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Yarn Market

A Look Back At 2010

Jim Phillips, Yarn Market Editor

Y arn spinners enjoyed their most successful year in recent memory in 2010, with many having little to no excess capacity over much of the first part of the year. "I think I would have to go back to the mid-1990s, maybe even further, to find a time when business conditions were this good," one spinner said earlier this year. Another commented: "A lot of spinning has returned to this hemisphere. And, due to the weak dollar and the need for quick turnaround, it looks like it is going to stay around for quite some time."

That forecast proved accurate, as many spinners produced at or near capacity for almost the whole year. While there were many reasons for the boom, most spinners interviewed over the year agreed that three factors were the primary drivers of increased orders:
  • Economic conditions improved throughout the first part of 2010, prompting consumers to begin to increase spending. This, in turn, encouraged retailers to begin aggressive restocking of inventory goods to sell.
  • Domestic capacity has been reduced to near the equilibrium point. After years of excess capacity, enough spinners have consolidated or closed shop to the point that demand and supply are roughly equivalent.
  • Major customers have become disenchanted with yarns imported from China and other Asian nations. Throughout 2010, prices for Chinese textiles increased without any corresponding increase in quality, service or delivery. Additionally, the weakness of the U.S. dollar strengthened the position of U.S. yarns against their foreign competition.

Ring-spun yarns were in high demand all year - to the point that, by the end of the second quarter, spinners had difficulty shipping yarn in a timely manner. Customers used to getting their orders within a week or two were having to wait four to six weeks, and sometimes longer, to receive their product. As one spinner noted, "We've had some capacity to take on new orders off and on through the second quarter and the first part of the third, but it has been very limited. Right now, we're doing everything we can to fill our existing orders in a timely fashion. Delivery schedules are slipping out to where they haven't been in a long time."

And open-end (OE) yarns, demand for which had been sagging for nearly two years, enjoyed a resurgence mid-year. As one spinner said, "Ring-spun yarns have been strong for quite some time. But now, we're seeing a big jump in OE orders. It looks like a lot of the T-shirt manufacturers let their product pipelines run almost dry."

Despite Success, Problems Remained
Despite the near-universal success enjoyed by spinners this year, 2010 was not without difficulty. In January, one of the largest diversified spinners, Wellstone Mills, was seized by its creditors. Most of its assets were acquired by Parkdale Mills. But with the closing of R.L. Stowe Mills in 2009, Parkdale was left as the sole surviving large and diversified U.S. spinner.

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Of particular concern for all spinners was the rapidly escalating price of raw materials, particularly cotton. On Jan. 18, 2010, quotations for the base quality of cotton averaged 67.66 cents per pound. On November 4, the average had increased to 129.54 cents, the highest price recorded since records were established in 1917.

"We're lucky, in that we've bought the cotton we need to fill our orders," said one spinner. "But if you don't have it in-house or on the way, it is hard
to find.

Added a yarn broker: "I've got customers and I've got orders. What I don't have is yarn. With the way the market is right now, you just have to get in line."

And man-made fiber yarn manufacturers, hoping to step in and fill the void, also had to face increasing prices. "We're concerned that steady increases in our prices will work to negate some of the advantage [over cotton]," one spinner said.

Of concern to many spinners as 2011 nears is that the current pricing and delivery schedule for domestic manufacturers will negate the traditional advantages of fast delivery and service that historically have set U.S. spinners apart from their Asian competition. "This may open the door for them to get back in," one spinner said.

November/December 2010

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