Agriculture accounts for significant nonwovens sales in the Middle East – most products here are currently imported cheaply from China, such as sacks and for sheeting
The Middle Eastern nonwovens sector is starting to grow from its Turkish and Saudi base. Paul Cochrane reports from Beirut
Nonwovens manufacturing has grown fast in the Middle East and North Africa (MENA) region, with most of the major players less than two decades old. With a burgeoning population and strong export potential, MENA production has in general doubled over the past five years, especially in the region’s manufacturing hubs of Saudi Arabia and Turkey, which currently have the strongest nonwovens sectors. But with heightened investment in the sector over the past two years, manufacturers elsewhere are squaring up for an increasingly competitive market as more supply comes online in 2013 and beyond.
Israel – through producers Avgol, Shalag Shamir, Albaad, Spuntech and Hogla Kimberly – is one new pretender. And to a lesser extent Jordan and Tunisia are growing a nonwovens industry, while Egypt is an emerging manufacturing hub. The majority of production in the Arab world and Turkey is currently for hygiene products, attributed to major investment in Reicofil machinery. Meanwhile, lower cost nonwovens are imported cheaply from China.
“The reason is the old story of utilising high-end equipment in the best way, which is for hygiene. If you have that sort of equipment, to make any other material would be like using a Ferrari as a delivery van,” said Richard Gillings, business development manager at Saudi German Company for Nonwoven Products (SGN), which is based in Dammam, on the country’s Gulf coast, near Bahrain. “That is why the major focus is hygiene, and there is some medical. Technical production is very small, as most of that is imported from China. In agriculture, as far as I know, we are the only manufacturer in the Middle East, although 95% of our business is hygiene and the rest agriculture.”
SGN is Saudi Arabia’s first nonwovens manufacturer, established in 1995, and the first spunbond operation in the Middle East, producing polypropylene spunbond and SMS nonwoven fabrics.
Last year, the kingdom accounted for 55% to 60% percent of SGN’s sales, rather than the company looking for more overseas sales.“Saudi Arabia is our biggest market, and there has been lot of investment in diaper lines as there is a high birth rate and overall high disposable income,” said Mr Gillings. The bulk of its exports are to Middle East and Africa (MEA) markets.
SGN is indicative of the overall expansion of the market, recording 10-15% annual growth over the past five years. SGN has two manufacturing facilities, a 30,000 square metre site in Dammam, and a 70,000 sqm site in Rabigh (on the Red Sea coast), having added three lines by 2006, bringing production to 33,000 tonnes per year (tpy). In March, SGN is to start its fourth Reicofil line at its Rabigh site, which has room for three more lines. “It will add another 17-18,000 tpy, with about 50,000 tpy altogether,” added Mr Gillings.
Meanwhile, production in Turkey has also surged to meet domestic and export demand, with production doubling between 2007-2011, according to Serkan Gogus, commercial director of Mogul in Turkey, which primarily produces wet wipes through spunlace brand Aqualace. He said: “The biggest growth is in spunlaid and spunmelt technologies, mainly for hygiene and spunlace for wet wipes.” Recent investments were in spunlace and PET spunbond at its two lines, with the latest opening in 2012. “We’re seeing the strongest growth in Turkey and Saudi Arabia, and there has also been growth in Egypt recently,” he added.
Egypt is a burgeoning market, both in consumption and increasingly for production due to its geographical proximity to MEA markets. France’s Bostik has invested in a new manufacturing plant in Cairo, Bostik Egypt, which opened in April, 2012, exporting to the MEA, and multinational Procter & Gamble (P&G) is building a $176 million diaper factory in the North African country, aiming at the same markets, with 40% to be sold locally. Japan’s Unicharm announced last October that it is also expanding into Saudi Arabia and Egypt as part of a strategy to triple the company’s annual production of diapers and feminine napkins by 2020, with 40% to be manufactured and consumed in MENA and Asia.
“Unicharm entered the market now, so a lot of these companies are growing, and Egypt is a place to grow. I don’t know how the political situation may effect things, but Egypt is still a high potential market and the middle class is there, bigger than before, and demand will grow, such as for diapers,” said Mounir Haddad, managing director at Saudi Advanced Fabrics (SAAF), which produces nappies for P&G distributors in Jeddah, Cairo, Europe and Africa.
The locational move of nonwovens manufacturing towards Egypt and the Red Sea is also aimed at meeting emerging retailer purchasing habits. “The trend is looking for more local supply - Egyptians like supplies from Egypt. There is a move towards that, and we’ve done that by opening factory on the east coast of Saudi Arabia,” said Mr Gillings. “What clients want in general is having their supplier in the same industrial area, and if not a supplier, then suppliers to maintain stock locally to cut down on lead times.”
SAAF is one of Saudi Arabia’s major nonwovens manufacturers alongside SGN and Mada, but exports 90% of its production, which is evenly split between hygiene and medical products. “SAAF is the biggest manufacturer in terms of medical volumes, SGN in hygiene volume, and Mada has started medical production but is still small,” said Mr Haddad of the kingdom’s manufacturers. More than 70% of SAAF’s exports are sent to China, the rest to the United States, Europe, Egypt and Turkey.
SAAF is also upping production, from 25,000 tpy to 40,000 tpy, adding to a Reicofil 3 line, and a Reicofil 4 line installed in 2006, with a third - 6 beam, SSMMMS, 3.2 machine Reicofil 4 - to be operational in September.
However, such investment by nonwovens manufacturers across the MENA region is likely to lead to more supply than demand. “Of course there is growth, but less than capacity. A lot of capacity came on last year and this year, and will create over capacity for the coming two years,” said Mr Haddad. “This is where there will be some conflict, but it won’t last too long as there’s growth in hygiene, especially in Asia and considerable growth in Africa.”
Indeed, despite 112 million people being aged under-30 in the MENA region, sub-Saharan Africa is seen as the next big sales market. “I don’t expect too much growth in the Middle East in terms of consumption but I believe Africa has more growth opportunities as penetration of nonwovens is very low,” said Mr Gogus.
But while Turkish manufacturers are bolstering export potential, consumers and manufacturing customers are suffering because the government in Ankara has decided to protect its nonwovens market, by raising import duties in September 2011. “We were very active in Turkey with a lot of customers, but sales are down 30 to 40% because of the higher tax,” said Mr Haddad.
While a supply and demand gap is expected for the MENA nonwoven hygiene industry in the short term, more local demand is forecast for medical products.
“We expect continual growth as SMS nonwoven is taking the place of Spandex,” said Mr Hadded, who said SMS already had 50%-60% of the European market, while in MENA it is just 20% - so there is “room for growth”. Bolstering demand for medical supplies were Gulf governments requiring hospitals to use disposable materials last year. “It created tenders for nonwovens we’ve never witnessed before,” he added. Such requirements are expected to be rolled out in other countries across the MENA region, he said.
Photograph by George Haddad