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Polyester Fiber Overview and Dynamics May 2011

Polyester Fiber Overview and Dynamics May 2011. Bill Jasper, Chairman and CEO, Unifi. Unifi Global Operations. 1. Unifi Manufacturing Processes. 2. Innovation – PVA Brands & Partnerships. PVA portfolio represent 15% of consolidated sales in fiscal 2010

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Polyester Fiber Overview and Dynamics May 2011

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  1. Polyester Fiber Overview and DynamicsMay 2011 Bill Jasper, Chairman and CEO, Unifi

  2. Unifi Global Operations 1

  3. Unifi Manufacturing Processes 2

  4. Innovation – PVA Brands & Partnerships • PVA portfolio represent 15% of consolidated sales in fiscal 2010 • Products utilized in apparel, contract, home furnishings, military, socks and hospitality • Steady investment in R&D and commercialization of PVA products remains a strategic priority PVA Brands Retail / Brand Partnerships 3

  5. Sustainability Unifi believes in working hard to minimize its environmental impact by doing everything possible to achieve the highest standards for sustainable textiles. • Create environmentally friendly products • Conserve & Reclaim Water • Reduce Energy Consumption • Use of Returnable Packaging • Operate fuel efficient transportation fleet Backward Integration Recycling Center 4

  6. Global Production by Region Polyester Fiber: 33 Million Tons Nylon Fiber (Type 6 & 66): 3.3 Million Tons Annual Growth: 1.0 to 1.5% (2010 to 2015) Annual Growth: 4.0 to 5.0% (2010 to 2015) • Polyester production is ten times as much as nylon 5

  7. Unifi Polyester Supply Chain Overview 6

  8. Polyester Raw Material Chain (0.86 X PTA) + (0.34 X MEG) = 1 Polymer 7

  9. PX (Para-xylene) – Feedstock to PTA • Supply/demand became tighter in 2010 and 2011 due to unplanned production outages and robust demand from PTA sector. • New projects are scarce for 2011/2012 supporting progressive tightening of global operating rates above mid-80’s. • High energy cost set the floor for PX prices 8

  10. PTA • Strong operating rates is driven by robust global polyester demand • PTA supply tightness expected to last for the rest of the year, due to delays in new projects in Asia/China. 9

  11. MEG • A combination of planned, unplanned outages and closures plus feedstock limitations (EO), and speculation in 2010/YTD 2011 kept supply just slightly ahead of demand. • No new MEG plants until 2013. 10

  12. Polyester Raw Material Drivers • Global supply/demand of key ingredients • New plant start-ups or expansions, plant shut-downs (planned and unplanned), Inventory levels, trade flows, regional demand patterns • Energy cost • Crude oil • Natural gas • Multiple product effect • Variety of products compete for the same molecules used by the textile polyester industry – PET bottle, anti-freeze, fertilizers, gasoline, and chemicals 11

  13. Polyester Raw Material Trends 1. Tight PX & MEG (90% OR) 2. Hurricane Katrina 5 3. Replace MSTDB in gasoline blend resulting in surge in MX / PX demand 4 9 3 2 4. World-scale MEG plant explosion in Middle East 1 7 5. Crude oil surge ($140/bbl) 6 6. Significant demand and crude drop due to global economic fallout 8 7. Global demand recovery 8. World-scale MEG plant shutdown in Middle East 9. Multiple factors despite manageable crude range a. Robust global demand b. Tight PX, PTA, & MEG supply (90+% OR) c. No major RM plant coming on line in 2011/12 d. Cotton impact 12

  14. Polyester Raw Material Outlook • Though pricing stabilization is projected to return during April-June quarter, pricing volatility will continue…. 13

  15. THANK YOU!

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