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Yarn Market
Alfred Dockery

Spinners Reap CBTPA Benefits

Alfred Dockery

S pinners looking for good news should check out the American Yarn Spinners Association’s just-completed analysis of Caribbean Basin Trade Partnership Act (CBTPA) trade.

The analysis shows US exports of yarn and thread to the region, which were relatively static prior to 2000, have increased dramatically through 2003. Total exports of yarn and thread to the region totaled 45 million pounds in 1999, the year before preferences were established. By 2003, that number had increased to 351 million pounds. Exports of US fabric made from US yarns also have increased, as have exports of knit fabrics to the region.

On a related note, a machinery supplier noted that quite a few US knitters are setting up shop in the Caribbean and Central America. Major players either building plants or having production facilities already in the region include Russell Corp. and Fruit of the Loom. Some ring-spinning (RS) capacity is expected to follow the knit and dye plants south, but open-end (OE) production is expected to stay in the United States. Three factors make OE a stay-at-home technology: an extremely low labor component; higher electricity costs abroad; and the cost of shipping cotton to the region.

Ring Is Still King

Spinners report overall volume is great, particularly for RS yarns. One spinner summarized current business conditions as “better than imagined a year ago, but I fear it is the calm before the storm. Everyone is concerned about what will happen when the quotas come off.”

On the OE side, volume is decent but not as strong as RS. Pricing pressure remains an issue here. Denim demand is firming up, and styles are moving toward RS yarn. At least one major denim producer is moving its plants back onto a seven-day schedule. Pricing remains tight.

Cotton Market Looks For Direction

One mill executive noted “The cotton market can’t seem to figure out a direction, which makes it difficult to plan.”

An industry observer expressed surprise that there wasn’t a big drop in business when cotton prices went up. “I haven’t seen anyone fall off and start standing because their customers are not giving orders,” he said.

A cotton merchant, asked about trends in the cotton trade, said it is “discouraging that the domestic textile industry is fading away or going offshore.” He noted our “fearless leaders still promise better things to come.”

He doesn’t believe it, but said he “still won’t vote for a Democrat.” When asked how the coming quota phase-out would affect the cotton business, he replied, “What quota phase-out?”

Mill men, who are much closer to the quota situation, are reviewing their options and making plans. One suggested spinners should “start looking at your customer base, pick the survivors and position yourself to supply them wherever they are going to be.”

Another said, “When China unleashes its volume and other countries try to hold on, it will be an ugly scenario.”

US Cotton Exports, China's Mill Use Rise

In its March report, the US Department of Agriculture (USDA) gauged US 2003-04 cotton production at 18.2 million bales. Both mill use and exports were up from February’s report of 6.3 million bales and 13.8 million bales, respectively. Total export commitments through the week ending February 26 were almost 11.8 million bales, about 2.2 million bales higher than total sales for the same period in the 2002-03 marketing year.

World cotton production for the 2003-04 crop year was raised 210,000 bales to almost 93 million in the USDA’s latest report. Brazil and Australia together accounted for the increase. The world mill use estimate rose 640,000 bales to 97.9 million, largely due to a predicted increase in China’s mill use.

January total cotton consumption by domestic mills was 238.2 million pounds for a seasonally adjusted annualized rate of 6.49 million bales, according to the US Department of Commerce. Last January’s annualized rate was 7.37 million bales.

On the man-made side, one fiber trader noted price increases in polyester and polypropylene are being driven by rising oil prices. He expects prices to stabilize, trend back down and then rise some more, “because that’s what they always seem to do.”

April 2004


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