China

Beijing government continue pushing anti-desertification legislation, further reducing cashmere clip this year and in future they propose to pay herdsmen compensation for further reduction of herd size. Very strong domestic demand has forced up prices during the summer and we think there could be shortages in the new year but, in any case, there will be no carry-over of unsold stock next spring, so prices will remain very firm for the foreseeable future.

China have recently introduced high import duty for cashmere of other origin, which will result in most Chinese cashmere being used by domestic manufacturers.

For Cashmere Fibres International Ltd
David M Lee(Director)
October 2006