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Yarn Market
Alfred Dockery, Technical Editor

A Tolerable Year For Spinners

By Alfred Dockery, Technical Editor

T he textile industry in general and spinners in particular saw plenty of trends in 2006. Cotton prices were relatively stable, while man-made fiber prices, which soared post-Katrina, stayed high. There was a tremendous demand for Pima or extra-long-staple cotton, which led to cotton producers growing an additional 100,000 bales last year.

Consolidation was not far from mill managers’ minds or the pages of local newspapers. Cheraw Mills merged with Frontier Spinning Mills. Production cutbacks affected Alice Manufacturing, Fruit of the Loom, Springs, WestPoint Home and others. Carolina Mills and Avondale Mills shut down operations, and

Delta Woodside filed for bankruptcy. The ring-spinning business ran strong . Toward the end, demand for open-end yarns firmed up. Many spinners and some industry observers felt enough open-end capacity had finally been taken out of the market. Spinners were heartened by the Central America-Dominican Republic Free Trade Agreement (CAFTA-DR) and somewhat dismayed at its slow ratification process.

“[Last year was] a year in which base volume levels were tested, and then, luckily, volume bounced a little higher,” said a multisystem spinner.

“The verticals took massive hits in 2006,” noted an industry observer. “CAFTA will be big and will have to be big to keep spinners busy. Looking at legislation: The China safeguards are a short-term fix. The Haiti agreement isn’t good for the industry. Vietnam is coming, and that isn’t good.”

The Avondale Spike

The Avondale Mills shutdown was the only event to be mentioned as both a high and low for 2006. It shocked the industry and at the same time caused a brief spike in demand in the yarn market.

“Vertical companies getting out of the yarn-spinning business continued to bring volume opportunities our way, as did the exit of certain competitors,” was the way one spinner put it.

“Our biggest high point was that we kept our plants running full all year,” said a ring spinner.

“The strength of our Central American business was a high point for us,” noted a specialty ring spinner. “The specialty business has become a spot business. You must be able to react. There is little to no program business.”

Low points included the winding down of military business, further customer base erosion, some trade deals and some fairly major plant and company closings.

“It wasn’t as good as 2005 for us, mainly due to reduced military business,” said a ring spinner. “We had an OK 2006.”

“The lowest point for the industry in 2006 had to be when Avondale went down,” said an industry observer. “It was a major player that invested money in its operations and had solid leadership.”

“Cotton prices went up 7 to 10 cents per pound this year, and we never did get that back in yarn prices,” said one spinner. Looking Ahead In general, spinners are upbeat about the new year, and at the same time aware that the concerns of recent years will continue to affect the way they play this increasingly global game.

“We anticipate 2007 to present many of the same challenges that we faced this past year, one of which is the eroding customer base,” said a ring spinner. “We will lose another key domestic customer next year, as we have the past several years. The task has been to track the business, which normally develops as an export customer.”

“We have a ‘wait and see’ approach to raw material pricing,” said a multisystem spinner.

“Open-end should be in a better position in 2007 because so much production has been taken out,” said one spinner. “We anticipate that ring spinning will continue to be strong. But I’m not sure that we will make a lot of gains in pricing.”

World Cotton Trade Falling In 2006-07

According to the US Department of Agriculture, world cotton production in 2006-07 is forecast to be 1.7 million bales higher, at 115.9 million. World consumption is expected to rise by 5 million bales, to 121 million. Ending stocks are expected to tighten in most non-US markets, helping world trade to slow in 2006-07. World ending stocks are expected to fall 2.7 million bales, to 51.5 million bales. Importing countries are largely expected to draw down their stocks, reducing the need for exports.

January/February 2007


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