Steep rise in fine and superfine wool prices

Superfine wool prices exhibited strength in US$ terms in the seven months July 2007-January 2008, while prices for other luxury fires have remained very subdued. In January 2008, prices for cashmere recorded a minimal rise compared with July 2007, whereas mohair prices remained unchanged and alpaca prices fell moderately. Although there has been little change in luxury fibre prices so far this season, they have remained at relatively high levels. In contrast, fine and superfine wool prices in US$ registered a steep rise. In January 2008, both 18 and 19 micron category wool prices were at 100th percentile, reaching the highest level (in US$) since the collapse of Reserve Price Scheme in February 1991.

A weaker rise in prices took place for superfine wool (16.5 micron category) which rose only moderately in the reporting period. However, the average January 2008 price was at a very high 98th percentile for the last decade.

The subdued trend in other luxury fibre prices is dictated by the level of demand generated by luxury consumers. There are some conflicting signals coming from the world luxury markets. Recent research on the luxury market in the US revealed that their spending on luxury goods and services dropped 20% in the second half of 2007 compared to the first half. The survey also showed weakening confidence among American luxury buyers.

In contrast, Europeans sound more optimistic. According to HSBC, robust demand from Asia, the Middle East and Russia should boost growth of the luxury goods industry.