2013 To Date: Look Back, Look Ahead
Jim Phillips, Yarn Market Editor
As one spinner said: "It's been a long time since we've been this stable. We've had some great quarters over the past 15 years and a whole lot of bad ones. But it has been awhile since things have been this consistent from month to month. With the exception of only a week or two at the beginning of the year, orders have been coming in at a steady rate. We are seeing new customers. And old customers are becoming more comfortable with slightly larger and longer-term orders."
A yarn buyer added: "Business has been strong for ring-spun yarns since the middle of last year. Over the past few months, we've seen the open-end business pick up a good bit as well. Synthetics and blends are also more in demand than they were a few years ago. Some folks switched over to blends when cotton prices went way up a couple of years ago and never switched back."
Bigger Orders, Better Margins
Said a yarn broker: "I have been quoting on more big apparel programs today than I have in a very long time. I have people asking me to quote on orders of 200,000 pounds a month or more. They want to know if that yarn is available, what's the cost and how quick they can get it. I have customers calling me every day now that wouldn't even return my calls a year ago."
As a result of the strong and stable conditions, some spinners are reporting slightly improved margins over years past. "Pricing remains an issue for us," said one spinner, "and I imagine it always will. Customers fight for every penny, and I've lost some orders over a few cents a pound. But, overall, customers are more comfortable now that raw material prices have stabilized. They are not as concerned as they were a few years ago that they might get stuck with inventory they either can't move or have to dump at a loss."
Added another industry insider: "What a consistent period of good business and decent margins gives us is the opportunity to reinvest in the industry - to update equipment, processes and procedures so that we can remain highly competitive in the global market. I believe the industry in this country is ripe for new investment and additional capacity. I think that, for the first time in a long time, there are people excited about the future prospects for our industry."
The Next Six Months
Unless there is an unexpected change in the economy or a precipitous drop in consumer confidence, spinners expect business to remain robust for the second half of the year. "At this point in time, I don't see any reason why business should fall off at all," said one spinner. "In fact, with the biggest retail seasons on the horizon, it is our hope that, if anything, we will be even busier over the last half of the year. At the same time, we recognize that anything can happen, and we keep a watchful eye on the market and try to make sure our production and demand are as in sync as possible. We want to be as just-in-time as possible."
Some spinners are concerned about how recent developments in government will affect consumer confidence over the last half of the year. "When people lose confidence in their government, they often prepare for the worst. That is my biggest concern. I think a lot of people are losing confidence in where our nation is headed by the activities of the administration in Washington. You read every day now about the government invading our privacy and spying on us. That is something that could trigger a fall in consumer confidence as well."
Another spinner said: "I think the key to sustaining what we have is the ability to continue to meet the delivery demands of our customers. And that becomes an issue in periods of very high demand. One of the significant advantages we have over our competition in Asia and the Pacific is the ability to deliver the highest-quality yarn to this hemisphere in the shortest amount of time. When demand and production are in close alignment, manufacturers need to make sure that every element of the supply chain is working as efficiently as possible. Any glitches anywhere along the way can delay an order and compromise the business. In this day and age, communication is the key."
Click here to download current yarn prices