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Yarn Market
Alfred Dockery, Technical Editor

Will Markets Firm As Capacities Fall?

Alfred Dockery, Technical Editor

C arolina Mills Inc., a 78-year-old company based in Maiden, N.C., became the latest player to exit the US yarn market with an announcement that it will cease domestic yarn manufacturing later this summer. More than 300 workers will be looking for new jobs.

“Petroleum and synthetic fiber prices just going out the roof was the final straw for us,” said Steve Dobbins, president and CEO. “We can’t be competitive with these raw material prices competing against the governments of other countries.”

The company will maintain some small specialty manufacturing in the form of Carolina Silver Technologies, a high-tech operation producing silver-plated fibers, yarns and fabrics primarily for medical uses.

Carolina Mills also will have an international selling and sourcing business working with textile and non-textile products. In addition, it will operate a logistics business utilizing its warehousing, distribution and trucking capabilities.

“It’s a big change for us moving from being a large domestic manufacturer to become a smaller, nimbler company moving into the future,” Dobbins said. “We’re switching from a battleship to a speedboat.”

“Unfortunately, a lot of good folks through no fault of their own will be displaced. It’s a sad conclusion and a sad commentary of what has continued to go on in our business, particularly on the synthetic side,” Dobbins concluded.

Improvement Or Steady State

Spinners were divided in their assessments of the effects of the recent reductions in domestic yarn production. Some feel the spindles taken off-line, especially in open-end, will firm up the market and improve conditions. Others take the position that the plants were closed because the business just wasn’t there to support them, so conditions remain roughly the same.

“If you look at the steel industry, it had tremendous attrition. Then at a certain point it congealed and in fact, became much more profitable,” said a multisystem spinner. “I hope our industry goes through something like that. I think there are opportunities for the remaining players to each have enough business to keep themselves going and, with a little ingenuity, perhaps the opportunity to grow slightly.”

“When companies go away, that production has already been lost to imports,” said a ring spinner. “There’s no point chasing that business; it’s already gone.”

“Some of the remaining customers are trying to establish themselves with the remaining yarn spinners out there,” said an industry observer. “[The industry] is still in consolidation mode.”& amp; amp; amp; amp; amp; amp; amp; lt; /p>

Summer Optimism

Mill managers report fairly full running conditions ranging from five-plus to seven days per week. Outlooks for the summer or at least through the Fourth of July are strong.

“It will be busier before the summer is over and probably slow down in the fourth quarter,” said one spinner. “We are reasonably happy with the volume.”

All of the spinners polled this month agree this summer’s running conditions are much stronger than this time last year. Interestingly enough, they have all cut back their production capacity in the last year.

“If it stays anywhere near where it is right now, then it will be a good summer,” said a specialty open-end spinner. “Of course, we don’t know about the fall yet. Once upon a time, you could sit down and sort of project out, but it is getting very difficult to do that anymore.”

“We were pretty busy this time last year too,” said a ring spinner. “After the Fourth of July last year, it really tailed off until the end of the year. We are hoping that won’t happen this year. History says that it will slow down in the second half.”

On the fiber front, cotton prices remain fairly stable. Man-made fibers, especially polyester and polypropylene, continue their price upswing.

“[Man-made] fiber prices have risen more than yarn prices,” noted one spinner. “That’s not surprising with oil in the $70-per-barrel range.”

While yarn price pressure appears to be one of the few constants in every spinner’s existence, there are reports that ring-spun prices have definitely gone up, especially on finer counts.

Catalog Of Concerns

This month’s survey of spinners finished with a question about what they saw as the tough issues facing their companies today. Along with the expected worries — such as tighter margins, rising healthcare costs and keeping a skilled workforce — credit worthiness and falling apparel prices rounded out their list.

“I worry about the credit worthiness of our customers,” said one mill executive. “I worry about raw material pricing. I also worry about willingness of financial institutions to provide credit to customers and to this industry.”

“Deflation in the price of apparel and its never-ending spiral downward,” said one spinner. “ That’s the root of all evil, and I don’t see it stopping.”

May/June 2006

 





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