G
ood news for spinners, bad news for cotton growers. A respondent from the cotton fibers
markets says that there is nothing optimistic about increased pricing for cotton fiber anywhere in
the near future. Mother Nature can change that attitude in a nano-second, however, so we will do
what we usually do — wait for the next season to start.
Open-end spinners report good volume from a sales standpoint but there are no forward sales
and pricing is awful.
Pricing is so bad, in fact, that one spinner said: “There is no open-end yarn being imported
simply because prices are so low domestically. But, even though we can’t make any money our volume
continues to be good, especially in the 16/1 through 30/1 counts.”
He added that while imported yarns of this type are virtually zero, the importation of
garments are hurting both the spinner and the spinner’s customers.
Another spinner of OE yarns said: “There’s only one way to change the situation and that’s
when supply nearly equals demand. And our only hope is to hang on until it changes. I’ve been in
this business for over 30 years and the last eight to 10 years have left me flabbergasted. We have
continued to add production spindles to an already saturated market.” It doesn’t make a lot of
sense, does it?
Pricing Bright Spot
A spinner who spins both ring and open-end yarns said: “Markets are better but they are helter
skelter. Shipping is good but there is no long-term business; however, there is a lot of spot
business. Prices are all over the map but there is one bright spot — prices have finally hit a
point where they are not sliding anymore.”
Weavers, as you know, have found that they can buy yarn cheaper than they can make it. This
is particularly true if the weaver is depending on obsolete spinning equipment which is more
expensive to operate and makes yarn of inferior quality.
One spinner said: “Many weavers are closing their spinning mills and outsourcing yarn for
their weaving operation. This will help balance our supply/demand problem. In addition, our good
customers are buying up smaller companies but it will take a couple of years for this to settle
down.” He also believes exports will increase over the next few years.
Ring-spun yarns are holding their own in both sales and pricing but, because pricing is so
much better than open-end yarn, imports are definitely impacting this segment of the industry. A
ring spinner reported: “Imported yarn pricing will generally run about fifty cents a pound cheaper
than domestic production. For instance, a 20/2 ring-spun carded-cotton yarn was recently offered at
$1.53 per pound delivered.”
No Weavers Left
Synthetic spinners have their problems as well.
“Markets are tough! Now is the time when we should be running wide open but our markets are
spotty at best,” said one synthetic spinner. He went on to say that markets for heathers (yarns
made with colored fibers) and home furnishings are quite good. Circular knits are spotty and
weaving markets for synthetic yarns are terrible.
Concerning the weaving areas he said: “There have been a lot of closings because of the poor
markets. We have virtually no weaver customers left.”
He then said something which may sound strange to you: “No one wants cotton spinning to pick
up more than those of us in synthetic spinning. When markets get tight or fiber prices go up,
cotton spinners try to get into synthetic spinning. They just don’t realize the difference between
spinning cotton and spinning polyester. The problem is we synthetic spinners have to live with the
oversupply of yarn which additionally can be substandard to that of regular spinners of man-made
fibers.”
This spinner reports that about half of his mills are running full with minor curtailment in
the remainder.
One spinner who had just returned from a seminar mentioned that one of the speakers said that
a successful textile company of the new millennium would have to understand finances better than
ever before, be able to accurately calculate the future return on investment from capitalized
expenditures and be realistic in their forward planning.
July 1999
