CHINA / MONGOLIA

Prices continue to increase since availability of the new clip to a point where even the Chinese manufacturers struggle to pass on replacement levels.  There has been little or no activity over the summer months but prices show no sign of weakening.  Available quantity of greasy has been drastically reduced – Chinadown to 5-6000 tons from 11-12000 tons and Mongolianow below 3000 tons down from 5-6000 tons of 2-3 years ago.  Both Chinese and Mongolian fibre is coarser this year as herders have slaughtered the younger goats to take advantage of high meat prices.  Stock levels in Europeseem quite low and shortage of prompt material could cause price increases during 4^th and 1^st quarter as demand outstrips supply.

AFGHAN / IRANIAN

China have bought most of the new clip which is now nearly all sold and would normally be available to purchase from origin well into the new year.  Prices have been pushed up to Mongolian levels and we anticipate a shortage over the winter months.  Next year’s clip will not be available until May/June + lead time for shipping and processing, September/October at the earliest.

CAMEL / YAK

Higher cashmere prices are stimulating good demand particularly for finer types; outstripping very limited supplies.  The new clip is only just available now and almost all sold at origin.  The limited supplies we have secured will not be available inEuropebefore November and once sold there will be no further quantity available until end 2012.

Conclusion

We anticipate a difficult year as manufacturers struggle to absorb high prices which we expect to continue for the coming season due to fibre shortages from all origins.  We advise securing supply when available as good quality fibre will definitely be in short supply after the end of the year.

David Lee – 7 September 2011.

Prices have continued rising during the first quarter mainly as a result of domestic demand in China which has also overspilt to greasy markets in Mongolia, Afghanistan and Iran.

CHINA

Very little good quality material remaining from last season.  The new clip is not yet available but will start with coarser Liaoning quality next month and best Inner Mongolia quality early May.  It has been widely reported in the media that prices have increased due to animal fatalities as a result of the severe winter weather.  This is not strictly true as the winter in China has been relatively mild but many herdsmen slaughtered animals last autumn to avoid costly winter feed and to take advantage of high meat prices.  Generally US$100-150 per goat/sheep.  Even with today’s high greasy prices of US$60-70 per kilo each animal will only net around US$20 per year for cashmere.  China expects the new clip to start at current prices and increase through the summer.

MONGOLIA

Similar situation to China regarding meat values and extensive snow in rural areas which also encouraged herdsmen to slaughter.  The new clip is just becoming available at prices similar or slightly higher than recent levels with strong demand.

AFGHAN / IRANIAN

Prices driven to record levels which I cannot recall being exceeded during the last 30 years.  This is mainly through Chinese demand for raw material.

New clip will not be available until late April / early May when prices are expected to remain firm in line with China/Mongolia.  In the meantime little or no material remains from last season.

CAMEL

Demand and prices have risen in line with cashmere prices.  At the moment there is reasonable availability at higher levels and new clip will not be available until late summer.

CONCLUSION

It becomes difficult to pass on increasing replacement prices for western manufacturers and Chinese exporters.  However Chinese domestic sales seem able to cope with current prices which are something we shall have to live with for the foreseeable future.

CHINA

Following the dramatic dip in greasy prices in 2008/9 many goats were slaughtered due to cost of winter fuel to comply with government grazing restrictions.  Combined with animal fatalities during 2009/10 severe winter, the 2010 clip is much lower than anticipated (down 50% in many areas).  Strong domestic retail sales have pushed up prices 10-15% in November.  There is little quantity of good quality available and we expect prices to continue rising until the 2011 clip becomes available.  Long best white could possibly be US$150 and short types below 30mm already exceed US$100.

MONGOLIA

2010 clip is down 35-40% from 2009, from approx. 7800 tons to 5000 tons due to severe winter 09/10.  Most greasy was bought by Chinese and exported to China after the Mongolian government withdrew export tax on greasy and scoured cashmere.  There is little or no fibre in the hands of herdsmen or Mongolian dehairers.  Prices have increased dramatically due to Chinese demand and look set to continue rising.

Despite high greasy prices (Tug 50-60,000 depending on quality = USD40-48 =

USD14-16 per goat per year at 300 gm average).  Due to increased Chinese wealth they are eating better and meat prices have soared to USD135 for an average 30 kg goat.  Herdsmen are already slaughtering goats before the December tax per head of livestock and to avoid further fatalities during another predicted severe weather.

The 2011 clip is expected to be down another 20% so prices will not fall in the near future.

AFGHANISTAN / IRAN

The Chinese have been very active in Afghanistan / Iran to make up for shortages and price increases of Chinese and Mongolian cashmere.  Prices have increased 20% since late summer and there is very little greasy available until the new clip.

CAMELHAIR / YAK

Demand and prices increase as manufacturers look for cheaper alternatives to cashmere.  Availability is still reasonable.

ANGORA

Prices have also shot up during recent weeks.  Super Grade is now around USD40.

CONCLUSION

China is definitely controlling commodity prices now and, the huge increase in their domestic demand is creating shortages worldwide.  It seems we are moving into a new pricing structure and western manufacturers will have to live with higher prices for the foreseeable future.

CHINA

Since the Chinese government announced last November to support cashmere raw material prices from the new clip we have seen frantic activity both in the domestic and international markets to buy up existing stocks, which has resulted in price increase of 15-20%, with limited availability of good quality White for White types. Some purchase activity by Chinese domestic manufacturers has been speculative and they are holding stock in anticipation of further price increases. We have seen no willingness to sell or weaker prices leading up to Chinese New Year and availability will remain tight until the new clip arrives.

MONGOLIA

Almost all available material has been sold and used with little or no dehaired fibre remaining at origin. Prices have increased by almost 100% since last spring and as the spinning season gets underway we could see a severe shortage of availability as the new clip will not be available in Europe until June/July.

AFGHANISTAN /IRAN

Prices have increased slightly as traders hear about Chinese/Mongolian market movement but dehaired prices are now moving back into line compared to Mongolian which was cheaper for most of last year. We hope Chinese buyers will not over-excite the market.

OTHER FIBRES

Yak and camelhair prices remain firm on the back of increased cashmere levels. Availability is still reasonable. Silk and angora prices have increased over recent months mainly due to domestic demand in China.

CONCLUSION

We expect the new cashmere clip to begin at current levels and probably increase later in the year as manufacturers worldwide compete for material left available after Chinese government support for it’s major cashmere manufacturers.

This will be a year for buying sooner rather than later and an indication of fibre requirement over the year will greatly assist us in planning our purchase strategy from the new clip.

For and on behalf of

Cashmere Fibres International Ltd

David M Lee – 10 February 2010

Firstly, this year most of the cashmere processing mills didn’t buy as much cashmere as before one reason being that Chinese banks didn’t give as many loans because of the Chinese government’s strict financial policy. Secondly the Chinese cashmere companies spent most of their money on other business like mining and real estate and didn’t have enough money left to buy cashmere materials because they found they couldn’t get enough profit from this.

He was told by them there is still a lot of greasy cashmere available in the producing areas, some said a half of the total Chinese cashmere collection is left and some said a third.

During the last few years, Chinese herdsmen have introduced a lot of cashmere goats from north-eastern China to Inner Mongolia and other main producing areas in order to get bigger yields than before from each goat. This year we found that the Chinese cashmere micron is coarser than the previous year. At the fair, most of the mills told him they couldn’t offer any W4W Chinese cashmere at 15.1 or 15.2 micron. They can only offer W4W Chinese cashmere around 15.5 micron. Brown Chinese cashmere is not as plentiful and shorter than in previous years. Most of the mills have no brown Chinese cashmere to offer and the ones that do their longest brown Chinese cashmere is 32-34mm.

We feel that eventually Chinese prices may fall slightly, but at this time the Chinese mills are only willing to buy greasy and sell dehaired if they can make a reasonable profit. Until the economic situation stabilises and Chinese interest rates fall, many suppliers are uninterested in processing cashmere.

Chinese sweater exporters are bust producing garments for sale through large retail chains and supermarkets worldwide at artificially low prices. As a result they are forced to source raw material from cheaper origins such as Mongolia, Iran and Afghanistan which, in effect, increases the price at these origins, making traditional manufacturing in western countries difficult, if not impossible.

We saw a similar situation several years ago in Outer Mongolia when China moved in and bought all the raw material, thus starving domestic manufacturers of stock and forcing them out of business, which then eliminates competition and allows China to dictate the price of raw material.

For many years China has been seeking worldwide domination of the cashmere market and production of garments. Their recent joining of the World Trade Organisation (WTO) has made this easier as Europe and America have removed all import quotas on number of garment imports and there are no restrictive import taxes. On the other hand Chinese exporters still receive a substantial rebate (11% for yarn and 13% for garments) from their government to encourage the generation of foreign currency which allows them to under-cut any competitor. They can generally sell yarn at the same price as dehaired cashmere and garments at the same price as yarn produced by overseas spinners.

If China is allowed to continue dominating cashmere markets all other manufacturers will be forced to close, resulting in many job losses and further loss of added value in other countries.