Wool market sniffle as China virus lockdown continues

Coronavirus, Trump tariffs weighing on wool market with EMI losing 9c

Coronavirus
VIRUS SHUTDOWN: Chinese woollen mills have been temporarily closed as Beijing struggles to contain an outbreak of coronavirus which has sent shockwaves around the world.

VIRUS SHUTDOWN: Chinese woollen mills have been temporarily closed as Beijing struggles to contain an outbreak of coronavirus which has sent shockwaves around the world.

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The wool market lost a little ground this week as the trade waits anxiously for China to contain an outbreak of coronavirus.

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The wool market caught a sniffle this week with a small across-the-board dip in Merino prices triggering a nine cents drop in the Eastern Market Indicator to 1568c a kilogram clean.

Severe coronavirus restrictions still apply in China, Australia's dominant buyer of wool, which will keep most mills closed until at least next week.

Chinese woollen clothing exporters are also struggling with a 15 per cent lift on apparel tariffs into the US market imposed by Donald Trump last September.

This week's national offering of 40,176 bales was down 9.3 per cent on the same sales last season but even with a pass-in rate of 22pc the market couldn't sustain the modest gains made last week.

Melbourne opened this week's sales on Tuesday with the first designated Tasmanian sale of the calendar year with more than 60pc of the offering Tasmanian grown.

The catalogue featured a large selection of 16 to 19 micron spinners and best style wools, AWEX reported.

These specialty lots were in keen demand and helped push up the southern individual micron price guides by 2 to 11c.

Sydney and Fremantle joined Melbourne on the second and third selling days with buyers focused on the good and best style Merino wools which recorded minimal price change.

Lesser style wools and those with poor additional measurement results lost ground as the sales progressed.

Some lots with very high mid breaks (greater than 85) sold at levels 100 to 150c below similar spec lots containing mid breaks of less than 40, AWEX said.

Crossbred wools were the only shining light of the series with strong demand lifting the 26 to 30 micron lines by 15 to 56c.

This week's offering included 5493 bales of non-mulesed wool, 2244 bales of creased mulesed and 11,844 bales of mulesed wool with pain relief.

Turnover for the week hit $53.9 million, bringing the season's tally to $1.348 billion.

Next week's national offering increases slightly 42,770 bales with Melbourne again selling over three days to accommodate an increased catalogue of 22,369 bales.

Executive director of the National Council of Wool Selling Brokers of Australia, Chris Wilcox, said concerns about the continuing coronavirus outbreak (which has been named Covid-19) had pushed the market lower, even though the Aussie dollar fell against the US greenback.

Writing in his weekly newsletter, he said the Nanjing Wool Market had advised the only factories allowed to resume operations are those producing items to help combat the epidemic, such as facemasks, sanitiser and protective clothing.

The rest, including wool textile mills, would not resume until February 17 or February 24.

"Prices for Merino wool mostly fell over the week, down by between 3 and 26c. Prices for 18 micron and 19 micron wool increased slightly.

"Crossbred wool prices rose strongly, up by between 15 and 43c," he said.

The Western Market Indicator in Fremantle fell by 42c to 1667c, the Southern Market Indicator slid by 9c to 1546c and the Northern Market Indicator by 8c to to 1604c.

"The Covid-19 outbreak isn't the only challenge that the wool textile industry in China has faced, of course," Mr Wilcox said.

"They have had to deal with the impact of the additional 15pc import tariffs imposed by the US on imports of wool apparel from China in September.

"After a sharp decline in imports of wool clothing from China by the US, this decline continued in October and November.

"The quantity of US imports of wool clothing from China slumped by 44pc year-on-year in October and by a further 34pc in November. The value of imports from China fell by 37pc and 36pc for each month."

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