RPT-ANALYSIS-American affair with cotton frays as man-made fibers take to catwalk

Thu Mar 13, 2014 9:32am EDT

(Repeats to add link to FACTBOX in second section)

By Chris Prentice

NEW YORK, March 13 (Reuters) - Cotton is no longer king of the U.S. apparel industry as lower prices fail to revive consumer demand and once-mocked man-made fibers take a permanent place in American wardrobes.

U.S. imports of synthetic clothing may overtake cotton garments for the first time in decades this year, while U.S. mills increasingly use artificial blends amid an unexpected revival of the threadbare domestic textile industry.

After a decades-long battle with its man-made foe, cotton will in the long term likely hold a smaller share of the growing clothing sector as lower-priced synthetics appeal to designers and consumers' love of natural fibers fades.

Market forces propelled the shift as cotton prices spiked to historic highs three years ago. Equally significant has been a change in technology, marketing, and consumer sentiment around synthetics. Gone is the shiny polyester leisure suit.

"Polyester yarn has evolved immensely. I believe fashion-savvy consumers in general are completely comfortable with it and wearing it," said designer Yoana Baraschi, whose clothes are sold at retailers including Neiman Marcus and Saks Fifth Avenue.

The change in sentiment is reverberating along the supply chain.

Last October Georgia's governor announced that the No. 1 U.S. miller, Parkdale Inc, which alone accounts for more than half of U.S. cotton demand, would spend $85 million to convert a plant -- which for years made 100 percent cotton yarn for iconic Hanes Brand T-shirts -- to blend synthetic fiber.

When cotton prices shot to more than $2 per lb in 2011, their highest level since the U.S. Civil War, mills scrambled to find alternatives, hoping they could curb costs without alienating consumers. As it turned out, American and other buyers are no longer quite so fussy about their fibers.

"When cotton got to $2 a lb, we found there was a lot of clothing being made out of cotton where buyers didn't have a preference," Anderson Warlick, vice chairman and chief executive officer of Parkdale, told Reuters.

Parkdale, based in Gastonia, North Carolina, has seen a huge uptick in polyester demand across its product lines in recent years that is unlikely to be reversed, he said.

The switch to man-made fibers has accelerated in recent years as demand for cotton stagnates even though prices have fallen back to less than $1. The reason: synthetics in China, the world's top textile market, are still cheaper.

In China, polyester prices traded at about 68 cents a lb, less than half the price of cotton, during the week ending March 6, according to the National Cotton Council of America.

For the first time in 20 years, imports of clothing made chiefly of synthetic fibers, such as polyester and viscose, almost rivaled those of cotton clothing in 2013, according to data from the U.S. International Trade Administration.

(For a graphic see: link.reuters.com/juw47v)

U.S. buyers imported 12.29 billion square-meter equivalents worth of cotton apparel last year compared to 12.04 billion sme of apparel made of man-made fibers. The trend is clear: synthetic imports have risen by more than 20 percent over the past three years; cotton imports have fallen by 14 percent.

Designers like Baraschi, who has been working with more synthetic fabrics, say man-made fibers offer flexibility.

"Stretch is key, it has become a part of the way we dress as well as the way we move in clothes and of what we expect from what we wear in our daily existence. Man-made fabrics are now very breathable and pleasant to wear also," Baraschi said.

(For a video tour of two North Carolina mills, click on: reut.rs/1cCepMC)

HUGE UPTICK

To be sure, cotton is still cherished for its premium quality. After years of shirking cotton in favor of high-performance synthetic materials, sports clothing company Under Armour Inc., for example, has developed a cotton line.

Cotton Inc.-- a marketing group launched to promote cotton over synthetic fibers -- has boosted its efforts to capture younger buyers' attention, enlisting actress and singer Hayden Panettiere in its most recent advertising campaign.

The now tiny U.S. textile industry is enjoying an unlikely revival thanks to lower-cost and reliable energy and shifting trade flows, with a wave of investment by foreign and domestic firms across the textile heartland from Virginia to Tennessee. Four foreign companies have announced plans to break ground in the last six months.

(For factbox on recent investment boom, click )

But some say the U.S. textile industry's renaissance does not necessarily bode well for cotton.

"Cotton's losing market share. Period," said John Bakane, chief executive officer of Frontier Spinning Mills.

The Sanford, North Carolina-based yarn producer, Parkdale's biggest domestic competitor, is boosting the amount of synthetic fibers in its yarns.

Cotton's supporters say a decline in the price of the natural fiber could boost its appeal. Rising U.S. output and an end to Beijing's strategic stockpiling program which has bolstered prices for the past three years, will likely increase global supplies and push down world prices.

Even so, that is unlikely to stem the tide.

U.K.-based textile consultancy and research firm PCI Fibres has forecast fiber mill cotton consumption in the United States and Canada to drop to 776,000 tonnes by 2020 from 802,000 tonnes in 2015 and above 2 million tonnes in 2000.

Synthetics have several advantages over their natural rival: without the threat of weather or disease, quality and supplies are more consistent, prices are more stable and technology has cut costs and increased efficiency.

"With polyester pricing where it is, there's no reason to go back. I don't see that switching," Parkdale's Warlick said.

CHANGING CONSUMER TASTE

Cotton's wild price fluctuations helped fuel the switch, but there has also been a big change in technology and consumer tastes.

High-end clothing brand Peter Millar launched its first clothing line of man-made fibers in its stores in upscale locations from the Hamptons to Palm Beach in 2012 in response to growing customer demand.

"What we noticed was that the technology of synthetics had really improved. There are benefits to performance fabrics," said Michael Bowers, vice president of design and merchandising for the North Carolina-based clothing maker.

Synthetic fibers fend off wrinkles and wick away moisture better than cotton, making them appealing to travelers and athletes, he said.

He declined to specify numbers but said the man-made fiber collection has grown "dramatically" since its launch, taking significant market share within the company's growing golfing apparel segment.

"There is room for both cotton and synthetic materials in a gentleman's wardrobe," Bowers said. (Editing by Josephine Mason and Ross Colvin)