Cellulosic Manmade Fibers

SIC 2823

Companies in this industry

Industry report:

The cellulosic manmade fiber industry is comprised of establishments primarily engaged in manufacturing rayon and acetate fibers in the form of monofilament, yarn, staple, or tow. These fibers are suitable for further manufacturing in other industries on spindles, looms, knitting machines, or other textile processing equipment. Synthetic fibers, which account for more than 90 percent of all U.S. manmade fiber output, are classified in SIC 2824: Manmade Organic Fibers, Except Cellulosic.

Cellulose fibers are made from modified wood pulp that has been dissolved in a liquid and treated with chemicals. The solution is forced through small holes called spinnerets, and the extrusion dries into a hard filament. The shape and physical properties of the fiber can be modified during extrusion and processing to yield numerous fiber types and grades. This is called filament yarn. Cellulosic fiber can also be produced as staple yarn. Staple yarn is made from filament fibers that are cut into shorter lengths and then spun together or in combination with other fibers.

Global demand for fiber increased in 2009 by 4.2 percent to 705 million tons. Manmade fibers increased by 4.1 percent to 44.1 million tons, and natural fibers increased by 4.5 percent to 26.4 million tons. Cellulosic manmade fiber had lost ground in the late 1990s to synthetic fiber, falling to less than 10 percent of total U.S. and worldwide man-made fiber output. According to the Fiber Economics Bureau's World Surveys of Manufactured Fiber Production, cellulosics fell to about seven percent of worldwide manmade fibers production by 1998, and by 2002, production had dropped to six percent. However, demand for cellulosic fibers jumped 7.7 percent in 2009 to 3.8 million tons, so that cellulosic fibers made up 7.7 percent of the manmade fiber market in 2009 and five percent of overall fiber demand.

Rayon accounts for the majority, roughly 90 percent, of cellulosic manmade fiber produced. Rayon is used to make apparel, home furnishings, nonwoven products, tires, and industrial goods. Acetate, which is primarily used to create apparel, home furnishings, and cigarette filters, accounted for less than six percent of production in the early 2000s. Lyocell (brand name: Tencel) is a new, third-generation cellulosic fiber that is similar to Rayon. Total industry shipments increased from $1.66 billion in 2007 to $1.79 billion in 2008, on par with $1.72 billion recorded in 1997.

In 2010, there was no production of rayon in the United States. The largest consumer of rayon and acetate was the broadwoven fabric industry, which accounted for more than 40 percent of total production. Apparel linings accounted for a large portion of the market, along with special occasion apparel and acetate/spandex blended fabrics. Knit fabric manufacturers accounted for 20 percent of the U.S. market.

Fibers, when made into fabrics, are identified by generic classifications that were established by the Textile Fiber Products Identification Act of 1960, with generic names assigned by the Federal Trade Commission (FTC). The Identification Act also requires products to be labeled with the manufacturer's name and country and to list the percentage of fiber content.

The first patent related to the manufacture of cellulose fibers was granted in 1855. In 1883, Sir Joseph Wilson Swan, a British scientist, created the first nonflammable cellulose fiber. Commercially viable rayon fibers were invented during the 1890s. Acetate filaments were developed in the late 1800s as well, but were not widely accepted for commercial use until the 1920s. During both world wars, particularly World War II, fiber development and production ballooned as warring nations sought inexhaustible supplies of apparel and textile fibers.

Rayon increased in popularity during the post-World War II U.S. economic expansion. By 1980, U.S. companies were generating more than 580 million pounds of fiber each year. Despite past growth, however, cellulose fibers were quickly losing favor to newer and better synthetic fibers, such as polyester and nylon. Between 1970 and 1990, the percentage of U.S. fibers (including organic filaments) made from cellulose declined from 28 percent to six percent. The industry was challenged by environmental concerns and standards while trying to improve quality.

Worldwide, cellulosic fiber production reached its peak in the early 1980s, after which it generally declined through much of the 1990s. However, demand began to increase again during the 2000s, rising to 3.80 million tons in 2009. The increasing popularity of synthetic fibers has combined with foreign competition, particularly from Asia, to batter the industry. By 2009, China alone accounted for 64 percent of all filament and spun yarn production. The sharpest decline came in Eastern Europe, where total output plummeted from a high of 1.1 million metric tons in the early 1980s to 92,000 metric tons in 2002. Western Europe and North America also reported moderate declines in cellulosic fiber production. U.S. producers of cellulosic manmade fibers shipped close to $974 million worth of product in 2001, down sharply from 1992 shipments of nearly $1.7 billion.

Revenues lagged behind inflation with an average growth rate of less than one percent per year, and industry employment fell from more than 14,000 workers in the early 1980s to about 11,000 by 1992. The employment rate continued to fall, dropping from approximately 7,500 employees in 1995 to 4,800 in 1997 and to 2,100 in 2000, with further declines in the cellulosic fiber workforce projected into the twenty-first century. The number of establishments was also declining from 18 in the mid-1980s, to nine in 1995, and only six in 1998. In the shrinking world of U.S. cellulosic fiber production at the turn of the century, Memphis,Tennessee-based Buckeye Technologies Inc., formerly known as Buckeye Cellulose, was a major player.

In the mid-1990s, the surviving U.S. cellulose fiber producers were hoping that the introduction of lyocell might save the struggling industry. Two of the largest competitors in the industry, Courtaulds Textiles PLC and Lenzing Fibers Corp., were vying for domination of this new market segment. Lyocell offered superior performance compared to rayon and could be manufactured with fewer hazardous waste emissions, but lyocell failed to live up to its early promise.

Fiber makers were hoping to benefit from massive capital investments made during the 1980s to improve productivity and develop better fibers. Nevertheless, despite manufacturer's efforts, the long-term industry outlook remained bleak. Producers in emerging industrial nations, such as China and Malaysia, were expected to dominate global market share. More stringent environmental regulations would also take their toll on U.S. competitors (see SIC 2824: Man-Made Organic Fibers, Except Cellulosic).
Global production of all manmade fiber in 2002 was 36 million metric tons, up from 29.9 million metric tons in 1998 and more than double the 14.3 million metric tons produced in 1978. However, while the output of such synthetic fibers as polyester had seen strong long-term growth of an average five percent annually, the production of cellulosics, including rayon and acetate, declined an average of two percent per year between 1978 and 2002.

The production of cellulosics, including rayon, acetate, and lyocell, totaled $969.5 million in 2002. Total shipments continued to climb from $1 billion in 2003 before reaching $1.43 billion in 2005, as reported by the U.S. Census Bureau. By 2007, an estimated 34 mills were engaged in manufacturing rayon and acetate fibers in the form of monofilament, yarn, staple, or tow, employing 1,300 people and shipping $250.2 million in products.

Current Conditions

Although cellulosic fiber production declined through much of the 1990s, global production increased beginning in the early 2000s, and the industry continued to expand though the 2000s. Production totaled 3.56 million tons and 3.83 million tons in 2006 and 2007, respectively, representing year-on-year increases of 5.5 percent and 7.6 percent. In 2008, the industry contracted due to a global recession that caused a decline in demand, which fell by 7.9 percent to 3.52 million tons. In 2009, the industry yarn industry as a whole experienced one of its worst years on record as the textile industry contracted significantly, leading to consolidation and concentration. However, production of cellulosic fiber increased in 2009, jumping 7.7 percent to 3.80 million tons. Spun yarn from cellulosic fiber in 2009 totaled 2.08 million tons, up four percent from the previous year, but still a fraction of yarn spun from cotton (21.5 million tons) and polyester (10.3 million tons).

Cellulosic fiber produced as filament continued to decline in the late 2000s as cellulosic fiber produced as staple yarn continued to trend upward. For example, in 2009, Europe's contribution of filament cellulosics declined by over 12 percent when the Enka Group ceased operations at its Elsterberg site in Germany, which had been in operation since 1909. The United States produced 17,100 tons of filament in 2009, down 25 percent from 2008. Cellulosic staple fibers increased in 2009 by 11.4 percent to 2.7 million tons due to ongoing demand in textiles, nonwovens, and flame-retardants. Also, record-high cotton prices helped Tencel remain competitive despite a rising price differential with staple polyester fiber. Friedrich Weninger, a board member of Lenzing AG, a leading producer of cellulose fibers, located in Austria, referred to 2009 in The Fiber Year 2009/10 as "turbulent, but better than expected by many market players."

Industry Leaders

Rayonier, Inc., of Jacksonville, Florida, was a real estate investment trust that bought and sold timber, managed timberlands, and produced wood and lumber produces. The company manufactured about 25 cellulose products and fibers that were used in textiles and other products such as air filters, tires, detergents, and diapers. About 60 percent of its cellulose fiber products were exported. The company posted revenues of $1.7 billion in 2009 and employed roughly 1,800.

Weyerhaeuser Company, located in Federal Way, Washington, was a timber giant. It owned and managed some six million acres of timber in the United States and another 15 million acres in Canada. Weyerhaeuser produced two lyocell fibers: Using peach pulp, the process known as meltblown lyocell creates self-bonding fibers that create a nonwoven material. Weyerhaeuser also made a staple lyocell fiber from peach pulp. The brand names for its textile-related cellulose products are Peach 426 Pulp and Pearl 428 Pulp. In 2009, Weyerhaeuser had revenues of $5.53 billion.

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