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Beyond the Bale : September 2017
MARKET INTELLIGENCE REPORT CHINA’S DEMAND FOR AUSTRALIAN WOOL In this article, we look at information sourced from Nanjing Wool Market in China – which shows that Australian wool is well sought after compared to wools from other countries. AUSTRALIAN WOOL PROVING POPULAR In its analysis in July of wool markets, Nanjing Wool Market said that while prices were generally strong, within China there still exists a “fire and ice situation with ups of fine wool price and downs of coarse wool price”. “Recently, the export orders (from China) were coming to a close, and the demand for raw materials was relatively low, so demand was centred around China’s domestic market. What’s more, the major China domestic demand stayed focused on the fake fur sector (see following page) which turned to be the driver of the real heat of the market. Some spinning mills had set down to produce fake fur and the wool raw materials become the focus with 21 micron (average) Merino and 26.8 micron (average) being in heavy demand. “The demand of other products is not clear now, but what we can see is that New Zealand wool (broad end of crossbred types here in Australia) hasn’t met the demands of new products for consumption, because of the large production pressure coming from making fabrics (Merino) that are in favour. There is some heavy substitution of these broadest wool types in the fabric market and these have been replaced by the chemical fabrics, so the demand of wool broader than 32 micron is relatively low with wool price detained at the bottom of historical price cycles.” This is reflected in the relative prices for Australian and New Zealand wool – see Table 1 below. TABLE 1. AVERAGE PRICE INDICATOR OF ALL DESCRIPTION (RMB 0.01 YUAN/KG) STYLE AVERAGE OF JULY 2017 YEAR ON YEAR (JULY 2016) Australian greasy wool 103.70 13.33% Australian China- combed wool top 113.55 22.89% Australian carbonised wool 77.61 9.00% New Zealand greasy wool 26.06 - 26.78% New Zealand China- combed wool top 42.75 - 13.16% New Zealand scoured wool 27.15 - 25.27% Uruguay wool top 47.96 1.91% China wool top 91.90 10.59% WHERE DOES CHINA IMPORT WOOL FROM? Table 2 below, sourced from Nanjing Wool Market, shows the top 20 countries from which China imports greasy wool for the six months January-June 2017 period, showing volume (kg) and amount (US$). It highlights the interdependent relationship between Australia and China, and the importance of Australia’s role in global wool production. In the six-month period from January-June 2017, the volume of greasy wool imports from Australia accounted for more than 70% of all imports of greasy wool from the top 20 countries, while the next two ranking countries, South Africa and New Zealand combined, accounted for little more than 15%. When looked at in value terms (US$), greasy wool imports from Australia was even more dominant, accounting for more than 79% of all imports from the top 20 countries, whereas South Africa accounted for slightly more than 8% and New Zealand less than 4% (12% combined). This demonstrates the premium quality of Australian wool, and the dominant role that Australian wool plays in the supply of greasy wool to China, the world’s foremost processor of greasy wool. TABLE 2. GREASY WOOL IMPORTED BY CHINA (SORTED BY JAN -JUNE 2017 VALUE) COUNTRY JAN -JUNE 2017 VOLUME (KG) JAN -JUNE 2017 AMOUNT (US$) Australia 95,413,670 1,022,491,993 South Africa 10,499,663 104,995,624 New Zealand 10,601,003 49,997,323 Argentina 3,322,830 34,915,500 Uruguay 2,602,588 19,588,792 Lesotho 1,492,294 1,492,294 Spain 2,554,044 2,554,044 Chile 1,287,691 1,287,691 UK 2,756,680 2,756,680 USA 734,147 734,147 Belgium 964,680 964,680 France 864,109 864,109 Germany 660,834 660,834 Netherlands 381,933 381,933 Hungary 314,931 314,931 Italy 339,046 339,046 Ireland 163,650 163,650 Kazakhstan 399,540 399,540 Canada 58,293 58,293 Kyrgyzstan 74,350 74,350 MARKET INTELLIGENCE 63
In the Shops - September 2017