Wool prices rebounded strongly this week at Australian wool auctions. After many months of selling under uncertain demand and weakening price levels, the abandonment of the Covid zero policy this week in China had immediate effect. This saw many Chinese first stage factories push bids into the traders for consideration a full 30usc or 4.5% better than the previous week. This made selling of local buyer stocks much easier but as enquiry continued at volumes well above those local stocks, exporters were then faced with the conundrum of forward selling with market risk exposure. 

This policy decision by the Chinese central government was the first step needed to recover that nation to the dominant demand destination and price setter in the Australian market. For many months, other wool using countries have been helping the larger four or five Chinese users lead the spot price making and taking a higher than normal percentage of wools on offer into their inventory. Away from some good Italian orders for the best 15 to 19 micron wools, and some low spec and quality types, this week was dominated by the Chinese purchasing activity.

To give impetus to this week’s good gains, it remains to be seen if the consumers of China deem it time and safe enough to hit the retail shops and choose to spend. On top of this, another major unknown is whether or not there has actually been enough wool products made to sell within the China domestic market, as many of the Chinese mills were on-selling first stage manufactured product into Europe. As the northern hemisphere winter is upon us, hopefully wool doesn't miss it’s peak selling opportunity into the world’s second largest domestic economy.

Merino fleece and skirting wools were the most well sought types and subsequently fetched returns upwards and over 100ac clean/kg better than were previously available. All Merino wool descriptions were keenly competed for, but it was notable that the 19.5 and 21.0 micron standard Chinese types came under the strongest demand pressure and most widespread competition from multiple exporters.  

The gains were timely as next week sees the final sale of the calendar year prior to the annual three week recess. A larger than expected roster of almost 50,000 bales is on offer Tuesday through to a Thursday conclusion.