Yarn Market: Yarn Spinners Start Strong

By Jim Phillips, Yarn Market Editor

Yarn orders in 2015 have so far met expectations, continuing a run of stability that has seen the industry add capacity for the first time in decades.

“The ring-spun business remains very strong,” said one spinner. “Combed cotton ring-spun has very limited availability.  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.  There are still not a lot of companies in the United States that produce combed-cotton ring-spun. For now, 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.  With the price of cotton leveling off in the past few months and hovering around $0.60 per pound, I think you will see more companies returning to cotton. With cotton prices jumping all over the place the past few years, a number of customers transitioned from 100-percent cotton to blends. Now, some of those orders are moving back to all cotton.”

Cotton is expected to be in plentiful supply for the remainder of the year, which bodes well for continued growth, spinners say.  The downside is that, with an oversupply, the possibility exists that fewer acres will be planted for the next season, which could drive the price back up.

Average spot cotton quotations for the base quality of cotton (color 41, leaf 4, staple 34, mike 35-36 and 43-49, strength 27.0-28.9, uniformity 81.0-81.9) in the seven designated markets measured by the USDA averaged $0.6085 per pound for the week ended Thursday, February 12, up from $0.5956 the previous week, but down from $0.8435 reported the corresponding period a year ago.

Value-Add Products In High Demand
Products in high demand at the moment, especially in the specialty segment, are those that offer some form of value add. “The markets that we serve are continually seeking to differentiate themselves, which is extremely valuable for our R&D initiatives,” a specialty spinner said.  “Products that offer either a sustainability or a performance attribute are in demand. Texture is also a very desirable characteristic.” Another spinner agreed: “We’re not running lots of the same things these days.  It seems everybody wants something different.”

“In a commodities-based business, price always rules,” said one business analyst.  “But in a market where there are multiple choices from similarly priced competitive products, opportunities exist to separate from the pack.  Speed to market is, of course, a key factor.  And so is customer service, both before and after the order is placed.  Product quality is also a huge issue.  Few things ruin business relationships faster than a product that is not quite up to specs.  But a major intangible in business is the customer experience. How easy is it for customers to buy from you?  Is ordering simple, with clearly delineated expectations for both the manufacturer and the customer? In a commodities world, all else being equal, customers keep coming back to those companies they like to do business with.”

“We are able to keep our customers happy by having an aggressive delivery strategy,” said one Southeastern spinner.  “Our ability to get business often hinges on whether we can get product to our customers, particularly those in Central America, faster than anyone else.”

Said another:  “Our customers tell us they often have quality issues from offshore manufacturers.  Sometimes the product isn’t up to specifications.  Other times they get the wrong product entirely. Our customers know they are going to get exactly what they ordered when they buy from us.  This helps us tremendously, especially in those instances where we can’t quite match the price.”

U.S. exports remain strong, although the strength of the U.S. dollar is having some impact. “There are some countries that artificially devalue their currencies, which makes it hard for Made in USA products to compete fairly in a global marketplace,” noted one analyst. “Nevertheless, many companies still maintain an aggressive global presence.”

February 2015