Remarkable changes: Cellulosic fiber business

JTN Monthly Asian Textile Business, Apr 2001

The cellulosic fiber industry continues to undergo major changes throughout the world, as producers make the decision to discontinue operations, or embark on ambitious projects to restructure their business.

CVC to Establish Now fiber Company

The Dutch investment company CVC Capital Partners announced in February that it would acquire about 80% of the shares of Lenzing AG that are owned by Bank Austria, and will establish a new fiber company consisting of both Lenzing's and Acordis' fiber activities. Lenzing is the largest producer of cellulosic fiber in the world, and the Bank Austria Group owns 50.1% of Lenzing's shares. Thus around 40% of the total shares of Lenzing will be transferred to CVC. CVC owns 64% of Acordis' shares.

Once the legal regulations are cleared and in case the new company is established, both "Tencel" and "Lenzing Lyocell" will be produced by the same company. This new company will be involved in the Lenzing business, including "Lenzing Lyocell", "Lenzing Modal" and viscose rayon staple fiber. It will also be involved the fiber business of the Acordis Group such as "Tencel", viscose rayon staple fiber, viscose rayon filament yarn "Enka", acetate filament yarn "Novaceta", industrial viscose rayon filament yarn and acrylic staple fiber. This new company will have approximately 7,400 employees and sales of roughly 1.4 billion euros.

Successive Withdrawals

In 2000, many companies in Europe and Japan successively withdrew from viscose rayon filament yam production. In Europe Cellatax in France (annual production capacity of 2,900 tons), Etma S.A. in Greece (6,000 tons) and Viscoseda Barcelona S.L. (2,300 tons in Spain) stopped production, and major production cuts also proved unavoidable in Germany.

In Japan as well, Kuraray Co., Ltd. and Asahi Kasei Corporation announced last year that they would cease producing viscose rayon filament yam. Kuraray in fact stopped production in March 2001. Although Asahi Kasei cut production in half from 20,000 tons to 10,000 tons in March 2000, it was forced to withdraw from this business. Asahi Kasei will completely stop production in September 2001, with sales to stop in March 2003. This will mean that the production of viscose rayon filament yam in Japan will vanish completely. Both companies decided to withdraw from production because their production facilities for viscose rayon filament yarn are decrepit, and because it was not possible to predict commercial viability given varied factors such as reduced domestic demand and shrinking export markets.

More and more producers in Japan are also closing their viscose rayon staple fiber activities. In March of this year Toyobo Co., Ltd. stopped production of polynosic (modified viscose rayon staple fiber). Toyobo has an annual production capacity of approximately 10,000 tons, and had reduced its actual production to not more than 4,000 tons. Toho Rayon Tokushima Co., Ltd., a subsidiary of Toho Rayon Co., Ltd. with an annual production capacity of 25,000 tons, will cease production in September of this year.

In February Fuji Spinning Co., Ltd., announced that it would stop production of cellulosic fiber by September 2001. Fujibo Ehime Co., Ltd., a subsidiary of Fuji Spinning, produces polynosic and regular viscose rayon staple fiber (total annual production capacity of 25,000 tons). With the closing of Toyobo, Fujibo Ehime would have been the sole polynosic producer in the world. Nevertheless, Fuji Spinning faces severe competition from regular viscose rayon staple fiber, and cannot anticipate longterm growth even in its polynosic business, which led to its decision to cease fiber production. There are, however, many users of sophisticated polynosic such as antibacterial/ odor-preventing "Chitopoly". For this reason Fuji Spinning will provide technology to the Taiwanese viscose rayon staple producer Formosa Chemicals & Fibre Corp. (FCFC), and plans to obtain fiber supplies from this company. Fuji Spinning disclosed that they have begun negotiations with FCFC concerning this business arrangement.

After Fujibo Ehime withdraws from production, there will be only two Japanese viscose rayon staple fiber producers, Daiwabo Rayon Co., Ltd. (annual production capacity 31,000 tons) and Omikenshi Co., Ltd. (24,000 tons). Daiwabo Rayon plans to increase its production capacity by approximately 5,000 tons in December 2001 for upgrading fiber quality mainly for nonwoven fabrics.

Expansion of New Applications Demands for Japanese spun viscose rayon yam and synthetic fiber/viscose rayon blended yarn have fallen off sharply owing to imported spun yarn, which makes the forecast for viscose rayon staple fiber for spun yarn quite severe. Nevertheless, there is an application for which use is growing and which is not being undercut by foreign competition. This application is for nonwoven fabrics. Spunlaced fabrics constitute the main nonwoven fabrics made of viscose rayon staple fiber. These spunlaced fabrics are made by entangling fibers by water jet. Spunlaced nonwovens are soft, offer rich drape and are very close in quality to woven or knitted fabrics. Consequently, these spunlaced nonwovens have good prospects for future growth, as is the case for spunbonded fabrics (filament nonwovens which form direct webs). Production volume of viscose rayon nonwovens, including dry-laid nonwoven fabrics exceeds that of spun viscose rayon yam, and the greatest use of these nonwovens in Japan is for viscose rayon staple fiber.