Yarn Market: Production Continues To Expand

By Jim Phillips, Yarn Market Editor

With the demand for U.S.-produced fiber and yarn increasing, the industry is finally poised to grow again, after some four decades of decline.

It has been previously reported that several new yarn plants are under construction, and now DAK Americas has announced a significant increase in fiber capacity. The company recently reported: “… an increase in its polyester staple fiber (PSF) capacity of 230 million pounds per year to meet growing demand in the Americas. The new fiber capacity will be installed at DAK’s Pearl River site in Bay St. Louis, MS, with a project start-up in the second half of 2016.”

According to DAK, the project will create 86 new jobs, including “positions in operations, maintenance, technical and management.” DAK recently completed a PSF expansion at its Charleston facility, adding 27 million pounds per year of PSF capacity.

From 1997 until 2009, some 650 textile plants closed. “We finally got to the point a couple of years ago where we reached the equilibrium point,” said one industry observer. “We had reduced spindles to the point that our capacity roughly matched demand. Now, however, as more programs are beginning to move back, we are finding that we have too little capacity in some sectors.” In recent times, for example, companies in Brazil, Canada, China, Dubai, Great Britain, India, Israel, Japan, Korea, Mexico and Switzerland, as well as in the United States, have announced plans to open or expand textile plants in Georgia, Louisiana, North Carolina, South Carolina, Tennessee and Virginia.

“The industry has been poised for growth for some time,” said one industry executive. “The key was for us to get off the roller coaster. We had such a long time where we would have great years followed by dreadful years. What we needed was just a period of long-term stability so that we could accurately assess what the real demand was. Providing something unexpected doesn’t derail this progress — and providing our government doesn’t give away the store in trade agreements — I think you will see a period of slow, but steady, growth in the U.S. industry.

Orders Expected To Stay Strong
A sustained period of stability is just what the industry has experienced for almost three years.

And that continues into the closing months of 2015. Ring-spun yarns are in high demand, as are a variety of polyester, blended and open-end yarns.

“It looks like the fourth quarter is going to be strong,” said one spinner. “We are in the middle of a very good run, and I just hope it continues.”

“If you don’t have your positions in ring spun, good luck to you,” said one yarn broker. “It is hard to come by, especially for smaller customers. And if you do find it, you are going to pay a premium.”

Cotton Remains In Low 60s
Part of the reason for the stability of the industry is that cotton prices have stabilized, hovering between 60 and 65 cents for some time. “Customers are confident at the moment that what they are buying will maintain its value,” said one observer. “It wasn’t that long ago that many customers were burned by buying product with very expensive cotton and then being unable to recoup their investment when the bottom fell out of the market.”

As of August 28, 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 U.S. Department of Agriculture averaged 61.30 cents per pound, down from 64.11 cents the previous week and 67.04 cents reported the corresponding period a year ago. Daily average quotations ranged from a high of 64.17 cents August 21, to a low of 59.61 cents August 26. Spot transactions reported in the Daily Spot Cotton Quotations for the week ended August 27 totaled 2,725 bales. This compares to 5,645 bales reported the previous week and 13,668 spot transactions reported the corresponding week a year ago. Total spot transactions for the season were 17,776 bales compared to 21,046 bales the corresponding week a year ago. The ICE October settlement prices ended the week at 63.83 cents, compared to 67.66 cents
the previous week.

September/October 2015