2012 is the Year of the Water Dragon, the first since 1952. Water has a calming influence on the Dragon, allowing it to see the world from the point of view of others, which is of course lucky for debt stricken Europe and the slow recovering USA. The Year of the Dragon is said to bring luck, success, and ambition. It is extremely popular in Chinese culture as an auspicious time to marry, start a business, or have a child. It is expected that the birth rate in China will boom, which is all good news for wool, with expected increased wool consumption.

Yarn and garment exporters in China had a challenging year in 2011 with declining exports to both Europe and the US. www.woolnews.net understands that inquiries from Europe are increasing but many are hesitant, requesting more samples of a greater variety of types and blends.

Chinese exporters report increasing trends to more blends, and pressure on prices.

On a positive note US buyers are in China placing orders for their summer season, and there are indications that the economy in the US is improving.

According to Robert Wang, the China Manager for AWTA, ‘not withstanding all the bad publicity from Europe, Europeans are still placing orders for wool garments in China. With the US in recovery mode and with Japan also recovering somewhat, these two countries are the largest consumers of woollen products. It is expected that with an economic recovery both the US and Japan will increase purchases of wool products in 2012′.

But the biggest consumer of them all, according to Mr Wang, is the consumer market in China itself. He particularly singles out the corporate uniform market in China that includes government agencies such as the police and army.

‘There has been a tendency for corporate uniform market to expect a greater wool content in its uniforms.

Even lower ranked police officers, used to uniforms made from inferior and polyester fabrics with a lower than 10% wool content are now expecting 30% wool content. The higher the rank, the higher the wool content expected, 70% wool, 30% polyester. So, the corporate wool market will be a major player for wool consumption in China.

Mr Wang expects prices to stay reasonably high as supply is tight and demand will be the same or higher than last year, and this will inevitably put pressure on prices.

“The wool industry can be an incredibly powerful machine and has the ability to change opinion, challenge beliefs and offer consumers better-performing products that are not only of very high quality, but are sourced responsibly and are better for both personal and environmental health and safety.

“Whilst there are challenges in some areas of the carpet market, we are generally finding that premium spinner and weavers are managing to push the higher raw material prices on though in the mid market there is reluctance from customers to pay that little bit extra for their product as, in the current climate, there are so many demands on their finances.”

“The wool industry has suffered in the past from in-fighting and unnecessary negativity between different factions of the wool supply chain; I believe this developed through a fear of competition from chemical-based producers rather than fear of healthy, internal challenges. It is very encouraging that wool growers and suppliers are coming together to create a united front against producers who are using the world’s natural resources like oil, to create products that would undoubtedly be better if they were derived from wool.”

“With this in mind, it would appear that finer wool has found a level and demand seems to be reasonable, with the potential to increase in 2012. Coarser wool is still in demand however the strong marketing by polypropylene in the UK carpet sector will slightly reduce demand for some grades of carpet wool. Overall this may be offset by continuing growth in demand in other carpet markets.”

“Our industry supplies excellent products but has historically missed an opportunity in strongly promoting them. With the support of Prince Charles, major fashion houses and famous faces from the design industry, The Campaign for Wool has made great steps in terms of highlighting the benefits and beauty of wool and I would urge everyone involved in the industry, from sheep farmer to fashion designer, to raise their support for the campaign. Together we can continue to create some noise about why wool is the fibre of the past, the present and most importantly, the future.”

Targeted purchasing of wools suitable for the Chinese market and better style wools held their ground, however there was large variation in price movements between selling centres, with the North Island being affected the most and the poorer coloured wools bearing the brunt of the softer market.

Mid Micron wools in the South Island generally remained unchanged as did the Fine Crossbred Fleece and Shears. Good Colour Crossbred Fleece remained firm, however, average and poor styles eased by 2.5 to 5 percent. Coarse Shears in the South generally remained solid with the North Island offering weakening up to 4.5 percent. First Lambs in the South were firm to 2 percent softer and in the North up to 4 percent easier. Oddments in the South ranged from 2.5 percent dearer to 5 percent cheaper with the North on average 6 percent down.

Wide spread activity with Australasia, China and Western Europe principals, supported by India, Middle East and the United Kingdom. Next sale on 2nd February comprises approximately 9,400 bales from the North Island and 6,700 bales from the South Island.

The main buyers were NZ Wool Services 4,300; Masurel 2,750; Fuhrmann 1,900; J S Brooksbank 1,700; H Dawson 950; IWL 700; Bloch & Behrens 700; Ascot 680; J Marshall 350; Chargeurs 350; Lempriere 100; G Modiano 100.

Source: New Zealand Wool Services International

There was keen demand on the auction floor, particularly among grease-wool exporters, which helped to support price levels.

The rand at R7,90, was almost 1% stronger against the US dollar compared with last week’s average rate, but was 0,7% weaker against the euro at R10,27.

The prices of most micron category quality fleece wools (MF5) were up by between 0,5% and 2,5%. The exception was 21 microns, which were slightly cheaper.

This week saw a smaller offering than during the past two weeks of 10 186 bales of which 97% was sold. Major buyers were Modiano SA (3 002 bales), Standard Wool SA (2 542 bales), Lempriere SA (2 113 bales) and Stucken & Co (1 306 bales).

The average clean price for the different categories good top-making (MF5), long fleeces were as follows: 19 microns gained 2,6% to R119,97/kg, 19,5 microns were 0,5% dearer at R114,52/kg, 20 microns were up 0,5% to R108,68/kg, 20,5 microns rose 1,1% to R106,91/kg; 21 microns fell by 0,8% to close at R104,33/kg, 21,5 microns were 1% cheaper at R103,34/kg, but 22 microns rose 0,8% to close at R104,70/kg.

Next week will be a much smaller offering with only 5 500 bales up for sale.

Source: Cape Wool SA

Committee chairman Russell Pattinson said, “Fleece weights in some states have not been as good as the Committee anticipated at the October meeting.

“We have also seen animal health issues, due to increased problems with flies and worm burdens, impact on expected wool production.”

The Committee has also adjusted the opening sheep numbers for 2011/12 following the release of provisional agricultural census data by the Australian Bureau of Statistics (ABS) earlier in December.

The census is conducted every 5 years, and provides a more reliable assessment of sheep numbers than the smaller annual surveys conducted in the between years by the ABS. Based on the latest census data, the ABS now expects 2011/12 opening sheep numbers to be 74.3 million, rather than the previous figure of 70.8 million. As a result of the revised data for 2011/12, the Committee has also adjusted the previous season’s (2010/11) estimated opening sheep numbers from 68.1 million to 70.8 million.

Committee chairman Russell Pattinson added that although the forecast for total wool production for 2011/12 is down on the Committee’s October estimate, it is still higher than it has been in recent years, and is consistent with the previously reported trend of flock rebuilding.

“Results from the combined MLA/AWI grower survey indicate that 90% of farmers intend to maintain or grow their ewe flocks in 2012.”

The National Committee drew on advice from the six State Committees, each of which includes brokers, growers, private treaty merchants, representatives from State Departments of Agriculture, and the Australian Wool Testing Authority.

Data and input was also drawn from AWEX, wool exporters, the Australian Bureau of Statistics, ABARES and Meat and Livestock Australia.

The full forecast report is available on the AWI website at www.wool.com/forecasts

Source: AWI

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According to AWEX data the top 20 auction buyers from a list of 63 have accounted for 90.6% of the total sales.

Viterra was the major buyer with 117,076 bales at auction, representing 14.4%. It was followed by Techwool that purchased 71,230 bales. Australian Fox and Lillie was the largest buyer of crossbred fleece lines with 20,999 bales.

The amount of wool sold at the Melbourne auction room continued to grow, reaching 52% of total national annual auction sales. Sydney-Newcastle held a 32.7% share. Fremantle’s throughput dropped to 123,807 bales or 15.3% of the national clearance.

Source: AWEX

Some of the retailers who have been hit hardest over the past year include Peacocks clothing chain the discount fashion chain, which was bought in a management buyout from the founding Peacock family in the mid 1990s, was struggling to refinance its £240m debts. If Peacocks was to go into administration it would be one of the largest firms of any description to have done so in Wales in many years. The Cardiff-based company, which employs more than 400 at its HQ, has said talks are continuing.

The children’s clothing retailer Pumpkin Patch UK has appointed Deloitte as administrators in the UK. The Reading-based company has 36 stores in the UK, employing about 400 staff. Deloitte said it had been necessary to close five stores, with 60 employees being made redundant, though the rest of its stores would continue to trade while options are pursued. Its parent company is based in New Zealand. The administration only affects UK operations.

Langholm-based Edinburgh Woollen Mill has saved nearly 400 jobs by buying a number of Jane Norman stores after they went into administration. Administrators Zolfo Cooper confirmed 33 of 94 shops had been bought by the south of Scotland company. The deal also gives EWM time to consider the purchase of another 28 stores across the UK. Administrators said there had been no interest in the remaining 33 sites which would now have to close.

JD Sports has confirmed it has acquired the assets of outdoor clothing retailer Blacks Leisure for £20m. The sportswear retailer confirmed that any “underperforming stores” would close, but did not say how many. Also, lingerie chain La Senza was bought by an Arabian retail group, saving 1,100 jobs.

Carpetright has announced more retail troubles after sales fell 5.2% in the second quarter. The firm said full-year pre-tax profits would be “at the lower end of expectations”. It has already issued two profit warnings this year.

For the 12 weeks ended October 22, sales in the UK fell 6.8% while like-for-like sales dropped 3%. Total sales in the rest of Europe fell by 1.8% with like-for-like sales down 1.7%.

Lord Harris of Peckham, the firm’s chief executive, said: “Looking forward, I see no respite from the challenging environment over the next year.” Lord Harris added that the group had plans to reduce its cost base by £4m, but gave no further details. The group has closed 11 shops so far this year, leaving it with 643 stores.

Source: BBCB

The report by consultants KPMG says that minimum wage levels in China are now four times greater than other places in South and South East Asia. However, the report says China can defend its position because of its productivity and infrastructure.

China is still dominant in the production of goods such as consumer electronics and furniture. But the report says that production of clothing and footwear is now more widely dispersed across Asia, with Indonesia and Vietnam specialising in the production of footwear and India developing a niche in hand-stitched fabrics and metalware.

According to KPMG estimates, Indonesia’s footwear exports grew by 42% in 2010 to $2.1bn (£1.3bn), while Bangladesh saw textiles exports grow by 43% to more than $18bn in the year to July 2011.

“Sourcing goods in China purely because of ultra-low costs is a thing of the past,” said Nick Debnam, KPMG’s Asia-Pacific chair.

“With demand still soft in many Western consumer markets, it is also proving difficult for companies to pass on higher costs to consumers. This changing environment is forcing companies to reassess sourcing strategies.”

China is battling its highest rate of inflation in three years although the latest consumer prices data from August suggests that the rate is beginning to ease.

While much of China’s manufacturing has begun to migrate westwards from the south and east of the country to cheaper provinces such as Sichuan, the report says the cost advantages from such moves inland may be short-lived.

KPMG says that China’s increasing manufacturing costs are more to do with the country’s demographics.

China’s one-child policy has resulted in a “sudden and serious” shortage of the labour that gives workers in both the richer coastal provinces and poorer inland areas the leverage to demand higher wages.

The KPMG report was based on interviews with 12 major multinational companies including Ikea, B&Q-owner Kingfisher and Hong Kong’s Li & Fung, which sources goods for big-name clients including Wal-Mart.

Source: BBCB

Between 2005 and 2010, textile and clothing production in Brazil rose by 25.2%, and this trend is expected to continue. The industry is prominent in world terms and fulfils a central role in the country’s manufacturing sector. In 2010 it produced 2.25 mn tons of textiles and 1.96 mn tons of made-up articles, making Brazil the world’s fifth largest textile producer and fourth largest clothing producer.

Moreover, there has been a sharp increase in domestic demand as personal disposable incomes have risen, and this has manifested itself in an impressive 50% rise in fibre consumption per head during the five years to 2010. The increase in domestic demand has been met partly by a surge in imports. Nonetheless, domestic production has increased at an even faster rate.

Such fast growth has spurred a surge in acquisitions of new and more modern machinery by Brazilian manufacturers in a bid to increase productivity. As a result, the industry is becoming more capital intensive and has seen a reduction in its labour costs.

The industry also benefits from local sources of raw materials, especially cotton. Yields have risen to the point where they are among the highest in the world, and Brazil has become a major cotton exporter.

Not surprisingly, cotton continues to dominate fibre consumption by Brazil’s spinning mills, and the country has become the world’s second largest producer of denim fabric.

However, the scope for expanding synthetic fibre output and consumption is expected to increase considerably in the future as a result of developments in the country’s oil industry. At the same time, costs are likely to be markedly lower and this should provide users of synthetic fibres in the textile and clothing industry with substantial benefits in terms of availability and costs.

Despite increases in production and consumption, Brazil still has enormous potential for further growth. Economic progress in the past has tended to be erratic and bedevilled by rampant inflation. But today the country appears to be on a steady and sustainable upward path and this should lead to an even better outcome for the Brazilian textile and clothing industry.

Source: Textiles Intelligence