Not-so-golden fleece: Australian wool prices plunge amid Sino-U.S. trade war
* Prices of fleeces used in casual wear drop up to 20% in 2
* Comes as Sino-U.S. trade war saps Chinese demand for wool
* Australia controls 90% of global fine-wool exports
By Jonathan Barrett
SYDNEY, Aug 16 (Reuters) - The price of Australian wool
favoured by Chinese clothing makers has dropped as much as 20%
in the last fortnight, sales reports show, with would-be bidders
shunning auctions as the Sino-U.S trade war ramped up.
The plunge began immediately after an Aug. 1 announcement
from Washington that fresh tariffs on Chinese imports would
include clothes and shoes, sapping wool-demand from factories in
China that churn out everything from street fashions to sports
Bidding has been particularly weak in Western Australia's
Fremantle auction, where more than half of fleeces are failing
to find a buyer, the sales reports show. Prices have also been
pressured in the country's two other big selling centres of
Sydney and Melbourne.
Australia controls 90 percent of global fine-wool exports,
where prices are driven by Chinese wool mills and Italian
"Everything has fallen," said Andrew Blanch, managing
director of Italian textile maker-owned New England Wool, which
has an office at the Sydney auction site.
"No-one can get any real direction of where price levels
should be to start buying again."
The price drops mark a seismic shift in the sector from 12
months ago, when wool traded above the key level of A$20 ($14)
per kg as demand boomed and supplies were constrained by
Australia's long-running drought.
But the benchmark price for fine Australian merino wool was
at A$16.76/kg on Aug. 9, and is forecast to fall further when it
is recalculated later on Friday.
While all wool types have been suffering at auctions, those
fleeces in the 19-21 micron range - a unit of measurement
popular among mills and manufacturers for producing casual wear
- are down by between 16% and 20% in Sydney, Melbourne and
Fremantle over a fortnight, auction results show.
Finer wool grades used for high-end suits have fallen
slightly less, while cardings, which are often greasy, short
locks, have had mixed results.
Wool prices continued to dive even after the U.S. said some
of its latest tariffs would be delayed from Sept. 1 to Dec. 15.
Some farmers have been withdrawing their wool bales before
auction to avoid the price falls, with turnover dropping by a
third since the start of last week.
"Many sellers decided not to offer their wool following
yesterday's sharp decline, resulting in 39% of the fleece
offering being withdrawn prior to sale," the Australian Wool
Exchange said in a report on Thursday's auction at the Fremantle
($1 = 1.4756 Australian dollars)
(Reporting by Jonathan Barrett in SYDNEY; Editing by Joseph
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