THE ITALIAN YARN INDUSTRY IN 2016-2017 Notes by Centro Studi 1. The industry balance-sheet for 2016 The year 2016 was not particularly favorable to the Italian yarn industry (understood as comprising wool, cotton, and linen yarns), which, after leveling off in 2015, returned to the negative numbers. Foreign demand negatively influenced industry performance; domestic demand, instead, was positive. In 2016, Italian yarn industry sales dropped by -2.7. According to data processed by SMI, Italian spinning sales fell off by an overall average of -2.7 on an annual basis, for a total turnover of slightly more than 2.8 billion euro. This dynamic confirms the forecasts released in January on occasion of the previous edition of Pitti Filati, when the year 2016 was expected to close down by about -2.6. Table 1 The Italian Yarn Industry (1) (2013-2016) Figure 1 Italian Yarn Sales in 2016 (million euro at current value) ( share by segment) 2013 2014 2015 2016 Sales 2 979 2 918 2 917 2 837-2,0 0,0-2,7 Value of production 1 885 1 834 1 820 1 759-2,7-0,8-3,3 Exports 898 871 871 828-3,0 0,0-4,9 Imports 831 833 849 881 0,3 1,9 3,8 Trade Balance 66 38 22-54 Apparent Consumption 1 819 1 797 1 798 1 813-1,2 0,1 0,8 Structural Indicators () Exports/Sales 30,1 29,8 29,8 29,2 Imports/Apparent Consumption 45,7 46,4 47,2 48,6 Source: ISTAT and internal survey data processed by SMI Wool, Cotton and linen yarns June 2017 1
The Italian Yarn Industry in 2016-2017 Wool spinning was once again the preponderant segment, accounting for 82.5 of all turnover for industry companies; cotton yarns accounted for 14.6 and were followed at a distance by linen yarn, with a 2.9 share. Over the course of 2016, all three yarn types considered here were affected by the negative trend, although we just distinguish among the rates of fall experienced by each. While, on the one hand, wool spinning lost -2.4, inverting the positive evolution of 2015, on the other both cotton and linen spinning fell off at almost double that; that is, at rates in excess of -4. The value of production carried on in Italy was still on a downslope, with a variation of -3.3, a figure which represents a considerable slowdown with respect to the preceding two-year period. The foreign markets were disappointing in 2016: despite a first quarter that was favorable at least for wool and linen yarns, criticalities emerged month after month and all three segments drifted into the negative numbers. Overall, yarn industry exports suffered a Last year, yarns exports slowed by -4.9... contraction of -4.9 in the twelve-month period, resulting in a reduction in foreign sales to 828 million euro. As shown in Table 2, all the yarn types we considered showed drop-offs, between the -0.6 endured by combed yarns and the -15.7 that handicapped needlework yarns. On a parallel track but running in the other direction, imports exhibited rather lively increases, for a +3.8 overall gain and a total of 881 million euro. To the exception of the... while imports accelerated by +3.8. chemical fiber/wool blend yarns (-0.3), imports in all the other goods categories were growing: needlework yarns by +10.0, linen yarns by +8.3, and carded and combed wool yarns by +1.5 and +6.6, respectively. Table 2 Italian Yarn Industry Foreign Trade in 2016: Analysis by Sub-Sectors Saldo Carded wool yarns 38 1,5 179-7,2 142 Combed wool yarns 314 6,6 247-0,6-67 Chemical fiber/wool yarns 112-0,3 97-3,1-15 Needlework yarns 13 10,0 73-15,7 59 Cotton yarns 320 1,6 192-4,4-129 Linen yarns 83 8,3 39-5,2-44 Total yarns 881 3,8 828-4,9-54 Source: SMI on ISTAT data Import Export June 2017 2
The Italian Yarn Industry in 2016-2017 Consequently, the Italian yarn industry trade balance, which had been positive in the period from 2012 through 2015, showed a deficit of 54 million euro. What is more, besides the dichotomic overall trends for export and import, it should be pointed out that wool spinning was the only industry segment to show a trade surplus (119 million euro), a value that was totally inadequate to compensate for the deficits recorded for cotton and linen yarns. Going on to analysis of the domestic market, we see that after what was a substantially stable situation last year, apparent consumption, gross inventories, enjoyed moderate Apparent consumption grew by +0.8. growth and closed the year with a +0.8 increase. More specifically, domestic demand was positive for wool and linen yarns; for cotton yarns, we at least saw a decrease in fall rate. 2. The economic situation in the first quarter of 2017 The current year s curtain opened to reveal that Italian yarn industry has another hill to climb. The ISTAT production index data referred to spinning (ATECO Code CB 13.1) in the first three months of 2017 show a downward trend of -4.8; in the month of April, instead, production began to grow again, by +2.9. These dynamics average out to a -1.5 loss in From January to April 2017, production fell off by -1.5. the first four months of the year. With reference, instead, to foreign trade in the period from January through March 2017, yarn exports were still affected by negative dynamics: that is, by a -3.6 downturn. And in the same period, imports also changed pace, slowing by -0.7. The balance for the three-month period was therefore negative to the tune of 29.1 million euro (that is, 6.4 million ca. more than the figure for the first quarter of 2016). In the first quarter of 2016, exports slowed by -3.6 and imports by -0.7. Table 3 Italian Yarn Industry Foreign Trade: Analysis by Sub-Sectors (period: January-March 2017) Tonn. Tonn. Saldo Carded wool yarns 543-19,4 11-1,3 2 615 2,6 46-5,7 35,5 Combed wool yarns 5 574-8,0 94-2,2 2 865-4,0 71 0,2-22,2 Chemical fiber /wool yarns 4 767 3,7 26-1,1 2 579-10,3 24-9,2-1,3 Needlework yarns 233-4,8 2-20,8 887 1,5 13-17,3 10,5 Cotton yarns 21 500 5,3 93 6,2 7 005-4,2 50 2,1-42,7 Linen yarns 2 083-19,9 17-19,0 662-12,9 8-13,3-8,9 Total Yarns 34 700 0,3 242-0,7 16 613-4,3 213-3,6-29,1 Source: SMI on ISTAT Import Export June 2017 3
The Italian Spinning Industry in 2016-2017 Our analysis of the single yarn types considered in this note shows that the various segments of the Italian yarn industry proceeded at different rhythms. From January through March 2017, carded wool yarns and chemical fiber/wool blend yarns lost ground, by -5.7 and -9.2 respectively, and needlework yarns plummeted by more than -17.0. The only exception in wools was combed yarn, for which exports showed a ghostly +0.2 increase. Foreign sales of cotton yarns, instead, reestablished a growth curve and were up by +2.1. Contrariwise, linen yarns fell back heavily, with a -13.3 decrease. On the imports front, we saw significant backslides for linen yarns (-19.0) and for needlework yarns (-20.8). With reference to the wool yarns area, imports of combed yarns decreased by -2.2; carded and chemical fiber/wool blend yarns also slipped, but by just a bit more than +1.0. Running against the tide, as was the case in exports, were the cotton yarns, which showed an increase of +6.2. A look at results in terms of quantity reveals that exports lost the most by volume (-4.3); imports, instead, increased slightly (+0.3). By single export yarn types, the exported quantities of carded yarns were up (+2.6), as were the volumes for needlework yarns (+1.5); all the other yarn types suffered drop-offs, the most severe being for the chemical fiber/wool blends and the linens. As far as imports go, volumes were on the rise (as were values) for the cotton and chemical fiber/wool blend yarns. The most significant negative variations, instead approaching -20 were seen for the carded wool and linen yarn types. We will now go on to analysis by customer market for each of the yarn types considered. Hong Kong was again the first ranking market for carded wool yarns (and absorbed 18.8 of Italy s total exports of this yarn type) even though the dynamics continued to be negative and quite relevant, equal to -40.6. Besides the United Kingdom, where Italian sales increased by a marginal +1.1, balancing out Hong Kong was Croatia, with a +50.8 growth rate. Romania was another growing market (+9.0), but Tunisia braked with a -0.7 loss. Hong Kong was in first place among Italy s customer markets for combed wool yarns as well (with a 19.8 incidence on total export of this yarn type), for a value that was almost double that of the carded yarns thanks to +5.3 growth. On the other hand, Romania and the Czech Republic saw significant contractions in their absorbance capacities, losing -18.5 and -23.8, respectively. And France dropped off by -3.5. Finally, Turkey s market for Italian combed wool yarns grew by 33.5, although the country absorbed little more than 7 of total industry segment exports. Running against the general sector trend, from January through March exports of cotton yarns began to grow again (+2.1) and combed wool yarns recorded a +0.2 increase. In the case of carded wool yarns, Hong Kong lost ground as a customer market while the United Kingdom and Croatia showed growth. Gaining ground, instead, were exports of combed wool yarns to Hong Kong and Turkey. June 2017 4
The Italian Spinning Industry in 2016-2017 Table 4 Exports of Yarns for Industry: Country-by-Country Analysis (period: January-March 2017) Table 3.1 - Carded wool and fine-hair yarns Table 3.2 - Combed wool and fine-hair yarns Quota TOTALE 46 145-5,7 100,0 Hong Kong 8 662-40,6 18,8 UK 8 073 1,1 17,5 Croatia 7 608 50,8 16,5 Romania 3 043 9,0 6,6 Tunisia 1 910-0,7 4,1 Quota TOTALE 71 423 0,2 100,0 Hong Kong 14 161 5,3 19,8 Romania 6 875-18,5 9,6 France 5 816-3,5 8,1 Czech Republic 5 571-23,8 7,8 Turkey 5 101 33,5 7,1 Table 3.3 Cotton yarns Quota TOTALE 50 296 2,1 100,0 Germany 7 245-3,8 14,4 Czech Republic 5 981-5,4 11,9 Croatia 3 815 29,2 7,6 France 3 155-1,4 6,3 Spain 2 849-5,3 5,7 Table 3.4 - Chemical fiber/wool yarns Source: ISTAT data processed by SMI Differently from what we saw for the carded yarns, sales to Croatia of chemical fiber/wool blend yarns decreased quite dramatically (-33.8). But this slowdown was contrasted by the trend for exports to Austria, which thanks to a +10.8 gain caught up with Croatia, and to Bulgaria (up by +37.2). Quota TOTALE 24 321-9,2 100,0 Croatia 2 604-33,8 10,7 Austria 2 545 10,8 10,5 Turkey 1 810-11,3 7,4 Bulgaria 1 580 37,2 6,5 Hong Kong 1 556-44,1 6,4 Sales of chemical finer/wool yarns to Austria and Bulgaria were on the increase. Italian exports of cotton yarns to Germany, the Czech Republic, France and Spain slowed, but exports to Croatia increased. Imports of combed yarns from Poland increased. June 2017 5
The Italian Spinning Industry in 2016-2017 As regards the top customers for Italy s cotton yarns, Germany and the Czech Republic, the two top-ranking destinations, slowed by -3.8 and -5.4 respectively. Other denizens of the negative area included France (-1.4) and Spain (-5.3). Exports of cotton yarns to Croatia instead enjoyed near-boom growth, with a +29.2 increase. Turning now to incoming flows in the period from January through March 2017, we see that as regards carded wool yarns, the top three supplier countries, which account for 85 of all imports of this yarn type, were enjoying a positive evolution: imports from the United Kingdom were up by +8.6: Lithuania by +3.6, and China by +5.4. Poland and Hungary, instead, were both down, by -13.9 and -38.2, respectively. In the period in question, imports of combed yarns from Germany decreased by -13.4; Poland instead was up by a like but inverse figure: +13.8. Imports of combed yarns from Bulgaria dropped by -7.7. Romania and the Czech Republic were both growing, although the gap between the two was wide: imports from the first increased by +18.8; from the second, by a mere +0.2. About 49 of Italy s imports of chemical fiber/wool blend yarns came from Romania, which in the period in question showed a loss of -2.0. Also in the negative numbers were Bulgaria (-17.2) and Turkey (-0.3), countries which each account for 13 ca. of Italy s imports of this yarn type. Imports from Portugal, instead, increased by +4.0. Lastly, in the first three months of 2017, Turkey accounted for 34.5 of Italy s imports of cotton yarns, growing by +22. It was followed by Egypt, which, however, was down by -6.4. China and India accounted for similar values, although imports from the two suppliers increased by very different percentages (+33.8 and +8.3, respectively). Pakistan was still an up-and-comer, with a +19.4 jump in sales to Italy. Turkey is the source of 34.5 of Italy s imports of cotton yarns. Florence, 28 June 2017 Publication by Tessile & Moda Service soc. Unipersonale This publication (hereinafter document ) is an exclusive original work by SMI - Sistema Moda Italia (Federation of Italian Textile and Fashion Enterprises, member of Confindustria [Italian Manufacturers Association]) for Tessile & Moda Service soc. Unipersonale. SMI - Sistema Moda Italia carries on numerous activities that target safeguarding and promoting the interests of textile-fashion sector companies. This document is designed for distribution by electronic and ordinary mail and may not be re-distributed, reproduced, published, or altered in whole or in part by persons not expressly authorized to do so. All authors rights reserved. The scope of this document is purely informative and does not represent either an offer or an inducement to any transaction. The information, opinions, estimates, and forecasts contained in this document were taken or derived from sources held to be reliable by SMI - Sistema Moda Italia but which do not constitute any form of guarantee, either implicit or explicit. For this reason, SMI- Sistema Moda Italia and Tessile & Moda Service soc. Unipersonale assume no responsibility for the same Pubblicazione a cura di Tessile & Moda Service soc. Unipersonale June 2017 6