CHINA – Quantity of new clip is down 15-20% due to grazing restriction and herdsmen switching to sheep farming mainly for meat as spring lambs can be sold the same autumn/winter. They must wait 2 years to harvest 1st cashmere clip from goats requiring expensive winter feed.

Prices increased during last month due to above and increased domestic production and predicted to rise further later in the year. Large domestic manufacturers are still waiting for cash from this year’s sweater sales and from government loans. They have not yet started buying the new clip.

Quality of new clip is good with reasonable availability of White 36mm +. 34mm and below almost unavailable and same price as longer types. Brown Chinese is also rare and very expensive.

Almost all new clip sold by herdsmen and revaluation of RMB against USD will probably cause further price increase later in the year.

The proposed Union Cashmere Sales Company headed by ERDOS seems to be losing momentum with most of the larger suppliers in China. We cannot see this co-operative getting off the ground and do not think it will have any effect on the market.

MONGOLIA – Half the new clip bought by Chinese, quarter by local dehairers and balance is in the hands of herdsmen and merchants. Prices rising quickly in line with Chinese. Quality OK and reasonable availability now, but could be a shortage later in the year. We expect demand to increase as substitution for dearer Chinese types to average down prices for some manufacturers.

AFGHAN / IRANIAN – Prices increased in line with Chinese / Mongolian. Especially Brown which is now same price or dearer than other shades due to high demand from Chinese and European spinners. Good white is also in high demand.

Greasy prices increased slightly due to demand from Chinese processors particularly for coarser types. Still reasonable availability for most qualities.

Prices remain high causing drop in Chinese quality levels. Summer hair will be lower quality than winter hair.

D M Lee 20 July 2005