Monthly Market Reports

January 2012

1 February 2012

The northern hemisphere Autumn/Winter is the textile industry’s trade show season – and a critical guide to what will be appearing in-store in 12 months’ time in our major textile markets. In this edition we report on the 2011/12 trade show season, drawing on Textile Outlook International’s extensive report in their latest edition (January 2012). We also provide an insight into the relationship between cashmere and fine Merino wool, and what the latest cashmere supply intelligence might mean for fine Merino growers.

Trade Show wrap
UK-based Textile Outlook International is one of the premier textile business and market analysis services, and their latest edition (No. 154, January 2012) contains a detailed review of the recent trade show season in the northern hemisphere. Some key points made include:

  • The report covered 5 major 2011/12 shows European shows, including Prima Moda Tessuto (Prato, July 5-7), Munich Fabric Start (September 6-8), Milano Unica (Milan, September 13-15), Texworld (Paris, September 19-22), and Premiere Vision (Paris, September 20-22) – these shows cover the range of wool end-uses from finest apparel to interior textiles and bedding
  • Despite uncertainty about the global economy, the mood at these fairs was variously described as one of ‘recovery’, of ‘rebuilding after the GFC’, ‘positive’, and ‘an air of excitement’ – as seen in increased numbers of visitors and exhibitor numbers, in some cases to record levels.
  • The emerging affluent markets continue to underpin prospects for growth, especially demand for luxury products – almost all fairs reported substantial increase in participation from emerging affluent markets, especially China, Russia, and Brazil. Significantly, Milano Unica announced that it will for the first time be showing at 2 Intertextil events in China in 2012, reflecting the growing importance of Asia as an export market for European textiles.
  • Wool was reported as being well represented in both interior textile and apparel displays, although wool price rises had contributed to an increase in the amount of blending with other fibres, according to Textile International.
  • Woolmark also received a special mention – both for The Wool Lab, which was seen as a key new product at Milano Unica, and also for the Milano Unica/Woolmark joint fashion show, which featured 10 up and coming new designers from around the world.

Although the Textile Outlook International report did not cover Heimtextil (Frankfurt, January 11-14), Woolmark and IWTO European staff (Ingrid Oomen, Elisabeth van Delden, Johann Mittemayr and Stefan Franke), manned a prominent display, and I was there briefly to give a lecture challenging wool’s reputation in some quarters as an allergen. In keeping with the other fairs, there were record numbers of attendees at Heimtextil and a generally positive mood, despite the economic uncertainty. This is significant as this event us the world’s biggest trade fair for home and textiles, a crucial opportunity to promote broader, non Merino wools.

Cashmere and fine Merino wool
As Fine Merino wool increasingly competes as a luxury fibre, and with the development and wide adoption of cashmere-feel treatments for fine wool such as Mercerisation, cashmere is increasingly a very relevant benchmark for Superfine Merino wool. Statistically speaking, the price of cashmere is a good guide to the price of Superfine Merino wool, with an 89% correlation between 18.5 micron Merino price and cashmere prices since 2002, with cashmere being on average 8.6 times the price of 18.5 micron Merino wool over the period.

In terms of the outlook for cashmere prices, the key driver appears to be supply shortage:

  • In the region of China and Mongolia, cashmere prices are rising as volumes of available cashmere have drastically reduced, largely driven by demand for meat protein - China down to 5,500 tons from 11,500 tons and Mongolia now below 3,000 tons, 20% less that in 2010 and almost 50% less than two years ago. Both Chinese and Mongolian fibre is coarser in 2011 as herders have slaughtered the younger goats to benefit from higher meat prices.
  • In the Iran and Afghanistan region, China has purchased much of the new clip in 2011, including much of that normally not available to purchase until later in 2012. Prices have been pushed up to Mongolian levels.
  • Stock levels in Europe seem quite low and shortage of material could cause price increases in the first quarter of 2012 as demand outstrips supply

The take-home message is that cashmere prices are expected to rise, driven by supply reduction, particularly for the finer diameter types, and that this might provide some price support for ultrafine and superfine Merino prices in 2012.