Wool prices in the world’s dominant exporter, Australia, are plunging after Chinese mills closed their order books, with buyers citing an escalation in the U.S.-Sino trade war, reports Trend referring to Reuters.
Some wool grade prices fell up to 7 percent at one of the country’s main auctions on Wednesday, traders told Reuters at the sale in the Sydney suburb of Yennora. Those same grades — popular with Chinese garment-makers — fell by double-digits a week ago.
“Last week fell heavily and it certainly will continue this week; there’s just no confidence and no business,” said Scott Sealy, a trader at Australian Merino Exports, which exports large quantities to China.
The price action is another sign of the Sino-U.S. trade war spilling over to third parties such as Australia, which controls 90 percent of global fine-wool exports.
Demand, once driven by Italian garment makers, now tends to be set by Chinese wool mills who took about two-thirds of the industry’s A$3.2 billion ($2.2 billion) in exports last financial year, according to government figures.
This week’s official wool price results won’t be known until the end of the week when results from all major selling centers are in. But the benchmark price for fine Australian merino wool was already down more than 20% from last year’s high of $21.16/kg coming into this week’s auctions.