The markets for Australian wool. Mr Chris Wilcox Chief Economist, The Woolmark Company

Transcription

1 The markets for Australian wool Mr Chris Wilcox Chief Economist, The Woolmark Company

2 Agenda 1. Prices 2. Fibre supply trends 3. Regional shifts in wool textile production 4. Wool end uses and retail trends 5. Wool s share in key segments

3 Prices

4 Three-year trends in Australian wool prices Ac/kg clean 1, micron 22 micron 24 & 28 micron Ac/kg clean 1,500 Ac/kg clean 1,300 1,300 1,400 1,200 1, , , um Jan-03 Jul-03 Jan-04 Jul-04 Jan-05 Jul-05 Jan Jan-03 Jul-03 Jan-04 Jul-04 Jan-05 Jul-05 Jan Jan-03 Jul-03 Jan-04 Jul-04 Jan-05 Jul-05 Jan-06 28um Source: AWEX. Weekly basis up to 30 June 2006.

5 Australian EMI in user currencies cents/kg clean Jul-00 Oct-00 Jan-01 Aus cents Euro cents US cents May-01 Aug-01 Nov-01 Feb-02 May-02 Sep-02 Nov-02 Mar-03 Jun-03 Oct-03 Jan-04 Apr-04 Jul-04 Oct-04 Jan-05 Apr-05 Aug-05 Oct-05 Feb-06 May-06 Sources: AWEX, The Woolmark Company, Financial Times. Data to 30 June 2006.

6 Wool price relatives 21-micron wool 7 6 Wool to cotton 7 6 Wool to synthetics Long run average 4 3 Long run average Jun-98 Jun-99 Jun-00 Jun-01 Jun-02 Jun-03 Jun-04 Jun-05 Jun Jun-98 Jun-99 Jun-00 Jun-01 Jun-02 Jun-03 Jun-04 Jun-05 Jun-06 Source: The Woolmark Company and Cotton Outlook. Data to March Synthetic long term average between April 1987 and March 2006 (3.15). Cotton long-term average between Jan 1985 and April 2006 (3.97.)

7 Fibre supply trends

8 World consumption of major textile fibres '000 million tonnes % % 1980 Cotton Wool 5.4% % % 2002 Oil-Based Synthetics 2003 Wool s share 2.3% 2.6% Cellulosics 2004(f) 2005(f) Source: ICAC, The Woolmark Company, CIRFS.

9 Fibre use by sector (e) (Volume and share of world fibre consumption by fibre type) Consumption in million tonnes 2005(e) % 100 Total: m tonnes Industrial Interior Textile Apparel 9% 25% 67% 0 Australian Wool Wool Cotton MMF* Man-made fibre includes oil based and cellulosic fibres. Source: The Woolmark Company, ICAC, CIRFS, CMA0.

10 Australian wool production continues to decline Wool production (mkg greasy) Wool (e) Sheep Sheep numbers (million) Lowest since 1947/ (f) Sources: ABS, AWI Wool Production Forecasting Committee 2005=2004/05

11 Increasing production of Australian fine and superfine wool mkg greasy equiv % Increase 1992/93 to 2006/07(f) + 143% 19.5um & finer 18.5um & finer 92/93 93/94 94/95 95/96 96/97 97/98 98/99 99/00 00/01 01/02 02/03 03/04 04/05 05/06 06/07 (f) + 340% Sources: The Woolmark Company, AWTA, AWIWPFC.

12 Declining production of Australian mid-micron wool 700 mkg greasy equiv um 20-23um % decrease 1992/93 to 2006/07 (f) -61% -56% 0 92/93 93/94 94/95 95/96 96/97 97/98 98/99 99/00 00/01 01/02 02/03 03/04 04/05 05/06 06/07 (f) Sources: The Woolmark Company, AWTA, AWIWPFC.

13 Regional shifts in wool textile production

14 Global volume of demand for wool* apparel wool textile industry mkg clean Spinning Manuf acturing Source: The Woolmark Company. Note: * Measured by Net Domestic Availability. The above NDA is a three-year average to smooth out the stock position.

15 Australian wool exports by destination 19-micron and finer wool 8% 3% 1994 Volume 82.2 mkg greasy Value - $535.7 million 6% 6% 2005 Volume mkg greasy Value - $926.7 million 37% 1% 4% 10% 7% 3% 0% 39% 0% 20% 2% Italy N America Japan China India Other Asia Other Europe Other 55% Sources: ABS, Woolmark. Notes: % figures are volume based. Exports comprise greasy, carbonised, scoured, top, noils and waste. In 2005, other includes tops shipped to unspecified destination.

16 Australian wool exports by destination 20 to 23-micron wool 22% 1994 Volume mkg greasy Value - $2,618.5 million 2% 12% 7% 2005 Volume mkg greasy Value - $1,209.5 million 13% 4% 6% 1% 2% 11% 22% 3% 19% 13% 8% 35% Italy N America Japan China India Other Asia Other Europe Other Sources: ABS, Woolmark. Notes: Percentage figures are volume based. Exports comprise greasy, carbonised, scoured, top, noils and waste.

17 Australian wool exports by destination 24 to 27-micron wool Volume 82.1 mkg greasy Value - $298.5 million 4% 8% 1% 10% 15% Volume mkg greasy Value - $92.1 million 12% 5% 4% 0% 3% 6% 13% 5% 44% 15% 55% Italy N America Japan China India Other Asia Other Europe Other Sources: ABS, Woolmark. Notes: Percentage figures are volume based. Exports comprise greasy, carbonised, scoured, top, noils and waste.

18 Australian wool exports by destination 28-micron and broader wool 1994 Volume 31.6 mkg greasy Value - $121.2 million 2005 Volume mkg greasy Value - $87.8 million 19% 3% 6% 6% 4% 1% 3% 2% 5% 14% 19% 3% 36% 71% Italy N America Japan China India Other Asia Other Europe Other Sources: ABS, Woolmark. Notes: Percentage figures are volume based. Exports comprise greasy, carbonised, scoured, top, noils and waste.

19 Global wool top production and capacity utilisation %= Capacity utilisation mkg clean % China Italy 75% Australia France Uruguay e Total global production in mkg clean (+6%) Capacity utilisation in % 52% 53% 34% Argentina 61% India 24% 90% Czech. Taiwan 32% 45% South Africa Source: The Woolmark Company estimates.

20 Apparel wool use up to spinning stage (mkg clean) Indian Sub-cont Americas Other 2005 W Europe Mkg clean W Europe % % China % % CIS/ C&E Europe/ Turkey Jap/Kor /Tai Source: The Woolmark Company China Jap/Kor/Tai % % CIS/C&E Eur/Turkey % % Americas % % Indian-Sub cont % % Others % % Total % %

21 Apparel wool use up to manufacturing stage (mkg clean) Other 2005 W Europe Mkg clean W Europe % % India Subcont Americas CIS/ C&E Europe/ Turkey Jap/Kor /Tai Source: The Woolmark Company China China % % Jap/Kor/Tai % % CIS/C&E Eur/ Turkey % % Americas % % Indian-Sub cont % % Others % % Total % %

22 Labour costs in the textile industry 2004 (US$/hour) Belgium Germany Italy Japan Australia USA Spain S.Korea Hkg Czech Rep Turkey Argentina Brazil Thailand Malaysia China (Coastal) India China (Mainland) Sri Lanka Bangladesh Source: Werner International.

23 Trends in clothing prices Index 1992 = Germany Japan US UK Source: Statistisches Bundesamt, Japan Statistics Bureau, US Department of Labor, UK National Statistics Office. Japan excludes kimonos.

24 Percentage change in Chinese wool woven wear and total imports into the EU in 2005 y-o-y 500% 486% 400% 300% 200% 100% 0% O/coats 150% 115% Suits Jackets 276% Dress Women s wear 30% 46% 60% 96%102% Skirts Trousers O/Coats Suits Jackets Men s wear Trousers 300% Total China Source: Ïnterlaine, The Woolmark Company.

25 Percentage change in Chinese wool woven wear and total imports into the USA in 2005 y-o-y 700% 600% 500% 2881% 918% 5073% 670% 566% 400% 300% 200% 100% 0% -100% O/coats 108% -13% -1% Suits Dress Skirts Women s wear Trousers O/Coats Suits Jackets Men s wear Trousers 27% Total China Source: Ïnterlaine, The Woolmark Company.

26 Wool end uses and retail trends

27 Wool usage and fibre diameter Superfine merino 19 um and finer 160 Merino um Fine crossbred um underwear Medium crossbred Broad wool um 32 um and broader men s woven outerwear women s woven outerwear knitwear blankets upholstery rugs socks filled bedding carpets mkg greasy Australia New Zealand South Africa Uruguay micron Source: The Woolmark Company.

28 Key consumer markets for fine and superfine wool (19.5 microns and finer) Key Consumer Markets Division 1 Division 2 Japan Italy Germany US China UK Korea France Taiwan Other W. Europe The dominant luxury fibre in lightweight knitwear and tailored formalwear Men s wear suits jackets trousers 45% Women s wear suits skirts trousers 25% Knitwear fine worsteds and cashmere blends lambswool underwear 30% Source: The Woolmark Company databases and estimates, international trade statistics.

29 Key consumer markets for medium merino wool (19.6-micron to 25-micron) Key Consumer Markets Division 1 Division 2 China US UK Italy Japan Germany, France, Spain, other W. Europe Taiwan, Korea India Turkey Russia, other E. Europe Extensive use in lower price point garments, often in blends Men s wear suits trousers jackets 30% Knitwear worsted knits lambswool socks handknitting 35% Women s wear jacket suits Trousers coats 32% Interior Textiles 3% Source: The Woolmark Company databases and estimates, international trade statistics.

30 Key consumer markets for all broad wool (26-micron and broader) Key Consumer Markets Division 1 Division 2 Men s (jackets, coats) 5% Women s (coats, jackets) 10% China US UK Germany Turkey Australia Italy, other W. Europe India, Pakistan, other South Asia Japan Russia, other CIS & E. Europe Other Middle East North Africa Carpets, bedding, upholstery, hand knitting yarns, winter-weight coats and sweaters Knitwear handknitting military Shetland 30% Interior Textiles carpets rugs bedding upholstery 55% Source: The Woolmark Company databases and estima international trade statistics, McKinsey &

31 Trends in global wool demand at retail mkg clean 1,800 1, Decline in Western Europe and Japan Apparel Non-apparel US slowdown and impact of drought 1,400 1,200 1,000 Non-apparel: % change = (-18% ) Apparel % change = (-29%) e Source: The Woolmark Company. Note: Demand = availability up to retail stage.

32 Apparel wool use up to retail stage (mkg clean) 2005 Mkg clean India Subcont Other W Europe W Europe % % China % % Americas Jap/Kor/Tai % % CIS/C&E Eur/Turkey % % Americas % % CIS/ C&E Europe/ Turkey Jap/Kor /Tai China Indian-Sub cont % % Others % % Total % % Source: The Woolmark Company.

33 Per capita apparel wool consumption Country Apparel wool NDA (mkg) Population (million) Per capita incomes ($US) Per capita annual wool consumption (kg) China , , Japan , US , UK , Italy , South Korea , Germany , Russia , Australia , France , Turkey , Spain , India , , Source: The Woolmark Company, United Nations, World Bank. Wool consumption is a three-year average of 2003 to 2005 apparel NDA at retail. Income is GDP per head on a purchasing power parity basis. Income and population data are for 2004.

34 Per capita apparel wool consumption versus incomes Australia Italy UK Japan S Korea Turkey Spain Germany France USA Russia India China 0 5,000 10, , ,000 25,000 30,000 35,000 40,000 45,000 Income (US$/head) Source: The Woolmark Company. Wool consumption is a three-year average of 2000 to 2005 apparel NDA at retail. Income is GDP per head on a purchasing power parity basis.

35 Wool s share in key segments

36 Japan imports of knitwear Value yen Imports in Value ( bill.) Total Knitwear 45% 40% Fibres' Share Synthetics 40% Wool 35% 30% 25% Wool Cotton 36% 24% % Source: Japanese Trade Statistics. Note: *Covers period January - December. Total knitwear = wool, synthetics, cotton and others.

37 USA imports of knitwear Value $US billions 4 3 Imports in Value (US$ billion) Total Knitwear 45% 40% Fibres' Share Synthetics 39% 2 1 Wool 35% 30% 25% Wool Cotton 35% 26% % Source: US Dept of Commerce (General imports). Note: Knitwear = sweaters/cardigans and excl. vests and sweatshirts. Total knitwear = wool, synthetics and cotton.

38 Japan imports of men s outerwear Value yen 300 Imports in Value ( bill.) 45% Fibres' Share Total Men's Outerwear 40% 35% Wool 37% 37% Wool 30% 25% Synthetics Cotton 26% 0 20% Source: Japanese Trade Statistics. Note: *Covers period January - December. Total men s outwear = wool, synthetics and cotton.

39 USA imports of men s outerwear Value US$ billions Imports in Value (US$ billions) Fibres' Share % 60% Cotton 52% 5 4 Total Men's Outerwear 50% 40% 3 30% Synthetics 26% Wool 20% 10% 0% Wool 22% Source: US Dept of Commerce. Note: Menswear Suits incl. ensembles, coats excl. Anorak/parka/windbreakers, Trousers of cotton excl. corduroy and denims Total men s outwear = wool, synthetics and cotton.

40 Japan imports of women s outerwear Value yen Imports in Value ( bill.) 2000 Total Women's Outerwear Wool % 55% 50% 45% 40% 35% 30% 25% 20% 15% 10% Fibres' Share Wool Cotton Synthetics % 30% 14% 2005 Source: Japanese Trade Statistics. Note: *Covers period January - December. Total women s outerwear = wool, cotton, synthetics and others.

41 USA imports of women s outerwear Value $US - billions Imports in Value (US$ Total Women's Outerwear 2000 Wool % 50% 40% 30% 20% 10% 0% Fibres' Share Synthetics Cotton Wool % 45% % 2005 Source: US Dept of Commerce. Note: Womenswear Suits incl. ensembles, coats excl. Anorak/parka/windbreakers, Trousers of cotton excl. corduroy and denims Total women s outerwear: wool, synthetics and cotton.

42 Private consumption forecasts in key apparel wool consuming countries Country World share of wool at retail Private Consumption Forecasts (f) 2007 (f) China 21% 9.9% 9.6% 8.9% Japan 11% 2.1% 2.9% 2.2% USA 11% 3.5% 3.2% 2.7% UK 6% 1.7% 2.0% 2.3% Italy 5% 0.1% 1.2% 1.2% Germany 5% 0.2% 0.9% 0.1% South Korea 3% 3.2% 4.5% 4.3% France 3% 2.2% 2.3% 2.1% (f) forecast (e) estimate China is GDP growth. Source: The Woolmark Company, Consensus Forecast (June 06).