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Fabric pricing factors

Graphics | May 1, 2011 | By:

If you are in the specialty fabrics industry, you’re aware of the sharp price increases that have occurred in recent months. As a buyer, you anticipate the increases and try to minimize them. As a seller, you pass through the increases in a way that is consistent with what your competitors are doing, and you explain the factors driving the increases to your customers.

While the use of fabrics for graphics applications continues to grow rapidly, it is still relatively small compared to the quantities being used worldwide in the apparel, home furnishings, automotive and industrial markets. It is for those traditional textile markets that most yarns and fabrics are produced. When it comes to pricing, supply and demand are the driving forces.

The majority of fabrics sold into the graphics market are 100-percent polyester. However, volatility in the cotton market ignited the price increases. During the economic downturn of 2008/2009, worldwide capacity to produce yarns and fabrics of all types was reduced. Fiber prices dropped significantly during that time.

In 2009, fiber prices rose steadily, reflecting the recovering worldwide demand, particularly in China and India where textile production remained strong. Flooding in Pakistan in 2010 destroyed most of its cotton crop and reduced global supply, which triggered the spike in cotton fiber prices. Countries that would have exported much of their cotton in 2010 kept it for domestic processing or held it in speculation that the prices would continue to rise.

The average price for cotton fiber over the past 40 years has been about 62 cents per pound. In January 2009, the price was about 50 cents per pound. In 2010 it was 75 cents per pound. By January 2011, it rose to $1.50 and it peaked in March at $2.12, an unprecedented high price.

As cotton prices rose, fabric producers began to use more polyester and poly/cotton blends, which drove polyester prices up sharply. At the same time that cotton prices were rising, crude oil, the primary raw material used for making polyester, rose from $40 per barrel to over $100. Just about everything that could happen to put upward pressure on prices (tight supply, strong demand, high raw material costs) has happened.

Many of the changes affecting fabric prices impact the cost of other printable materials. Through all of this volatility, we need to remind ourselves and our customers that an image printed on fabric conveys a message of high quality and lasting value. That will not change.

Jeff Leagon is vice president of business development at Aurora Specialty Textiles Group Inc., Aurora, Ill.

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