China drives cost higher for Superfine wool
There are two key reasons why prices for superfine wool will be strong this season says Robert Wang AWI China Manager. Mills in China believe that there is not enough available. ‘The Chinese domestic market is expected to be busy for at least the next two years in relation to finer wools and woolen mills building up their stocks’.
‘We are talking about fine and superfine wool at 19.5 micron and finer, apparel fleece. Looking at production forecasts and marrying this to the potential increase in demand processors in China believe that there is insufficient superfine wool to supply to requirements for the next 12 months.’
The demand in China is being driven by the renewal of uniform tenders and an increased demand by the Chinese consumer for garments made in lighter fabrics.
Mr Wang further commented that based on wool testing data alone testing of superfine wool has increased dramatically since December, but production has not. This will see wool prices strong for the foreseeable future. ‘We are only two months into the new year and prices are already very firm,’ he says.
20-24 micron wool will also be firm to very firm he says. Again this is due to limited supply. But at least in this range there are other grower countries that can supply, including Argentina, South Africa, and Uruguay.
‘Even the cheap end of the supply market, such as skirtings, will also be firm as topmakers look for cheaper wools to blend.’
The same cannot be said for coarser wools that are really struggling at present due to luke warm demand. But a colder than usual winter in Europe and the USA should help clear stock and encourage demand.
Another thing to watch in China this year that will affect the domestic market, in particular, is the 19th Party Congress. This Congress will decide the economic direction for the next 5 years and is expected to make a major shift from its anti-corruption focus to encourage faster economic development. ‘This focus will boost the domestic economy and the Congress will also spell out how it plans to deal with the Trump administration and any trade wars with the USA,’ he says.