What didn't snap under China trade tension

Amid the wool market slide some strong points still remain


China dominates our wool markets, but as it's eased its competition, what wool has kept selling well?


AS the Eastern Market Indicator shed 163 cents a kilogram across last week's wool auction series to finish at 1513c/kg, some curious trends otherwise masked by China's buying dominance emerged.

The sudden decline across most of the market was attributed to the US-China trade war and uncertainty over Brexit.

ALSO READ: More wool market wobbles as EMI plunges to 1564c

However, wool types that suited Italy and Japan specifications, and non-mulesed types - although only a small percentage of overall volumes - continued to sell well.

Last week's Australian Wool Exchange Weekly Wool Market Report, published on Thursday, showed non-mulesed lines had significantly grown its premium, having finished 200c/kg above similar wool types.

"The highlight of the week, in an otherwise gloomy market, was the good support for non-mulesed types," the AWEX report said.

"A small number of buyers competed strongly for these types, pushing them 200c/kg higher than similar types."

However, upon closer inspection, it wasn't so much that buyers pushed the non-mulesed types higher - those types still lost ground, just not as much as the rest of the market.

A fortnight ago, non-mulesed types were fetching a 50c/kg to 100c/kg premium, equivalent to the amount they lost last week amid the falling market.

Yet, these types had a much softer landing, settling at their new 200c/kg premium.

As AWEX market information manager Lionel Plunkett explained, there were a couple of drivers behind this mulesed/non-mulesed price spread opening further, not least the rapid decline of the rest of the market.

"There was a premium there in the previous week (of 50c/kg to 100c/kg), but the gap's opened up," he said.

This was in a market which he said had "a reasonable amount of non-mulesed types available compared to in the past".

In addition, Mr Plunkett said the non-mulesed premium was across a range of microns, more so than normal.

But non-mulesed wasn't the only factor at play.

G Schneider, whose wool goes to Japan and Italy, was among the dominant buyers and its Australian managing director Tim Marwedel said from weaving through to knitting types, buyers currently had a choice.

With China's reduced presence, other buyers could meet their quality specifications first, which Mr Marwedel said remained their priority, then still have the choice of non-mulesed.

He also said the finer microns held up better because China largely targeted wools of 19-micron and broader.

The largest falls were seen in the 19-micron and broader categories, including a 157c/kg drop for 19-micron wool at Sydney and 167c/kg at Melbourne.

Comparatively, 18-micron wool at Sydney dropped 143c/kg and Melbourne only 117c/kg.

At last week's close, the EMI was 603c/kg below its lofty peak of 2116c/kg, reached on August 16 last year - a level well beyond which Mr Plunkett said anybody had initially expected.


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