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Yarn Market
Alfred Dockery, Technical Editor

Polyester Prices Leap Upward

Alfred Dockery, Technical Editor

F iber prices are on the minds of mill executives. Citing damage from Hurricane Katrina and uncertainty of the availability of chemicals and energy, polyester producers raised prices by as much as 16 cents per pound. Spinners are bracing for price increases in polypropylene and acrylic fibers.

"No doubt it will have an impact, with many people getting out of the polyester business," said a ring spinner. "We hope it is short-lived."

Hurricane damage is not expected to have long-term effects on cotton supplies or prices, given a 22 million-plus bale domestic cotton crop and generous global stocks. Cotton quality from the affected area, rather then quantity, may be the issue going forward.

Leaving The Lull Behind

Spinners reported softened demand in July and August. Several admitted to standing one or more plants in August to adjust inventories. This has been the first real lull most yarn mills have seen in a year. Open-end spinning has slowed considerably, while ring spinning is holding its own. Demand for combed, fine-count and ring-spun remains strong.

"We’re in our typical slowdown fourth quarter into first quarter," said a specialty ring spinner. "We expect our running schedule to be a solid five days a week through year-end. Our business tends to pick back up in March when home furnishing orders come in."

Another ring spinner reported running seven days a week, with business returning to second-quarter levels.
"Our first and second quarters were very positive," he said. "The third quarter was somewhat weak. All indications are that we will resume a full operating schedule."

A multisystem spinner noted apparel yarn sales were buoyed by late-season order-filling; however, prices remain under pressure. Export business with Central America cooled off in the waning days of summer. There is some debate about whether apparel imports from China are to blame for the slowdown.

Phones Are Ringing

Near-term expectations for business were mixed, with some spinners optimistic and others wary. Higher fuel prices and consumer spending were mentioned often.

"Gas prices are going to affect consumer spending," said one industry analyst. "The consumer has kept buying; that is what has kept the Chinese at bay."

On the positive side, the carpet yarn business should be picking up shortly, as carpet replacement begins on the Gulf Coast.

"We expect to see things really start to percolate in October," said a ring spinner. "We are seeing more activity and getting more phone calls."

Spinners were divided on whether or not they would be able to pass higher polyester prices on down the supply chain.

"Yarn prices remain under a great deal of pressure due to volume and late season de-stocking," said one spinner.

"Yarn prices are stable, with business neither strong enough to justify price increases nor weak enough to have us looking to cut prices to buy business," said another.

Cotton Stocks Trend Upward

In its September cotton crop report, the US Department of Agriculture estimated a 2005-06 crop of 22.3 million 480-pound bales, up 5 percent from the August forecast but 4 percent below last year's production. Upland production was estimated at 21.6 million bales, and extra-long-staple (ELS) production at 707,000 bales. Yield is expected to average 782 pounds per acre, 34 pounds above last month and 64 pounds above the five-year average. If realized, the yield and production will be the second-highest on record.

According to the US Commerce Department, July (4-week month) total cotton consumption in domestic mills was 220.7 million pounds for a seasonally adjusted annualized rate of 6.4 million 480-pound bales. Last year's July annualized rate was 6.63 million bales. The department's estimate of upland and ELS consumption by US mills, when adjusted to represent the complete 2004-05 crop year, is 6.27 million bales. This level of mill use, when combined with an export number of approximately 14.3 million bales, would imply ending stocks of 6.13 million bales for the 2004-05 crop year, up from 5.5 million bales for stocks on hand as of July 31, 2005.

October 2005

 


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