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Italian Yarn Spinners Brace for Higher Costs

Yarn makers set to unfurl their spring 2015 collections at the three-day Pitti Filati fair are turning to alternate materials.

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MILAN — Yarn makers set to unfurl their spring 2015 collections at the three-day Pitti Filati fair that begins Jan. 22 are bracing for price hikes in cashmere, wool and even cotton.

The increase in raw material costs is being blamed on a limited supply of wool and stockpiling tactics on cotton from large fast-fashion companies and industrial countries like China.

“Cashmere is out of control,” said Filpucci chief executive officer Federico Gualtieri. “Prices are currently about 20 percent higher this month versus a year ago.”

Botto Giuseppe ceo Silvio Botto Poala said, “Big apparel companies buy in massive quantities [hundreds of thousands of tons at a time]. By doing this they raise the demand.”

Over the year, there’s also been a rise in silk and wool prices.

“The current situation does not allow us to talk yet about stability in terms of wool prices,” said Lincoln Germanetti, ceo of Manifattura di Valduggia SpA, a unit of Filatura e Tessitura di Tollegno. “During 2013, we saw a 10 percent increase.”

Cashmere prices are currently trading at a high of $132 a kilo due to tight supply, and a further increase is expected, The Woolmark Co. said in its December report.

“Given prospects for an overall tighter wool supply, a lower Australian dollar, strengthening recovery in the USA and some parts of Western Europe, a mild export lift and steady consumption growth in China, but lower competitor fiber prices, we are cautiously optimistic for 2014,” Woolmark said.

China’s stockpiling of cotton over recent months has helped to elevate prices slightly.

Macquarie’s London-based commodities strategist Kona Haque sees prices ranging between 85 cents and 93 cents a pound in 2014. Cotton prices are currently at about 82 cents a pound.

“With the Chinese having committed to another season of maintaining a price floor double that of the world, we expect to see demand for the world’s cheaper and more freely available stocks lead to a potential tightening [of cotton] in the world outside of China,” Haque said.

Due to rising costs of high-end wool and cashmere, Italian yarn makers at Pitti Filati will likely showcase more alternative materials, such as viscose and mohair.

“We will use mohair for the next season,” Filpucci’s Gualtieri said. “It comes primarily from South Africa and is beautiful and is considered prestigious.”

“Using alternative materials such as mohair, for example, is due solely to stylistic diversification. Wool and cashmere remain fundamental components of our collection,” said Paolo Todisco, ceo of Zegna Baruffa Lane Borgosesia.

According to Italian textile and fashion consortium SMI Sistema Moda Italia, in the first seven months of 2013, Italian yarn exports fell 3.4 percent compared with the same period of 2012, caused by weaker demand from developing nations and a drop in exports to European trade partners.

Despite the economic data, key yarn players forecast a moderate rise in sales once 2013 numbers are finalized and are optimistic about 2014.

“In 2013, we predict a rise in sales of about 3 percent,” said Todisco. “In 2014, we see a rise of our premier collections identified by Botto Poala and Chiavazza and a substantial stability of the classic Baruffa line.”

Cashmere leader Cariaggi said sales will likely rise slightly to 102 million euros, or $139.7 million, in 2013.

“We expect 2014 sales in line with 2013,” said Cariaggi board member Cristina Cariaggi. “The market situation isn’t one of the best, but we are convinced that in this contest companies will be able to remain competitive due to continued investments in innovation, research and development.”

Botto Giuseppe said China has recently experienced a slowdown, though the Japanese and Italian markets are showing signs of improvement.

“In 2014 we hope to see China improve and we also hope our sales will rise in the double digits or about 10 percent,” Botto Poala said.

About 95 brands, versus 100 at last year’s fair, will be featured at the 74th edition of the exhibition.

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