Demand for knitwear returns to China

Fox & Lillie Rural technical and marketing manager Eamon Timms said the trend became evident recently at one of China's major shopping sales - Single's Day - held last week.

"It's becoming even more evident that the knitwear sector in China has been underpinning the whole pricing structure of the wool market which continues to try and find direction during the pandemic," Mr Timms said.

"Looking from a wool perspective, woollen sweaters appeared to sell quite well, but the interest in fake fur was not there as hoped, so any expected increase in the demand for crossbred wool will not be likely based on this week's results."

The knitwear market principally uses shorter wool tops combed from wool between approximately 50-80 millimetres greasy length which create a bulkier yarn and in further processing, a greater loft or depth to the knitwear.

Mr Timms said one of the issues was that these shorter wool types were mainly pieces, bellies and lambs and the fibre loss from these types could be significant.

"Demand is now so significant for knitwear that many users are buying longer tops made of full-length fleece and cutting them back to the shorter top length for knitting with," he said.

"Users are quite happy with this process as conversion costs and yield is much more predictable and colour is likely to be better."

Fox & Lillie Merino trader Peter Maher said there had been significant advances for processing longer fleece wools which would usually go into traditional weaving types.

"The weaving market worldwide is struggling significantly, but other uses for longer fleece wool, such as knitwear, is currently underpinning this market," Mr Maher said.

"The downside, however, is the knitwear market generally doesn't use as much volume as the weaving sector which might explain some of the volatility."

He said the knitwear market was good for wool as consumerism driven by the middle class in China was for the latest style, cut, colour for the season - demand which was often driven by online influencers.

"This is unlike the suit market where consumers keep their suit wear pieces for several years," he said.

According to Mecardo's quarterly monthly insights report, luxury, like a tailor made woollen suit, simply isn't in fashion ant more.

"The supply/demand equation is finely balanced, with the global pandemic negatively impacting the discretionary spending decisions of consumers," managing director of Mercado, Robert Herrmann said.

"To improve demand a turnaround in consumer confidence will be needed, with the timing of any turnaround at the mercy of the COVID-19 recovery."

The major shopping day broke all of last year's sales records. Retail giant, Alibaba, reported their Single's Day sales surpassed $US74 billion, nearly double the previous record.

JD.com also reported an increase in sales at $US41 billion.

Alibaba said these strong early numbers indicated that demand in China was bouncing back after the coronavirus.