Imports Not The Problem
By J. Karl Rudy, Technical Editor
Orders In And Out
Spinners continue to report that there is no continuity to any sales. One spinner commented, “We get nice orders, but they are in and out — then I am looking for new business. All business today is essentially spot business. The customer wants quick delivery with no assurance of future business!” Under our present market conditions, you can’t expect a customer to commit to extended business — tomorrow the yarn might be cheaper.
There is no export business for open-end (OE) yarn. (Of course, for obvious reasons, there is no OE yarn being imported either.) Ring-spun (RS) yarns, however, are being exported by some spinners.
Spinners report the slowdown in sales has affected markets across the board. A spinner reported that the denim market was especially slow. You will remember, a few months ago, denim yarn sales built up very quickly. Apparently, this was short-lived, and no one knows just what the future may hold. Many textile people know from past experiences that market conditions are not at their best at this time of year, but everything improves after Christmas. But, one disgruntled spinner said, “Over the past few years, business after the holidays has deteriorated, and I don’t expect it will change this year.”
OE Markets Still Crazy
One of the OE yarn respondents, disgusted with persistent low pricing, said, “If our customer can’t make money with the present-day prices of yarns, he won’t ever to able to. Here we are with new machinery, expensive cotton, making a quality yarn. Then we turn around and give it away. Our customers are the only ones making money today — the consumers aren’t and we sure aren’t!”
Pricing is still referred to in the OE markets as crazy. There was one report of an 18/1 OE yarn being offered for sale for 85 to 90 cents. With cotton selling at over 60 cents, you only have a quarter left to buy insurance, pay your overhead costs, labor, waste and so on. You don’t even have enough left to pay the lawyer to go bankrupt.
Observations On Pricing Trends
Yarn Market was most flattered to have its pricing data used to publish the research article on OE and RS pricing found in ATI several months ago (see Open-End Vs. Ring-Spun Pricing, ATI, September 2000). While the information is good as presented, it will have little impact on predicting future pricing trends unless additional information is factored into the equation. For instance, prices quoted in Yarn Market are asking prices. While the actual price for RS yarns may be reasonably close to the asking price, due to market conditions today, the actual price of OE yarns in today’s market will be considerably lower than the asking price. This is due to the ongoing oversupply flooding the markets, as mentioned repeatedly over the past few years. Also, spinners are naturally reluctant to publish information regarding actual pricing because so many factors may be considered in making the sale.
Lately, spinners report that there have been significant reductions in the producing of spindles of OE yarns. Spinners are now anticipating a degree of price stabilization, as well as an increase in pricing for all yarn counts. They feel this will happen as early as the first quarter of 2001.
In observing the trends in the spread of pricing between OE and RS yarns, the article says, “ while the price difference in October 1984 was 13 cents, the difference in January 2000 was 51 cents.” It is interesting to note that during this same period of time, OE spindles were increasing dramatically and RS spindles were decreasing.
Unfortunately, the article doesn’t show anything that spinners don’t already know from experience and observation. Realizing that the article reported on trends, it would be interesting for the researchers to extend the scope of the study to determine the cause of the major peaks and valleys in 1987-88, 1993-94 and 1994-95.