DEMAND for wool is looking up if the feedback from recent European and North American textile and clothing trade shows are anything to go by.
But manufacturers aren’t counting their chickens before they’ve hatched, saying the impact of the latest IMF global outlook – released at the World Economic Forum held last month in Davos, Switzerland – is still to be determined.
For manufacturers the test will be to see whether the interest shown at the January/February trade fairs will be converted to physical orders.
Australian Wool Innovation (AWI) chief executive Stuart McCullough said early signs were positive.
“Wool was well tested in the face of the global financial crisis (GFC) so should fare well in the face of a double dip (recession),” he said.
The Australian Wool Exchange’s Southern Micron Price Guide shows the clean fleece price for 18-micron wool starting February 2009 at just 1050 cents a kilogram, but last month was 1511c/kg after peaking at more than 2100c/kg during autumn 2011.
A lot of this activity was from China – a trend that was expected to continue into 2012.
The abilty to obtain credit in 2012 could adversely affect some European orders, but Mr McCullough said China was now a big enough player to consume wool at a level where it could maintain prices.
He expected its emerging appetite for all things luxury was the beginning of bigger things to come.
“If we didn’t have the Chinese I would say absolutely it would slow down,” he said.
Chinese demand along with the low wool supply was therefore expected to help prices remain buoyant, he said.
“With 1.1 billion people in China I don’t know how long the improved demand could go for, but I’m expecting this is just the beginning, with China expected to overtake the US by 2015 as the world’s biggest consumer of luxury goods,” Mr McCullough said.
He said the past couple of years had shown wool prices can hold with “a macro headwind”.
“We’ve just got to make sure we’re seeing these trends and keeping them in the market for as long as possible,” he said.
Other strong signs included the large amount of wool at the ISPO trade show at Munich and the Outdoor Retailer trade show at Salt Lake City, US, last month.
“All reports back from those two shows are that there’s huge amounts (of wool) being shown there,” he said.
At the Bread and Butter trade show in Berlin (held January 18 to 20) five pocket woollen jeans were among the new fashions, while tweed, herringbone and chalk stripe milled fabrics were also making a comeback across Europe, he said.
He said wool was back in fashion, with the clean, green shopper, strong marketing and an increasingly affluent China combining to grow demand.
The clean, green shopper was becoming a bigger player in the bedding market too, with owner and managing director of Ingleburn wool bedding business Wool Products Australia Pty Ltd, Graeme Kerr, reporting increased demand for natural bedding products such as wool.
He was at Germany’s Heimtextil trade event at Frankfurt in early January and said the interest in Aussie wool was the best he had seen.
He was also confident of this translating to orders, but didn’t want to jump the gun.
“Whether these materialise into orders is yet to be seen, but our indications are they will,” he said.
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