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Mon, Aug 28, 2017
Vol 1, Issue No. 33

Textile Insight
Unifi Fights Chinese Imports; Tightens Cost Structure

The REPREVE parent, which is tightening its organizational structure and cutting costs in its North and Central American operations, is fighting back against yarn import dumping from China and India.

In early April, six months after filing initial trade petitions, Unifi asked the U.S. Dept. of Commerce to apply retroactive duties on yarn imports from China. The request was granted weeks later as the Commerce Dept. also issued preliminary countervailing duties on Chinese and Indian imports of polyester-textured yarn. An announcement on preliminary anti-dumping duties is expected by June 30 with duties retroactive on imports from China during the 90 days before the announcement. Countervailing duty rates range from 32 percent on most Chinese producers to in excess of 450 percent for suppliers who did not comply or cooperate with the U.S. government. Duty rates on India yarn imports range from 7 to 20 percent.

In the months after Unifi filed its petitions with the government, polyester-textured yarn imports from China spiked 27 percent, according to UFI senior executives who suggested the action was prompted by efforts “to stockpile imported yarn” before any preliminary duties were imposed. In reporting Q3 results, Unifi said, “yarn imports placed significant pressure on volumes, selling prices and the profitability for our largest polyester product lines, particularly in the U.S.”

Unifi reported a net loss of $1.5 million in Q3 and a “meaningful” decline in consolidated gross margin to 7.7 percent as total revenues rose 8.5 percent to $180 million. The polyester segment, adversely impacted by competitive pressures from yarn imports into the U.S., contributed to a weaker sales mix and lower fixed-cost absorption. The nylon segment benefited from higher selling prices, largely due to a dramatic increase in nylon raw material costs. International top line performance was a bright spot with sales growth driven primarily by REPREVE sales across Asia and Europe.