Speculation that workers in China’s railway industry may be getting new uniforms using wool has been the only bright spot in the past week for Australian wool demand, according to overseas traders.
One international trader based in China said the good news was a long way from materialising since it was still not known what percentage of wool would be used in the uniforms, when orders would be issued, or whether Australian wool would be required.
Techwool Trading’s Josh Lamb said if China were to change its uniforms, then there could be a firming of the market in the 21- to 23-micron range, but it would not help the finer end of wool sales.
He said the short to medium-term outlook for Australian wool was “still very ordinary and definitely cheaper”.
Chinese demand for uniforms had upheld some of the Australian market this season, meaning the price dip was not as worse as it could have been.
“There’s not a lot of good news at this stage,” he said. “I’m sure it will come but it’s easy to say the market is historically higher than previously, but the fact is the market is trending downward.
"It’s not the end of the world but we’d like to see improvement.”
Mr Lamb said the downward trend might continue through the start of new season too, from September through until Christmas.
Supply from farmers to markets is tipped to decline further in the next couple of weeks. Overall, Australian Wool Exchange figures show that the offering so far in 2011-12 has declined 2 per cent, or 37,941 bales, compared with the same period last financial year. Total bales offered this year is at 1.87 million.
There are two market lefts for 2011-12 – including this week’s and next week – and another two markets in the new season in the first two weeks of July before a three-week recess.
He said market activity had been sporadic and while there was buying activity from the EU last week, there might not be any more for the next but 4-5 weeks.