Apparel fibre prices – all in the same boat

As discussed in recent articles, greasy wool prices are struggling with severely constrained demand and farmer-owned stocks are increasing as a consequence. This article takes a look at how other apparel fibre prices are travelling in this pandemic world.

Apparel prices generally peaked in 2018, with the effect of COVID-19 arriving after an 18 month down cycle was already in place. Figure 1 takes a longer view of apparel fibre prices by setting the average 2015 US dollar prices for different fibres to be equal to 1, and then comparing subsequent prices to the base 2015 level. This has the advantage of putting the fibres on the same scale, for the sake of comparison. The wool price included in Figure 1 is the average Merino micron price (Merino).

Of all the fibres the Merino price had the best-rising cycle from 2015 to 2018 in US dollar terms (it was boosted at the local level by a falling Australian dollar), which held on into early 2019. Silk matched the wool rise until early 2018. Since the peak levels in 2018, most fibres have fallen below their respective 2015 averages, with cotton and Merino performing the best (as of June 2020). The man-made fibres are some 30% below their 2015 levels and silk is down by 16%.

Without knowing about COVID-19 it is difficult to see the effect of the pandemic on the apparel fibre prices, due to the pre-existing down cycle which was already in place.

In Figure 2 the focus on apparel fibre prices is shorted to the period from mid-2018. US dollar apparel fibre prices have been reset to a base price from mid-2018. In this graphic, nearly all apparel fibre prices are down by 40% on mid-2018 levels, with cotton the exception as it is “only” down by 30%. It is a tidy graphic which reinforces the reality that apparel fibre prices are intimately linked, tending to trend and cycle similarly. In recent months apparel fibre prices have steadied, after falling in the February to April period as supply chains began to react to COVID-19 lockdowns.

Can cotton continue to outperform? Figure 3 shows a price ratio for the Cotlook Index and a polyester staple fibre (PSF) price ratio from the late 1980s to June. In February the ratio rose up to around 1.8, and it is still there. Historically this is a high ratio, and with PSF prices steady at low levels, it seems unlikely the cotton price can rise further in a sustainable fashion.

What does it mean?

Merino prices have followed the general pattern of apparel fibre prices, although they are performing quite well in relation to the price cycle since 2015. Apparel fibre prices have steadied since April, but the uncertainty about demand remains, with cotton and wool stockpiles building in the upper end of their respective supply chains. Until prices for the bigger apparel fibres start to trend higher, Merino prices will continue to languish.

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Key Points

  • Apparel fibre prices have followed similar trends during the past two years, since peaking in mid 2018.
  • Merino prices have followed the normal trend.
  • Apparel fibre prices have steadied in US dollar terms in recent months.
  • Cotton is outperforming at present, but is stretching its basis to polyester staple fibre.

Click on graph to expand

Click on graph to expand

Click on graph to expand

Data sources: AWEX, RBA, Cotlook, Emerging Textiles, ICS

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