Price shuffles among wool categories

Fortunes depend on where you sit on micron scale

Sheep
TYPE MATTERS: Values are on the rise for medium wools as Chinese orders for the knitwear sector pick-up.

TYPE MATTERS: Values are on the rise for medium wools as Chinese orders for the knitwear sector pick-up.

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Popularity of knitwear appears to be driving values for medium wool types.

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Last week proved to be a turnaround for a range of categories in the wool market.

The focus in the previous few weeks had been squarely on the 18.5-micron types and finer, while the 19-micron lines and broader languished.

But last week, good demand coming through on medium categories - mainly from China - translated into exporters holding a solid volume of fresh orders that needed to be completed promptly.

We have been pleased to see more inquiry and business from India in the past month.

But we need to be mindful about how much more demand may come from that country, given the latest circumstances there with COVID-19.

Logistically, there may also be challenges stemming from shipping companies becoming concerned about their ability to continuing servicing Indian Ports - and the potential risks to crew health of doing so.

Values for finer wools continue to maintain a strong margin over medium types, and observing the pricing structure shows how much volume is being taken-up by knitwear types.

An example comparison came from the last day of selling on Thursday.

Three lots that were right on the 17-micron mark sold, with lot "A" being a Merino fleece of good style, with a staple length of 99 millimetres, staple strength of 47 newtons per kilotext, mid-break of 40 and vegetable matter of 0.4 per cent that sold for 2314 cents a kilogram (clean).

Lot "B" was a Merino fleece, of good style with a staple length of 81mm, staple strength of 17n/kt, mid-break of 90 and vegetable matter of 0.7 per cent, and it sold for 2264c/kg (clean).

Lot "C" was Merino pieces with an average style, staple length of 71mm, staple strength of 36n/kt, mid-break of 43 and vegetable matter of 1.7 per cent. It sold for 2195c/kg.

The first lot would typically be a "normal" part of a batch used in combing for weaving into cloth, and the rotten tender fleece and skirting would usually end up being processed as components of a knitwear yarn.

As a percentage of the best lot, the discount on the rotten fleece is only 2.2 per cent and the discount on the pieces is 5 per cent.

But we need to factor in the extra costs - or losses - of processing the poorer-type wools, and these will push-up the top and yarn cost to over the best lot.

This highlights that knitwear wool consumption is such a significant driver of demand at present.

Another indicator of its popularity was evidenced by a processor in China that specialises in combing shorter types of wool for the knitwear sector.

This company commented about how much more competition it now faces from traditional longer top processors, which are installing more machinery to cut the processed long tops into shorter tops.

Another Chinese operator, which used to send big volumes of suits to Europe and the US, reported that the COVID-19 situation meant its suit export business had almost collapsed due to no demand for office or business attire.

Incredibly, most of its export suit volumes have been replaced by making uniforms for companies and government employees in China.

This has kept the business going at similar volumes of cloth being woven compared to pre-COVID-19 levels.

China has some very well dressed employees, which is helpful to moving more volume.

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