Australian wool prices fell sharply in August, with the Eastern Market Indicator down by 322 Acents (or 22%) from the start to the end of the month. It was a similar percentage drop in US$, Euro and Renminbi. This is one of the largest monthly % declines since 1991, with a similar % decline seen (for example) in May 2003 after the SARS outbreak in China.
The decline in Merino wool prices over the past month comes amid the backdrop of the US Government introducing a 15% additional duty on imports of wool clothing from China, effective from 1st September 2019. This is higher than the original additional 10% duty previously advised. The higher level was announced by the Office of the US Trade Representative on 30th August after China had itself announced new additional duties on a range of products imported from the US. These additional duties on wool clothing imports by the US from China are included in a list of a range of products imported from China. Because the additional duties are applied as of 1st September, it directly affects the US imports of wool clothing imported in time for the crucial Autumn/Winter season in the US. Around 45% of the annual total of US imports of wool clothing from China is imported in the September-December period. And, over half of the US imports of wool clothing each year is supplied by China. A second batch of products imported from China will have the additional 15% duty imposed on 15th December, although this list appears to contain little or no wool products.
Further details, including a chart showing the trends in the EMI in A$, US$ and Euro over the past 30 years, are provided in the full version of the Weekly Newsletter. Available to NCWSBA members.