CASHMERE

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