Open-End Yarn Prices Increasing

ell, here we go again! Cotton prices are up, and rayon fiber producers have announced an
increase in their prices due to increasing costs of caustic. Acrylic producers have warned spinners
to expect a price increase due to increased prices of natural gas. Now, finally, open-end (OE)
spinners have begun to ask for increased prices for their products. One such spinner commented that
the OE markets were changing rapidly. He added, “ This price increase has been somewhat of a shock
to our customers, but they seem to understand. However, only time will tell if the retailers will
accept it. One thing is certain — we can’t continue to run our mills and lose money. Our OE
customers are quite optimistic for the first quarter and some have booked well into the second
quarter.” So, everything is not doom and gloom.

Concerning the comment above about customers understanding the price increase, several
respondents have said something to the effect, “Yeah, I understand, but when it comes to the bottom
line will I accept it (the price increase)?”

Ring-Spun Markets Slow

Ring-spun (RS) markets have hit a slowdown, according to some spinners, although the demand
for yarns for the denim trade remains good. Apparel markets for those products are reported as
spotty. Spinners and their customers, however, remain optimistic for the immediate future mainly
because of the last-minute surge of retail customers during the holiday season and the continued
strength of the denim market. Future business for RS yarns depends in part on the ability of the
retailer to move his inventories. The slowdown of RS markets did not effect all spinners because,
as one spinner said, “Ring-spun markets are up moderately, open-end yarn markets are up
considerably, prices are firming up daily, and our customers’ yarn supplies are down. Raw material
costs are up, but overall things are looking up.” Isn’t it good to hear a positive report once in

Synthetic spinners are definitely less than happy with their market conditions. When asked
about market conditions, one commented, “Market conditions are lousy! However, we are optimistic
for the first quarter — traditionally the first half is better in our business. Children’s
sleepwear business is improving, but right now automotive sales are way off and home furnishings
are pretty soft. Recently, we have noticed some shrinkage in business for cotton yarns, which
should help those of us in synthetics, but 2001 is going to be a tough year for synthetic yarn
sales.” He went on to say that his company had things in place before the end of the year to assure
a better first quarter. However, he didn’t say what those things were, but he anticipated a solid
five-day work week for all of his plants.

Weavers report that the first quarter “looks promising.” There was some curtailment during
December, but weavers are planning a full five-day operation for the start of 2001. Like spinners,
weavers also report that long-term business has shrunk, making it very difficult to plan their
operations. They also have similar pricing concerns. One weaver said, “Frankly, our customers are
not interested in a price increase and they will definitely resist such a move.” As one spinner
said, “Time will tell.”

Texturizers Concerned

Texturizers report that prices may actually drop because of imports. Interestingly enough,
the imports they refer to are not fibers but garments. Currently, markets for textured yarns are
quite soft and projected to stay that way through most of the first quarter. First quarters are
traditionally slow for texturizers, but improvement will depend on how retailers move their

As one texturizer observed, “If retailers move their inventory, business for us will
improve. Domestic capacity is nearly balanced with demand, but the imports from Asia upset that
balance.” Asian production of textured yarn and garments made from those products greatly exceeds
the demand there, according to reports from texturizers. That over-capacity is exported. It doesn’t
seem fair, does it?

It may not seem fair to those affected, but one respondent to the Yarn Market this month
reported that domestic fiber producers are running full. They can do that only because they are
exporting fiber. What’s the expression? What’s good for the goose is good for the gander.

One thing you have to say about people in the textile trades, especially sales — they are
always optimistic!

February 2001