Surprisingly, last week’s wool market was calm compared to recent times – and not the volatile and petulant business of recent weeks.
The first day of sale prices opened lower, as most traders had expected at the start of the week, with higher quantities lined up offsetting the few new orders.
But more like the polite and courteous affair they lead in Port Elizabeth, South Africa – where the auctioneer asks a question and buyers politely give their prices – the market has settled very quickly and calmly.
After prices eased Tuesday – only 30 or 40 cents per kilogram relatively low – a base was quickly established.
But rather than going higher, the market moved slightly in a positive direction.
This stable and smooth movement was welcomed by all in the trade, as previous movements up to 100c / kg were starting to wear out a bit.
Overall, the market movement for the week was down 30c / kg, down 24c / kg and 22 euro cents.
This equates to a contraction of about 2.5-3% – which wouldn’t be enough to make the Alan Kohler segment on ABC news.
The positive tone looks set to continue this week, with many follow-up surveys being transmitted in batches – and a few more genuine offers appearing on Riemann’s futures platform.
While Chinese and international retailers still track stock movements from Singles Day online shopping extravagance in China the week before, where some $ 115 billion in merchandise changed hands on just the two major platforms Alibaba and JD there are, hopefully, quite a few. replenishment in progress.
How many new clothes must be purchased to fill these virtual shelves remains a big question.
Popular double-faced fabric clothes tend to be a fall or spring collection, while heavier coats and down jackets are all the rage in the winter.
The fake fur fashion has failed this year, and with a decent amount of this fabric already lying around warehouses and production facilities awaiting a new home, this product is unlikely to boost the market for the fake fur. wool twill like it did a few years ago.
The sweaters trade, although still missing the crucial export segment, appears to be growing and essentially supplying the lion’s share of the current demand of the Chinese domestic market.
With the cashmere supply issues induced by COVID-19 this season, ultra-fine merino comfortably fills the void – and, hopefully, will convert some of the ambitious consumers to merino.
The big failure this year was the combed fabrics sector.
But all is not lost.
The decidedly less obvious fashion trends in the combed wool industry, compared to the color-based wool industry, will allow most of the fabrics in production to be used again in the years to come. .
A gray striped suit can always look fresh and new and as soon as office workers around the world get their vaccination certificates, they will want to look good when they come back to the office.
Not all will return to daily office work, but a large portion currently working from home, or simply locked in, will be anxious to return there.
In the meantime, the importance of the Chinese consumer in the wool market continues to grow.
Not from a government-orchestrated plan, but only from a calculation of numbers and the circular closure of COVID-19.
In recent years, Chinese consumers have purchased a large volume of products, especially in the luxury sector, as they travel around the world.
Part of this was because the big luxury brands were charging more for the same garment in their Shanghai or Beijing stores as the Chinese market exploded – because they could.
When savvy Chinese consumers figured this out, they started saving their purchases until they were overseas – and these same luxury brands saw an explosion in sales from Chinese tourists in Moscow, Milan and Paris. .
Now that Chinese tourists are entrenched – like the rest of us – they shop in China and thus bolster clothing sales statistics across the spectrum, but certainly woolen clothing.
According to a report by Delta Agri-Consultants, China’s wool garment purchase volumes of 125 million kilograms are now more than the following three countries combined – with the United States in second place at 50 million kilograms, Japan with 34 million kilograms and Germany with 31 million kilograms.
These figures are from 2019. So, with the rapid recovery of COVID-19 in China – but the delayed recovery in the US and the EU – one can only assume that the gap would have widened further.
How the wool industry, and in particular the Australian merino sector, promotes its product to this hugely important consumer market will be key to the Australian wool producer’s fortunes for years to come.
The wool industry is quite traditionalist and likes to maintain ties with its historical roots.
But new consumers often react to a different message than traditional old markets.
Some of the new marketing campaign material may seem a bit ‘out there’ to the average Australian wool producer.
But a big part, like the recent Australian Wool Innovation collaboration video for the Chinese market, is exactly what these growing, environmentally conscious and mobile millennials are looking for.
The size and potential of the “yuppie” market across China is staggering when you look at the population.
And, to deploy an old saying with a modern twist, if we sold a merino training top to every Chinese yuppie, we would have a shortage of wool.
With this market recovering – and others, hopefully soon, we may be able to run through the rest of 2020 with the market intact.
Certainly, if we can bubble – plus or minus 30c / kg – until Christmas, everyone will be happy.
The challenge is to restore confidence from satisfied retailers to garment manufacturers and wool processors in time for the January reboot.
The story The wool market stabilized last week but new orders are needed for the first time on The Land.