China's Share of AU Wool Market Set to Reach 80 Percent

China's dominance of the Australian market is continuing to grow, with Australia's wool export data to be released next week expected to show that China is now importing around 80 percent of Australia's wool.

At this week's sale, China led the auction room activity once again, with the ongoing concerns over low supply, together with demand from China, the major factors in what was another strong week for the market.

The Wool Exchange's Eastern Market Indicator (EMI) closed Thursday at 846 Australian cents/kilogram clean, up 7 cents/kilogram from last week, following last week's rise of 26 cents. The EMI is now at its highest point since last October. In U.S. dollars, the market was up 3 cents, with the Australian dollar lifting marginally from 87.5 U.S. cents last Thursday to 87.6 U.S. cents yesterday, before dropping slightly to 87.1 U.S. cents today. Analysts are expecting the Australian dollar to remain above the 80 U.S. cent mark for the foreseeable future, due largely to the current strength of the Australian economy.

Prices for wools of 19.5 microns and upward all lifted, while those for finer wools dropped slightly. Analysts said that, due to the extent of China's dominance, and the continuing low level of activity from Europe, there were no real premiums for the finer wools again this week.

Experts are predicting that China's dominance will continue, though they are also hinting that as stocks in China start to build, it may start to hold back slightly.

"Australia's dependency on a single market is a concern. Any sort of barrier to trade would be extremely hard on the wool industry," commented Rita Kourlis Samuelson, international wool marketing director for the American Sheep Industry Association. "In the past, China has abruptly changed its wool imports for various reasons: quota limitations 'unexpectedly' being met before the end of the year, SARS, reductions in manufacturing before the 2008 Olympics, etc."

Reprinted in part The Wool Record Weekly

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