#flaxlinencongress16

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1 #flaxlinencongress16

2 #flaxlinencongress16 FLAX/LINEN, THE SMART GREEN FIBRE FOR BUSINESS

3 TEXTILE FIBRES DATAS & LINEN CONSUMPTION 纺织纤维数据和亚麻消费テキスタイル用繊維のデータとリネンの消費

4 Hubert BRISSET Scutcher PRESIDENT OF FESTAL Frédéric DOUCHY Trader CELC TRADING SECTION PRESIDENT Flax & Linen Observatory: Economic Data

5 Premisses 1. VOLUME IN TONS AT EVERY LEVEL IN EQUIVALENT SCUTCHED LONG FLAX 2. CALENDAR YEAR 1/1/2015 till 31/12/ LEAD IN TIME BETWEEN VOLUMES AT EVERY LEVEL 4. STOCK? EXCESSIVE STOCK = FALSE DEMAND 5. CUSTOM STATISTICS: NOT UNAMBIGUOUS AND INTEGRAL

6 PROD OTHER FIBRE PROD. EUROPE CIVIL YEAR IN TONNES EQUIVALENT TO LONG FIBRES + CHANGE OF INVENTORY EUROPE 130 ECONOMIC DATA LAST UPDATE 18/04/16 STOCKS? YARN OTHER YARN EUROPE YARN CHINA YARN INDIA STOCKS? FABRIC OTHER MANUF. OTHER FABRIC JAPAN MANUF. JAPAN FABRIC EUROPE MANUF. EUROPE FABRIC CHINA MANUF. CHINA FABRIC INDIA MANUF. INDIA STOCKS? STOCKS CONS. OTHER CONS. USA = CONS. JAPAN CONS. EUROPE CONS. CHINA CONS. INDIA

7 PROD OTHER FIBRE PROD. EUROPE CIVIL YEAR IN TONNES EQUIVALENT TO LONG FIBRES + CHANGE OF INVENTORY EUROPE 130 ECONOMIC DATA LAST UPDATE 18/04/16 STOCKS? YARN OTHER YARN EUROPE YARN CHINA YARN INDIA STOCKS? FABRIC OTHER MANUF. OTHER FABRIC JAPAN MANUF. JAPAN FABRIC EUROPE MANUF. EUROPE FABRIC CHINA MANUF. CHINA FABRIC INDIA MANUF. INDIA STOCKS? STOCKS CONS. OTHER CONS. USA = CONS. JAPAN CONS. EUROPE CONS. CHINA CONS. INDIA

8 Tonnes or hectares Long Fibre Tonnes/ha , , , , , / / / / / / / / / /16 Raw Production Production brute 33Pays Countries Sales Ventes 3 Countries 3 Pays Areas Surfaces 3 Countries 3 Pays Average Rendement Long moyen Fibre Yield FL (base (FR) FR) 1,434 1,007 1,677 1,954 1,353 0,787 1,931 1,974 1,655 1,505 0,000

9 SCRIPT Flax/Linen Observatory : Economic Data by Hubert BRISSET, Scutcher, President of FESTAL & Frédéric DOUCHY, Trader, CELC Trading Section Introduction by Hubert BRISSET Within CELC FLAX & LINEN OBSERVATORY, The ECONOMIC DATA is a think-tank which gathers European business leaders strongly involved in the flax industry: Farmes, Scutchers, Traders, Spinners and Weavers. It started in , when flax trade was undergoing depression in both price and quality. In such a difficult economic context, we were all worried about our future. The goal was to find and to understand the reasons for low prices but also to come up with ways of stopping the economic slowdown. The frequency of meetings is of the order of 4 to the 6 meetings per year.

10 Our 5 goals are 1. To group statistics available in the industry from agricultural production to the distribution globally. Today sections culture, scutching, spinning and weaving CELC provide reliable compilations of the activities of their members. 2. To analyze statistical pooling information collected by each stakeholder 3. To identify weak market signals to anticipate changes 4. To identify societal trends that may affect our production 5. To disseminate remarks or conclusions to all members of the European industry during flax and Linen union meetings or CELC Board of Directors. I now leave the stage to Frédéric DOUCHY for the Flax Economic Data graph and analyzis. FLAX & LINEN Economic Data analyze by Frédéric DOUCHY Goodmorning lady s and gentelman of the world linen sector. I have only two slide s and would like to summarize what the veille économique of the CELC is trying to elaborate. The objective of this commission is to make a so realistic as possible flowchart of the production/consumption of flax in the global linen sector from agriculture to consumption. CHART 1: FLOWCHART OF THE PRODUCTION/CONSUMPTION OF FLAX IN THE WORLD Some remarks in advance: 1. The flow chart is only taking in account the long fibre flax, and not the short fibre chain. On top, all figures are transponed in equivalent long fibre at agricultural level. The figures at spinning level for instance are not the YARN quantity but this quantity in equivalent long fibre. 2. The chart is based on the sales production consumption of flax in one calender year. The chart here is based on 2015 transactions. Normally agriculture is working on crop years, from 1 July previous year till 30 June of the following year.

11 Figures are corrected to the calender year 1 January 2015 till 31 December The figures you will see is not indicating the same flax which is produced and sold in the same period as the flax consumed by the spinning level and the weaving level or consumed during this same period. No, we estimate that at least over the whole chain, there is about one year delay. So to express it more clearly: the flax which you see sold during the calendar year 2015 is most likely sold in the shops during the spring or summer of the year The lead on agricultural offer on increasing or reducing demand at distribution level can in this way be very late in reaction and have as consequence in too big changes of prices in the positive direction or the negative direction. The fluctuation of prices at agricultural side can be very nefast in the development of the market but on the other hand also create a very late reaction of the agricultural side on the evolution at consumption level creating too much stock and in this way generate a collapse of prices of raw material. Neither of both is good for the long term and thus we should predict more in advance to have enough fibre available that prices are not increasing too high and the opposite to reduce offer at time to avoid that prices are falling too low. 4. A very important remark is the factor stock. Sales, or production can be done for stock purposes and in this way create a false demand. This can happen on all levels of the flowchart. We have only an idea of stock level at the agricultural level, not any more at spinning, weaving or distribution level. On the other hand, we suppose that at distribution level all stock is every year liquidated by solden sales of by low end marketplace sales. 5. On spinning level and Weaving level, we have some information about custom statistics. This information however does not cover at all the complete consumption of flax fibre since the categories are either vague on the composition (containing more than 85% of flax or less) and especially vague on weight per meter for fabrics. For knitting there is no specific code. On garments, the linen content is even not existing. This information is thus too flu and unreliable to compose the flow chart per country.

12 FLAX fiber - raw or retted FLAX fiber broken or scutched but not spun FLAX fiber - hackled or otherwise processed but not spun FLAX tow and waste FLAX YARN with a linear density of >= Decitex <= Metric number 12 FLAX YARN with a linear density of to Decitex > Mn 12 to Mn 36 FLAX YARN with a linear density of < Decitex > Mn 36 FLAX YARN put up for retail sale Woven fabrics of FLAX containing >=85% flax by weight unbleached Woven fabrics of FLAX containing >= 85% flax by weight - bleached

13 Woven fabrics of FLAX containing >= 85% Flax by weight - printed or dyed Woven fabrics of RAMIE Nevertheless, we tried with our commission to make a first draft of flowchart which I propose to explain level by level. 1. We start with the agricultural offer Europe PRODUCED in tons of long fibre and the variation on stock was 130 tons so in total the sales were from Western Europe (France, Belgium and the Netherlands) tons. We estimate the production of other countries at Tons mainly from Egypt, Biella Russia and China. It would be interesting to have better statistics from these three countries. The quantity sold on world level is then tons. 2. Flow from Agricultural to spinning level There are mainly three spinning countries where the mass of fibres is sold to: o To the European spinning mills: Tons o To the Chinese spinning mills: Tons o To the Indian spinning mills: Tons o Other spinning mills in the rest of the world are consuming approximately tons. These spinning mills are located mainly in Egypt, Biella Russia, Bangladesh, and other countries. o In total the consumption of flax in the spinning mill was during Tons From this figure we can conclude that the Spinning mills destocked ton of equivalent long fibre (or in raw material flax or in yarn).

14 3. Flow from Spinning to Weaving level The further we go in the cart the less known the figures are and thus also the more unreliable. The Europe spinners are mainly selling to European weavers. A small part is the high quality end is sold to Japanese weavers and also a part is sold to weavers in other countries. We have no exact figures. The Chinese spinners are selling the major part of their production to Chinese weavers. We estimate the quantity at tons (from the produced raw material). This represents 73,35%. The other 26,65% is sold mainly in the following countries: o Tons to Europe. I repeat that tons is the equivalent of yarn to raw material long flax and not the quantity in yarn. We estimate that you need 2 kg of long flax to make one kg of yarn. o Tons to India o Tons to Japan and other countries The Indian spinners are selling mainly to local weavers: tons Finally, the spinners of all other countries are mainly selling to other countries than Japan, China, Europe and India Stock levels at weaving are not known and would be great if we can get more information about this from the different actor on the weaving level 4. Flow from Weaving to Distribution The arrows between these two levels are in size according to the importance in tonnage. We have no quantity indications. The colour is indicating from what Weaving country the supply is. We have no information about where the garments are produced, so we have eliminates this level and suppose the fabrics are consumed directly or indirectly through garment manufacturers in the markets indicated on the flow chart. We analyse the consumption as follows: o USA CONSUMPTION MARKET: we estimate that USA remains the biggest consumer of linen China is the biggest supplier of the United states market Also for Europe the USA remains an important export country

15 However, we estimate the consumption of furniture 50% of the consumption in the USA, 25% clothing and 25% house linen We indicate America as a mature market and we do not see growth anymore in the American market. This is the meaning of the equal sign o EUROPEAN CONSUMPTION MARKET The European market is mainly supplied by China, Europe itself and a small part India. We estimated the consumption market one third clothing, one third house linen and one third furniture. In 2015, the consumption of linen in Europe was still growing, therefore, we indicated a green up arrow. On the other hand, we can also indicate Europe as a mature market where the growth of linen is rather limited. In this market the consumption has to be kept by promotion campaigns. o INDIAN CONSUMPTION MARKET The Indian weaving is selling mainly in their own market but is also selling a small part to the European market. The Indian consumption market is also consuming a part of Chinese imported fabric (or garments) Also Europe is exporting fabric or finished goods to India (we estimated a small part of there production). The consumption of linen in India is estimated half for the clothing industry, 25% for house linen and 25% for furniture (curtains, table linen,...) In 2015 the consumption of linen in India was still growing, therefore we indicated a green up arrow. India is during the last years the market with the strongest growth and we estimated that India has seen growing the consumption of linen year after year with growth with two digits. o JAPAN CONSUMPTION MARKET The Japanese market is supplied mainly by the Japanese weaving itself and then for a small part by China and Europe We estimated the consumption for two thirds in clothing, one sixth in furniture and one sixth in house linen

16 In 2015 the consumption of linen in Japan was still growing although the market can be considered as a mature market. Therefore we indicated a green up arrow o CHINA CONSUMPTION MARKET China is still a very young market for the consumption of linen where there is a lot of potential on the condition of intensive promotion campaigns We estimate 70 % of the consumption is in clothing, 15% in house linen and 15% in furniture o OTHER : There is for sure also consumption in South Korea, Canada and South America (mainly Brazil), even in African countries and Russia. Today these countries remain although very limited in consumption. o If we dare to give an indication of the importance of consumption per country/continent, we would point it out as follows: USA: 40% Europe: 30% India: 15% Japan: 7% China: 3% The rest of the world: 5% As indicated at the start, the flow chart is a very first draft and it would be very interesting if all actors in our flax chain would participate in improving the figures of this chart. We are all here present as one flax family and the common interest is to make grow our business and to create a well spread margin over the whole chain of the production and consumption. Exchange of economical information can help and also a world wide common promotion effort. CHART 2: Evolution of the sowing out and production of long fibre in Western-Europe (France, Belgium, the Netherlands) The yellow line is indicating the number of hectares sown out in the three flax growing countries France, Belgium and the Netherlands. The number of hectares went down from 2006 with hectares to the lowest point in 2010 with hectares. In 2015 the sowing out was Ha, which indicates that the agricultural side of the chain is reacting on the increasing demand of the spinning.

17 The red line is indicating the average productivity of the long fibre per hectare. You will see that nature has a very important role in supply of fibre was a very dramatic crop with in average only 787 kg long fibre per hectare. Crop 2013 on the contrary was an exceptional productive crop with kg long fibre per hectare (remark that this is more than double of 2011). The increase of number of hectares between 2013 and 2014 (+ 12%) is however destructed by 16,2% less fibre per ha. Nevertheless the scutching mills have increased the number of hours production and there was still 4 months of stock of straw to compensate this lack of fibre so that the difference could be compensated. In 2015 there was an increase of number of hectares of 14,7%), however the quantity of fibre per hectare went down with 11% in comparison with Nevertheless, the scutching mills have increased the production capacities to match as much as possible the demand. The conclusion is that the agricultural supply has tried to follow the increasing demand, but that factors which are out of their control and mainly directed by nature are sometimes overruling the intensions. The whole flax chain has to take this in consideration and that stock is an important factor to bridge bad crops, which in history regularly happens. Frederic Douchy Conclusion by Hubert BRISSET Everyone in our industry, strengthened by links between each and every of its members, has to share their information to satisfy the consumer, to have a profitable business, and to increase sales. We need worldwide reliable statistics for each company, each professional profile, each region and each type of final market. Outside of Europe, there may be other similar think tanks in the sector with which it would be interesting to share. We guarantee confidentiality and are committed to sharing information with organizations who will wish to do the same with us. Thank you for your attention

18 To make the right decisions, we need reliable economic data. Hubert BRISSET & Frédéric DOUCHY for The Flax & Linen Observatory

19 #flaxlinencongress16