Yarn makers grew more pessimistic in the second quarter as the global pace of investment in mills that spin cotton slowed and rising costs squeezed profit, Cotlook Ltd. said.
A quarterly business confidence survey showed that spinning-capacity expansion appears ``stalled,'' and many mills appear to be curtailing the number of spindles in use to make yarn from cotton, the Liverpool, England-based research firm said today in a report. Of the 65 mills surveyed in China, the largest consumer of cotton, over two-thirds had idled capacity in the second quarter, Cotlook said.
The mills are ``more downbeat than anything we've had in the last 12 months and the most downbeat we've seen in recent years,'' Matt Robinson, a Cotlook director, said in a telephone interview.
Tightening global credit markets after the U.S. subprime mortgage-market collapse in August slowed the investment pace in the yarn industry, Robinson said.
Higher energy and cotton costs and stagnant yarn prices narrowed profit margins at spinning mills, he said.
Cotton futures have gained 57 percent from a 23-month low on May 14, 2007, while crude oil has more than doubled in the period, reaching a record $145.85 a barrel on July 3.
Yarn-makers also said they are using ``a greater percentage of man-made fibers to the detriment of cotton,'' the survey showed.
Source : Bloomberg.com |
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