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Yarn Market

Orders Finally Begin To Materialize

Jim Phillips, Yarn Market Editor

After a much-slower-than-anticipated first four months of the year, yarn spinners reported a substantial uptick in business beginning in late April.

"We're starting to get a lot of inquiries and have begun making some sales," said one spinner. "And it seems to be across the board and not limited to just one or two products. Inquiries into ring-spun yarns have really picked up, and there seems to be some movement in open-end as well. There's demand for upholstery and home furnishings. So, we have our fingers crossed that we are finally out of an inventory-correction period and are moving into a replenishment period."

Some of the increase in business activity can be attributed to orders for the back-to-school season, as well as the initial positions taken by customers for the holiday season. "Our hope is that this is not just going to be a transitional phase, created by the immediate retailer need to get product on the shelves for the upcoming peak shopping periods," said a yarn broker. "We have our fingers crossed that this is the beginning of the sustained increase in business that we expected way back at the beginning of the year."

Yarn Prices Stabilizing
There is speculation on the part of some spinners that the recent surge in inquiries and orders is due, in part, to an increase in yarn prices from Asian suppliers. "It's been a long time since we've seen the price of yarn go up," said one spinner. "Since the middle of last year, prices have been in free fall, and it has been a buyer's market. We're hearing, though, that the price of imported yarn is beginning to increase again. So a number of customers are looking to bring business back to the Western Hemisphere."

Another spinner agreed: "We've been able to stabilize our own prices somewhat. And that's usually an indication that prices from other suppliers are also stable or on the rise."

Is The Increase In Business Sustainable?
The yarn business has been topsy-turvy for many of the past 25 years. Heady periods have been followed by times of deep decline. "There just doesn't seem to be any equilibrium anymore," said one spinner. "It's either feast or famine. Just look at the past two years."

Indeed, the industry emerged from the global economic crisis — one that saw the demise of numerous U.S. spinners — to enjoy a year and a half of the most robust business seen in decades. And then, in mid-2011, the bottom dropped out. Since then, it has been hit-and-miss for many spinners.

"We've had times — like at the very beginning of this year — when we said, 'Here we go again; business is about to boom again.' But those times were very short-lived. After a brief increase in orders, business became scarce again. It's to the point where I am not sure anyone knows what to expect. We were cautiously optimistic about this year, but so far, it just hasn't panned out. We're hoping that what we are seeing now is a trend that will last for a little while."

One industry executive close to a number of mills put it succinctly: "We all like for our business to be great, but we don't need for it to be great. What the industry really needs is a sustained period of good business — not this cycle of a few months of incredibly good business followed by a few months of incredibly bad business."

Made In USA Making A Comeback?
Spinners and yarn buyers have reported seeing a substantial increase in the amount of Made in USA apparel in department stores over the past few months. Is this an indication that consumers are once again becoming label-conscious?

"Retailers certainly aren't putting this merchandise on the shelves out of the goodness of their hearts," said one spinner. "There has to be a reason, and that reason is usually customer demand. It seems that more and more, U.S. customers are looking for merchandise made domestically. And retailers are responding. We need to say 'thank you' to our customers for this and let them know that it does make a difference."

He continued, "This has the potential to be a big thing for our industry, and we owe it to ourselves and our customers to get the word out both inside and outside the industry that this is happening."

May/June 2012


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