It is nearly four months since Mecardo looked at apparel fibre prices. With the deterioration in the economic backdrop to the markets, it is time to have a look at the apparel fibre price complex.
As previous articles have pointed out wool prices tend to follow the general cycles and trends evident in the greater complex of apparel fibre prices. As with any population there will be outliers, which in the past 18 months have been cotton (on the high side) and crossbred wool (on the low side). So apparel fibre prices do not tell us where wool prices should necessarily be, but they do tell us what overriding cycles and trends are in place. The practical implication of this market structure is that marketers, at best, can only influence a small part of price.
Figure 1 shows the rolling five year percentiles for a range of apparel fibres, beginning in 2017 and running to September 2022 using US dollar prices. Viscose has been added, as a proxy for bamboo (for which more information was requested by a reader) which is part of the cellulosic group of fibres. In Figure 1 cotton and crossbred wool remain the outliers still, outperforming and underperforming respectively. In the middle we have merino (on the low side), polyester staple fibre (PSF), viscose and now acrylic also, which has re-joined the bulk of the fibre price rankings after outperforming in the post-pandemic market.
As mentioned above bamboo fibres are part of the regenerated cellulose fibre group (viscose and rayon for example) with a similar structure to cotton. As such it is often blended with cotton, with fibre prices quoted around cotton levels (although below the long Pima/Egyptian cotton quotes).
In Figure 2 the change in US dollar price is shown for the same fibres as in Figure 1, using spring 2017 as the base (0%) level. This shows more clearly the bunched nature of price changes for apparel fibres, expecting for the two outliers (cotton and crossbred).
Figure 3 uses the same format as Figure 2 but focuses on natural fibres. In this group cashmere is having the best run, outperforming silk, merino and crossbred wool. Crossbred wool is the underperformer.
Deteriorating economic conditions in the major economies point to downward pressure on apparel fibre prices from the demand side of the market.
What does it mean?
With economic growth slowing in the major northern hemisphere economies the pressure on apparel fibres will be downwards. Disruption to supply can counter this effect, and will most likely do so for cotton. Energy costs will be important in determining where manmade fibre prices go. Merino wool, without any great supply issues, is likely to follow the lead of the bulk of the apparel fibre prices, lower. For crossbred this is bad news as there is little prospect of improved prices showing up for this season.
Key Points
- In terms of price movements in recent years, merino wool prices have generally followed the peloton of the apparel fibre market, to use a cycling metaphor.
- Cotton, while well down on recent highs, continues to outperform apparel fibres generally with cashmere following next and then very fine merino.
- Crossbred prices are performing the worst, by a long way, of all apparel fibres.
Click on figure to expand
Click on figure to expand
Click on figure to expand
Data sources: AWEX, RBA, Emerging Textiles, Kulkarni and Banu, ICS
