Waiting For Good News
By J. Karl Rudy, Technical Editor
his month, spinners quoted in “Yarn Market” agree on a quite a few things. Unfortunately,
most aren’t all that optimistic.
The one topic most talked about was that Step Two of the government’s support program stopped on December 15. Virtually all spinners expect yarn prices to firm up and maybe even move up. This program ran out of money long before expected and growers are understandably concerned.
Not only are they upset with the end of the program but they are being advised not to plant any more cotton than they did last year,” said one respondent.
"We are expecting the shortest crop ever this coming season. I think that after Step Three is triggered, mills will begin using imported cotton. Step Three lifts restrictions on imported cotton and this fiber is about 15 cents cheaper (per pound) than domestic cotton. Prices of domestic cotton are already off sharply.”
He was talking about price averages that will be reported next month. So tune in next month to see what happens.
One spinner told “Yarn Market” that his company bought domestic cotton mainly because they were not sure when the certificates would run out. The implication was that they would already have imported cotton had they been certain of the date.
Another thing spinners agree on is the continued lackluster markets. “Everyone is trying to sell yarn, especially the verticals,” said a cotton spinner. “Business is very sporadic. There is no long-term business at all. A buyer can go to spot markets and get any yarn at just about any price.
“We have good contracts for the beginning of 1999. Now if business picks up and people take what they have ordered, we will be in good shape for 1999.”
A synthetic spinner, when asked about market conditions, said rather abruptly: “This is a bad time to ask, but let’s just say it is typical for this time of year. Textile markets are harder to predict than ever, and the fact that retailers report their sales were not up to expectations raises concerns in my mind about future sales in 1999. The current oversupply of yarn only adds another unknown factor.”
Imports add yet another dimension to this complicated formula.
A cotton spinner mentioned that ships are now returning to ports overseas loaded with nothing
but empty containers.
All you have to do is drive toward a port city and count the containers moving to and from those cities to realize the awesome number of containers needed to transport imported items to the domestic customer.
“Yarn Market” has previously reported late deliveries due to the lack of containers, and the situation has certainly not improved according to many spinners.
“We get calls all the time from foreign exporters,” said a spinner. “We recently got a call from a person representing a mill in Asia. They were offering an 18/1 ring-spun, carded cotton for $1.10 per pound.
Another group in Asia recently reduced its price for 30/1 ring-spun, carded cotton from $1.60 to $1.35. The same group dropped the price of 30/1 ring-spun, combed cotton from $1.90 to $1.70.”
Compare these prices to those quoted in the chart to the right to realize the severity of the problem. Part of the solution is to find something to fill those empty containers being shipped to foreign ports.
Asian imports are hurting pricing for the texturizers as well. “While Asian imports are down, they are quoting prices everywhere,” reported one texturizer.
“The end result has been a reduction in our pricing in order to remain competitive. We stood plants at Thanksgiving and 10 to 14 days at Christmas and consider the first quarter unknown as far as projections are concerned. We are very worried about our customers because there are lots of imported garments coming.”
To cotton spinners, this must sound very familiar and upsetting, because cotton garments are included in this scenario.
One spinner told “Yarn Market” that an American icon is struggling. No mention was made as to the cause, just that denim markets are practically non-existent and many plants had major downtime during over the holidays.