Combed-cotton Ring-Spun In High Demand

Demand for yarn continued to be strong through the first few weeks of November, with combed cotton
ring-spun in particularly high demand.

“The ring-spun business remains very strong, fortunately,” said one spinner. “Combed cotton
ring-spun has very limited availability right now. Several companies in the Western Hemisphere are
growing their ring-spinning operations to take advantage of the demand. I really don’t see that
changing in the near future. Even so, there are still not a lot of companies in the United States
that produce combed-cotton ring-spun. In the short-term, there’s just not enough combed-cotton
ring-spun to go around. That’s actually created a pretty good situation for those companies
producing the yarn.”

Another spinner noted: “I see some producers in Latin America moving toward producing more
cotton products. That will alleviate some of the demand pressure eventually, but it’s not a quick

Despite the high demand, however, prices are still below where they need to be, one broker
said. “It seems like old-hat to be talking about it now, but the price fluctuations in raw
materials over the past couple of years still makes customers wary. A number of them were stuck
with high-priced orders when the bottom fell out of cotton prices. They still want us to sell to
them at unrealistically low prices. A lot of us can’t even make yarn at the prices they want to

With demand such as it is, spinners need to pay careful attention to customer relationships,
said one industry insider. “We’ve worked hard over the past decade to get back some of the business
that had previously gone to Asia. We’ve built our niche upon quality and quick-turn. But if our
customers can’t get the product they need from us, they will go elsewhere. It becomes really
important to make sure customer relationship management is a top priority.”

Added another spinner: “The dynamics of the ring-spun market have placed a premium on
communication. The capacity versus demand deficit, paired with limited inventories, has resulted in
various scheduling challenges for our customers. The ability to understand these complications and
our capability to offer solutions has been an important component of customer service.”

He added, “The retail prospects determine the demand for the textile environment. Currently,
the market opportunities promote ring-spun product. It is important that these requirements are
fulfilled in order for the momentum for Western Hemisphere sourcing to be maintained.
Communication, understanding, and responsiveness are required to maintain the momentum.”

Cotton Prices Continue To Fall

Although considerably more stable than in the past year, cotton prices continue to fall,
broken only by occasional week-to-week increases. For example, for the week ended November 15,
prices averaged 67.27 cents per pound, up from 65.41 cents per pound the previous week, but down
from 70.70 cents per pound in late September and 97.30 cents per pound from the same week of
November a year ago.

“Even though the cotton market is considerably more stable than it was a year ago, our
customers keep seeing these small declines and become even more resistant than ever to paying a
reasonable price,” said one spinner. “It’s a battle right now that’s just hard to fight. The choice
can come down to either refusing to sell or standing down production, neither of which is to the
spinner’s advantage. Perhaps, if we have a strong holiday season in consumer spending and retailers
anticipate higher demand for products in the new year, we will see this loosen up a little. But,
for right now, it’s really tough to create any margin.”

November 20, 2012