Wool market eases down as China baulks at price

The wool market remained stable during the first day of sales last week however was down overall after Thursday’s close. The EMI lifted 2c, before easing back 6c to close at 1160c.
Fine wools continued to ease in value in Sydney on Wednesday, particularly the 18 and 18.5 micron wools which dropped 20c to 30c. Other fine wools were off around 5c and crossbred wools were also slightly down on last week. The gains of around 10c for both the 20 and 21 micron categories and unchanged result for broad wools saw the NMI gain 2c, before lifting another cent on Thursday to close at 1201c. The fine wools saw some gains, while most other categories were either unchanged or just slightly lower. With the exception of the 28 micron categories (-8c), movements ranged between 3c higher to 4c lower.

Melbourne sales on Wednesday saw 18.5 micron categories and finer continue to ease off, along with crossbred wools with 26 and 28 micron categories off 15c and 23c, although the 30 and 32 microns were firm to unchanged. The gains for 19 to 24 micron wools, ranging from 3c to 9c were enough to push the SMI up 2c to 1141c.

The market eased off again on Thursday, with the SMI dropping 11c to 1130c. While some fine wools saw support, medium to broad micron categories dropped back 15c to 25c, and crossbred wools were mostly 5c to 10c softer.

In Fremantle fine wools were little changed ranging from 1c lower to 1c higher during Wednesday. The 19.5 micron lots were down 5c, and the 22 micron wools also eased.

Twenty and 21 micron categories lifted 6c and 1c pushing the WMI up 2c to 1162c. Gains were wiped out on Thursday as the fine wools dropped around 20c, and medium to broad categories were 5c to 10c lower.

There are signs that business conditions in China’s wool textile industry are weakening after 12 months of solid growth in domestic and export demand.

China had previously benefited from difficult trading conditions and lower raw wool demand in other wool processing countries, notably in Europe, but this has changed with European processors much more active in purchasing raw wool throughout 2011. Retail sales of clothing in the domestic market continues to grow, but wool textile mills in China have reported their concerns in being able to absorb and pass-on the sharp rise in raw textile fibre prices to China’s consumers.

They suggested that they would be looking to substitute other fibres in place of wool in blends, as well as using more medium micron wool and less fine wool in blends to meet price points for the domestic market.

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