens industry in the eight major East and Southeast Asian countries is expected to increase over the next five years, potentially overtaking nonwovens output of the dominant European or North American sectors.

The nonwovens industry in the eight countries of China, Korea, Japan, Taiwan, Thailand, Malaysia, Indonesia, and the Philippines has expanded by an average 4.5% a year from 856,000 tonnes in 1997 to slightly over a million tonnes in 2002. These eight countries now produce about a quarter of all nonwoven materials worldwide, up from less than a fifth in 1997. With current growth rates, the eight are likely to account for well over a third of worldwide nonwovens production by 2007.

Despite the relatively high average annual growth rates for the region over the last five years, the economic malaise experienced by the Asia Pacific region for the past several years has affected the industry in very different ways. Some countries have recorded almost zero annual growth while growth in others has approached double figures.

Traditionally an important driver of the Asian nonwovens sector, the Japanese economy remains mired in a swamp of feeble growth, falling prices, and exploding debt. Japan's main problem is that it has been unable to generate sufficient consumer spending and business investment despite many attempts to revive both. Japan also has pressing supply-side issues as well. It has a rapidly aging labor force, and flat (soon to be negative) population growth. Meanwhile, its inflexible labor and product markets have so far been unable to generate high enough productivity growth to offset this demographic drag.

Other countries have fared better economically, but sluggish global demand remains a factor. After averaging a remarkable 7.8% from 1990-1997, real GDP growth in non-Japan Asia plummeted to 2.5% in 1998 in the aftermath of the Asian financial and economic crisis. In 1999 and most of 2000, growth skyrocketed, reaching 6.3% in 1999 and a 6.6% rate in 2000. Real GDP growth slid to 5.1% in 2001 due primarily to the slump in global demand. Most of the regional economies are recovering in 2002, although the vigor varies across the region.

Japan, Korea and Taiwan, in particular, have seen their export-dependent nonwovens sectors hit by the global recession and falling demand. Although these three countries have the most technologically advanced nonwovens sectors in the Asian region, their 2002 nonwovens output is expected to be about the same as 1997 volume.

Average annual growth of nonwovens production in Taiwan and Korea has effectively been zero in the last five years, and only an anaemic 1.5% in Japan, according to estimates. Over the next five year period, annual growth for the three countries' nonwovens sectors is likely to pick up but not by much, averaging less than 2%.

In contrast to the lower nonwovens industry growth rates in Japan, Taiwan and Korea, the Chinese nonwovens industry has experienced an average growth rate of 10% per year. Production has risen from 286,000 tonnes to an estimated 465,000 tonnes in 2002. This growth is a result of the rapid industrialization of China. This rate of growth is likely to continue until 2007 when the Chinese nonwovens market volume could reach over 700,000 tonnes.

China is one of the few economies in Emerging Asia that is capable of driving overall output via autonomous domestic demand, and over the last several quarters it has done just that. Real GDP has expanded by 8% in the year through June 2002, and industrial output has increased by 12.8% in the year through July even as external demand has remained relatively soft. Consumer and government spending have been the key drivers of Chinese growth.

Domestic demand has driven much of China's nonwovens market expansion. The hygiene sector, which accounted for about 10% of domestic nonwovens production in 2002, has one of the highest projected annual growth rates in the industry over the next five years, and is therefore attracting significant investment capital.

A total of seven spunmelt lines are scheduled to start up in China during 2003, which will take the country's total spunmelt polypropylene capacity to more than 160,000 tonnes. Of that total capacity, however, about a third is accounted for by older, single-beam lines. China's spunbond polyester capacity is far lower, with only five companies producing significant quantities, and only one new line scheduled to start up in 2003.

Some of China's nonwovens industry growth is attributable to nonwovens volume formerly produced by companies in Japan, Taiwan or Korea being transferred to new manufacturing facilities that have been established by those companies in China in an attempt to take advantage of the lower production costs.

Like China, Thailand and Malaysia are also industrializing and their embryonic nonwovens industries are growing rapidly. There are few nonwoven producers present and nonwovens volume increases are in large jumps as state-of-the-art high-capacity production facilities are installed in each of these two countries.

More than $900 million could be invested in the Asia-Pacific region in the next five years to expand nonwovens production, and about half this is likely to be spent in China. Thailand and Malaysia are also expected to account for a significant proportion of the remainder, helped by rapidly growing hygiene markets and relative political stability.

Like that of the major nonwovens-producing and -consuming regions of Western Europe and North America, the nonwovens market in Asia is relatively localized, with the bulk of fabrics produced in the region also being consumed in the region.

Trade data for major East and Southeast Asian countries reveal a large quantity of nonwovens being imported and exported, but much of it to within the Asian region. Only Japan, which has significant existing industrial ties with Western countries, has a significant two-way trade in nonwovens with North America and Europe.

China, which is the biggest single market in the region, imported almost 70,000 tonnes of fabric in 2001, more than any other country in the region including Japan. The role of regional supplier played by South Korea and Taiwan is illustrated by the fact that they are the only two Asian countries to record a positive balance of trade in both volume and value terms.

The trend in many of Asia's smaller consumers of nonwovens in the last five years has been a small but steady increase in both imports of fabrics, and to a lesser extent in exports.