The year started with Chinese and Mongolian greasy prices falling as expected in view of the world economic situation. Mongolian prices then fell even further in April as a result of the Mongolian Tugrig falling by 50% against the US dollar, almost overnight. Chinese new clip prices eased slightly but Afghan/Iranian prices remained firm.
In May the Mongolian government removed the export duty on greasy and scoured cashmere which has allowed the Chinese to buy almost the entire Mongolian clip and export back to China. The Chinese government have made RMB 700 billion (USD 100 Billion) available to Chinese businesses to stimulate their economy. They have also increased the export subsidy to 13% for yarn and 15% for sweaters. (Anyone with political connection should take up this point in relation to China’s WTO membership as it definitely gives Chinese manufacturers an unfair advantage).
As a result of all this activity, Mongolian cashmere prices have increased dramatically over the summer and very little fibre remains in Mongolian hands. Some suppliers are reverting to form and not honouring contracts. Chinese prices are also on the up due to domestic excitement. Maybe we have now reached the point where western demand for cashmere products no longer determines market movement.
Afghan/Iranian prices have also increased over the last few weeks.
CAMEL clip is only now becoming available and prices are at similar levels to last season.
SILK AND ANGORA prices have also increased over the past few months. Again mainly as a result of domestic demand and excitement in China.
CONCLUSION – China has definitely received substantial late season garment orders, which will have contributed to domestic demand, but these orders are now coming to an end. It remains to be seen if recent increases can be maintained between seasons as most of this year’s fibre is now in the hands of speculators or processors and must eventually find a home in fibre, yarn or garment form. On the other hand the western processing pipeline seems fairly empty.
Retail activity over this coming winter should ultimately determine the level of demand for textile fibres and future market movement.