MILLS GRUMBLE AS COURTAULDS SETS ANOTHER PRICE INCREASE ON RAYON

Byline: Michael McNamara

NEW YORK — Worries over fabric margins mounted Tuesday as Courtaulds Fibers announced the second price increase this year on its rayon fibers.
The new increase will add 12 to 15 percent to prices, depending on fiber types, effective May 1. While it is another example of the quickening pace of price hikes that have hit both natural and man-made fibers over the past 14 months, it is also a particularly steep one.
On Jan. 1, Courtaulds put into effect a 5 to 10 percent increase on rayon. That hike marked the first time since January 1991 that the company raised its rayon prices. The January 1991 hike averaged 6 percent.
Dick Doidge-Harrison, president of the Courtaulds rayon division, said despite several steps the firm has taken to reduce costs, the price hikes were unavoidable and that further increases in rayon prices “are probable later this year.”
“We recognize how unwelcome this is, given the pressure exerted from the retail level on all of us in the supply chain,” said Doidge-Harrison. Courtaulds is the largest domestic producer of rayon at about 180 million pounds annually. Doidge-Harrison said the increase “is driven by huge increases in world prices for wood pulp and caustic soda.”
“We have reduced numbers employed about 20 percent, reduced other costs and made step changes in productivity,” Doidge-Harrison said. “This cost reduction action will continue. Still, raw materials make up a large part of the cost of producing rayon and the scale of these increases is way beyond anything that can be contained.”
A spokesman for Lenzing Fibers Corp., the other top domestic rayon maker, at about 125 million pounds annually, said his firm “is evaluating the situation.”
The upward surge of price has affected other fibers as well:
l Polyester filament has had two price hikes in the last six months.
l As of Monday, nylon prices went up anywhere from 5 to 8 percent.
l Acrylic prices, which went up in January, are set to rise again in April.
l At the end of January, cotton was priced at 95.2 cents a pound mill-delivered, against 71.5 cents a year earlier. This week cotton was being quoted at $1.02 a pound. (See related story, this page.)
Mill and converter executives said their businesses have already seen shrinking margins, and this latest wave of fiber price increases will put even more pressure on those margins. “We are not able to pass along these costs,” said James Marion, president of Bloomsburg Mills, a mill that produces a large number of rayon-containing fabrics. “We’re able to deal with a rayon increase a little easier than one in polyester, because some of the fabrics using rayon are in a little higher demand. But even some of those markets have begun to soften a little.”
“The increase in rayon could not have come at a worse time,” said Gerald Rodelli, Stonecutter Mills’ senior vice president of sales and merchandising. “I respect the fact that feedstocks go up, but in this world, timing is everything, and the converters — our customers — have found business to be very difficult over the past few weeks.
“As a company, we have an excellent relationship with all of our fiber suppliers,” Rodelli added. “We respect their decision, however we disagree with it.”
Barney Kelley, principal of Nuance Textiles, a converter here, said, “The problem is that my customers are not keeping pace with the changes at the supply end, and I’m having a difficult time passing along the increases I’m getting.
“The consumer is not willing to pay more, however, so we’re sort of getting squeezed in the middle by all this,” Kelley said.