By  on June 26, 2007

MILAN — Italian spinners are bracing for a volatile market in the second half of the year.

Heading into the three-day Pitti Filati yarn fair, which opens July 4 at Fortezza da Basso fairgrounds in Florence, executives said they were concerned that the soaring price of raw wool, worrisome exchange rates and even uncertain weather patterns will counteract the otherwise strong market for high-end yarn.

"Unfortunately the market is not serene,'' said Eugenio Parravicini, general manager of Manifattura Sesia. "These are difficult economic times, wool is expensive and the quality is not optimum because of the drought that afflicted Australia."

To cope with market sensitivity, many firms have trimmed their industrial processes, while production moves toward high-end yarns with technological attributes.

Since Zegna Baruffa changed ownership a year ago, the firm has consolidated its three dyeing plants into one, cut 10 percent of the workforce and focused on high-end yarns. President Alfredo Botto Poala said that in order to survive the company needed to streamline its business to offer clients personalized service. Zegna Baruffa is on track to maintain its 2006 sales of 127 million euros, or $170 million at current exchange. However, Botto Poala added that he expects the amount of kilos sold to decrease.

"From December, raw wool has jumped in price by around 30 percent because of increased demand from Chinese buyers," Botto Poala said. "It's really a lot, and together with the rate of exchange, it will force us and, I am sure, other yarn manufacturers to increase prices."

Filatura di Grignasco, Luigi Botto and Cariaggi also have made significant structural changes in the past year.

At Filatura di Grignasco, two production factories have been relocated into one facility, which was recently equipped with a new and more efficient dyeing plant.

"The single factory offers an integrated production process and will help our position in Italy, equipping us to create yarn that has added value," said Riccardo Osella, general manager of the Biella-based Filatura di Grignasco.

The changes are expected to generate revenue gains by 2008, Osella said. The company had a volume of 37 million euros, or $49.5 million, last year.

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