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Wool prices to remain high

Feb '07
Business sentiment and orders in the global wool textile industry are still positive and should sustain current raw wool price levels in the March quarter according to the latest Woolmark Business Survey.

The survey's quarterly results, taken at the end of December 2006 show that sound demand throughout the global wool textile pipeline is underpinning high raw wool prices for wool producers in Australia.

“Low pipeline stocks are an additional positive,” explains The Woolmark Company's Chief Economist, Chris Wilcox. “Stocks within the pipeline are generally too low, particularly of raw wool and top. Processors feel they need to replenish their stocks to meet customer orders, which is further driving raw wool demand.”

Orders at combing and worsted spinning are particularly solid. Worsted weaving orders weakened a little during the December quarter, possibly in reaction to an until-recently warm winter in the northern hemisphere. Weavers expect orders to rebound to normal levels in the March 2007 quarter.

Orders for wool top are the most positive for some time in China, Western Europe, East Asia and Australia. This should bring better demand for wool top and raw wool in the March quarter.

The results from the Woolmark Business Survey show that it is widespread, solid demand foundations across most of the pipeline that have helped push wool prices in US$ for some microns to 15 year highs. The expected falls in Australian supply over the next six months due to the drought have also contributed to the rise.

“While these higher prices are causing caution amongst some mills, particularly Chinese combers,” says Chris Wilcox, “current raw wool prices should be maintainable in the March 2007 quarter.”

The Woolmark Business Survey is conducted quarterly with around 260 leading industry companies in Western Europe, East Asia, China, India and Australia. For the December 2006 quarter survey, Woolmark Market Intelligence received responses from 79% of the surveyed firms.

Australian Wool Services Limited

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