The main changes recently are in Mongolia where the General Director of Buyan Cashmere Sweater Company has been appointed Minister for Trade and Industry. He has successfully tightened border controls with China and, for the time being, prevented the smuggling out of the country of greasy and scoured cashmere. After an initial increase in prices for the new clip costs have fallen back slightly as herdsmen realise the Chinese collectors are not as active as in previous years.
To encourage further added value within Mongolia the new Minister is also proposing US$4 per kilo export duty on dehaired cashmere, which will inevitably result in increased prices.
To officially import Mongolian cashmere the Chinese must pay US$8 per kilo import duty, which dramatically increases their yarn cost. However they may have no choice as they have become reliant on Mongolian cashmere blends for their darker shades and there is not sufficient quantity of Chinese brown to cover demand.
Erdos are trying to reduce prices by offering some cheap KV38W4W on the export market but due to a good balance of supply and demand we doubt their attempts to manipulate the market will be successful. Due to demand of domestic production, price of shorter types remains very high.
AFGHAN / IRANIAN
The market remains firm although bulk of new clip is not yet available.
We do not anticipate any large fluctuation in price over the coming season as the recent influx of Chinese produced garments has opened the world cashmere market to a much larger customer base, producing a more consistent balance between supply and demand and the cheaper prices of Chinese garments means the domestic producers must maintain prices within a limited band.
Strong domestic demand has increased prices of MC5 and lower qualities 20-25% since the beginning of the year. Finer types – firm but reasonable quality available. The new clip will not be available until mid summer.
Silk sliver and yarn prices increased rapidly since the beginning of this year due to poor cocoon harvest, resulting in reduced quantity of sales. We expect prices to ease back towards previous levels providing June/July cocoon harvest produces expected quantities.
Higher angora prices from China due to increased domestic demand have resulted in the usual decline in quality standards and we have decided to withdraw from this market. We do have small quantities of South American angora available at higher prices but with dependable quality.
For Cashmere Fibres International Ltd
David M Lee (Director) April 2006