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Yarn Market

Global Markets Obvious

J. Karl Rudy and Clarence D. Rogers, Technical Editors

C otton prices continue to tumble, as expected by those in the know. One respondent said, “ Cotton markets don’t look pretty. In fact, we had a seasonal daily low of 38.65 cents per pound.”

Asked if cotton farmers would plant cotton at those prices, he said, “Cotton may be bad, but not as bad as other commodity crops.” Farmers will, therefore, probably plant cotton.

Cotton pricing is of concern to spinners as well. Not from the same perspective as that of farmers, of course, but from the attitude of their customers. “When customers see raw cotton pricing fall, they expect an immediate decrease in the price of their yarn. They simply don’t understand that we are still using fiber that cost us 60 cents per pound. We will be all right when we start using the cheaper cotton.” Of course, he was referring to margins that lately have been leaning to the red, but would move to the black side of the ledger.

Pricing Problems

The continuing lackluster markets have caused yarn prices to drop dramatically. As one cotton spinner observed, “Volume is slow, and pricing is about 80 to 85 percent of normal. All of our sales are spots. I really feel that the second half will be better than the first.”

Texturizers say, “Our volume is OK, but pricing is terrible. A lot of our customers are in real difficulty financially, which causes business to be so flat.” The sad thing about it is that no turn-around is expected anytime soon. An expected reduction in capacity of textured yarns may cause markets to “tighten up,” but that remains to be seen.

“Imports are killing us!” was the cry of virtually everyone. One spinner lamented, “We can no longer compete! We used to have a month or two lead time, but now the importers are storing the stuff and are still able to offer it at prices often less than we paid for our raw cotton.”

Synthetic spinners report that, while this is typically the season for sales to skyrocket and production operations to require Sunday production, it hasn’t happened. One spinner said, “ Acrylic business is not what we expected. We are closer to getting our asking prices, and this month is better than last month, but we don’t know what will happen after July 4th. All markets are short-term, where the customer decides to move, moves quickly, and wants two-day delivery.” Sound familiar?

Bright Spots

However, all is not bad. While some segments are doing awful, others are doing very well. Those that are doing well are working hard to improve what they do, changing production into special products or focusing on niche markets. One weaver said, “Business is very good. I can’t produce enough yarn to keep all of my looms running at full capacity. I am buying yarn to help out in weaving. The future looks good, so we are planning to increase our yarn production. We are considering buying more yarn-production machinery to support weaving.”

One polyester spinner for the knitting trade said, “Business is pretty good. We are running a full schedule and are backed up a little. And the feeling is, if you have something that is going good, don’t talk about it very much, and certainly don’t get into any specifics. If you do, you may end up losing in the marketplace.”

“There is some improvement in coarse- and medium-count plied yarns for both ring and open-end,” responded another spinner. “My plant is running seven days a week, 168-hour schedule. We think that our success can be credited to a very diverse product line and willingness to accept small orders.”

A spinner of medium-count knitting yarns said, “Things are better in this area than they are in weaving. Prices are soft, compared to last year, but they are still holding. The most important thing for us is that prices are still there. Overall, we have cut back a little, and our production is down. However, this decrease compares to the last couple of years, when we were running full blast.”

Here is an opportunity for a wool spinner/weaver: it has been reported the Army refuses to wear wool berets made in China. Is there enough of the wool industry left to fill this need? It does point out one difficulty we may have if the domestic textile industry is forced out of business.

One yarn man expressed the feelings of many textile people by saying, “I try to be optimistic. Sooner or later, customers will have to start buying again.” Hopefully, that time is now!

July 2001

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