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Yarn Market

Mixed Results For Spinners At Year-End

Jim Phillips, Yarn Market Editor

Spinners report mixed results heading into the final two months of 2013.

Some have been pleasantly surprised at the amount of orders coming in late in the year, while others have noticed a substantial drop-off.

"Our business has been generally good for most of the year, with finer yarns being particularly strong," said one spinner. However, another said: "We have noticed a pretty big decline recently. We think this is due, in large part, to customers trying to decrease their inventory at the end of the year, and we expect business to pick up considerably at the start of the next year."

Another spinner noted that business at his company was "at best, fair. We are still running full, but orders are erratic. Most of the programs have been completed and those orders we are picking up are spot orders. Everything right now is pretty much day-to-day, week-to-week. We certainly expect our long-term business to pick up again after the holidays."

Consumer Confidence Decreases
Some industry executives and experts point to the recent government shutdown as a major cause of slower business. "Consumer confidence in the economy deteriorated significantly over the past few months as a result of all the posturing in Washington," said one industry observer. "And, since the resolution to that shutdown was temporary, I think we can expect consumers to be wary for the short term, at least until the matter is completely resolved."

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Indeed, The Conference Board Consumer Confidence Index® corroborated the decline in consumer outlook. The Consumer Confidence Index decreased sharply in October. "Consumers' expectations, which had softened in September, decreased sharply in October," the Conference Board reported. "Those expecting business conditions to improve over the next six months fell to 16.0 percent from 20.6 percent, while those expecting business conditions to worsen increased to 17.5 percent from 10.3 percent."

Overall, spinners have been pleased with their year-to-date results and are optimistic that 2014 will bring more of the same. "Our business has been in line with our expectations for most of the year, and barring some unforeseen crisis, we see no reason not to expect it to continue into next year," said one spinner. "We anticipated the slowing demand going into the holidays, and expect opportunities to increase again by late January."

"Green" Still Strong
In keeping with a continued consumer focus on sustainable and ecologically friendly products across a number of market segments, many spinners - especially those involved in specialty products - note increased demand for "green" products. "Sustainable products are in high demand," said one spinner. "Organic cotton, recycled polyesters and cotton continue to grow in importance. Comfort fibers, like modal, are increasingly important. There are numerous opportunities for performance yarns."

"In successfully competing with low-cost countries, innovation and speed-to-market remain the key differentiators for U.S. spinners," said one yarn broker. "In this business, customer service is the primary driver. The ability to manufacture and deliver quick-turn orders still sets us apart from others. One of the factors that set our company apart is the ability to maintain an inventory sufficient to deliver high-demand products quickly."

It has been noted that, for most of the past two years, the U.S. spinning industry has been operating at close to capacity. This has prompted some within the industry to be bullish about the future, even predicting increased textile investment in the United States. This, however, hasn't kept some facilities from shuttering. Honduras-based Grupo Karim's Jo-Mar Spinning plant closed in October. The Belmont, N.C., plant, which opened in 2010 in a former R.L. Stowe Mills Inc. facility, closed as a result of increased imports, specifically "additional U.S. trade with Canada and Mexico brought on by the NAFTA," Jo-Mar President Josh Hamilton said.

Cotton Prices Down Slightly
The price of cotton continues to move down slightly. Average spot cotton quotations for the base quality of cotton — color 41, leaf 4, staple 34, mike 3.5-3.6 and 4.3-4.9, strength 27.0-28.9, uniformity 81.0-81.9 - in the seven designated markets measured by the U.S. Department of Agriculture averaged 74 cents per pound for the week ended Thursday, Nov. 7, 2013, down from 75.62 cents per pound the previous week and down almost 10 cents since September.

November 2013


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