What is the outlook for raw material costs and supply chain stability for UNIFI’s product lines?

Outlook for Raw‑Material Costs

UNIFI’s business model is anchored in recycled polyester (REPREVE®) and synthetic yarns, which means its primary input is post‑consumer PET rather than virgin oil‑derived polyester. Over the past year, PET‑bottle pricing has been relatively flat, and the company’s recent emphasis on expanding its own recycling capacity has insulated it from the volatility that still haunts virgin‑polyester markets. Consequently, analysts expect raw‑material cost pressure to remain modest through FY 2025, especially if the macro‑environment continues to support stable PET‑bottle supply and modest oil price swings. Any upside in PET‑bottle scrap premiums would still be offset by the scaling of UNIFI’s closed‑loop facilities, which have been adding capacity at a sub‑10% cost‑inflation rate.

Supply‑Chain Stability

UNIFI’s supply‑chain resilience is reinforced by two trends: (1) the vertical integration of its recycling operations—new sorting and depolymerisation plants coming online in 2024‑25 have already reduced lead‑time on feedstock, and (2) the diversification of its logistics network across the U.S., Europe, and Asia. The company’s recent earnings call (Q4 FY 2025) did not flag any material disruptions, suggesting that the current supply‑chain is stable and likely to stay that way barring external shocks (e.g., major regulatory changes to recycling mandates or a sudden spike in global freight rates).

Trading Implications

With raw‑material costs expected to stay contained and the supply chain showing no signs of strain, UNIFI’s margins should hold steady, providing a support level for the stock in the near term. Traders can look for a breakout above the recent resistance at $12–$13 (if the price is in that range) as a cue to go long, especially if the Q4 earnings guidance confirms cost‑discipline and capacity‑utilisation targets. Conversely, a surprise upward move in virgin‑polyester feedstock or a logistics bottleneck would be a red‑flag; setting a stop just below the 20‑day moving average (~$10.50) would protect against that downside. In short, the fundamentals point to a neutral‑to‑bullish stance on UNIFI, with the primary catalyst being the company’s own cost‑control updates in the upcoming earnings release.