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U.S. spinning mills cut operations as cold strains energy grid

NEW YORK, Jan 30 (Reuters) - The arctic cold sweeping across the United States has caused rare winter power interruptions for U.S. spinning mills in North and South Carolina, including Frontier Spinning Mills, the second-largest yarn producer in the United States

Frontier, located in Sanford, North Carolina, the heart of the country's textile industry, has had to stop operating following requests from their power supplier, Duke Energy Corp., John Bakane, chief executive officer, told Reuters on Thursday.

U.S. cotton traders, ginners, and buyers were already dealing with tight supplies and the late processing of a small crop in the world's top exporter.

"You've seen mills have to shut down so power companies can heat houses," Bakane said.

The stoppages have lasted for several hours at most, affecting spinning of about 2,000 bales of cotton, Bakane said.

That represents just a sliver of Frontier's annual demand for some 940,000 480-lb bales, but it also means opportunity cost and other production strains.

"Whenever you have to shut down a mill and then restart, you have all kinds of efficiency problems," he said.

Duke Energy, the nation's largest utility, has twice asked industrial customers in the Carolinas curtail power usage this month as snow and cold gripped the region, a spokeswoman said.

Industrial users can opt into contracts with utility providers in which they agree to power interruptions for rebates, said Paige Layne, a spokeswoman for Duke Energy.

"When we're looking at historic lows, this is one of the tools our grid operators have available instead of rolling blackouts or other load-shed programs," Layne told Reuters.

Traditionally, industrial users are asked to crimp demand during heat waves, as most residents use air-conditioning.

Duke Energy saw a record energy usage peak on Jan. 7 of 20,246 megawatt-hours, surpassing December 2010's record of 18,985 megawatt-hours.

A LOGISTICS 'DISASTER'

While the impact on the textile industry has so far been small, hampering but not halting operations, it comes at a significant time for the U.S. textile industry.

Companies around the world are setting up shop in the United states, drawn as much by lower-cost and reliable energy as by shifting trade flows and improving technology.

"If it were to happen every week, that would be an issue," said a source at another U.S. mill, who declined to be named as he is not authorized to speak with the press.

He said that his milling operation had lost two days of production altogether.

The increased demand for electricity is just one example of how this winter's historic cold has roiled industry.

Natural gas prices have spiked 20 percent so far this year as demand has surged.

Extreme cold, ice, and snow drifts have congested up rail, port and road travel.

"Logistics are a disaster this week," said Jordan Lea, chairman and co-owner of Eastern Trading in South Carolina.

(Reporting by Chris Prentice)

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