The wool scene

Press, Volume CXIII, Issue 33252, 15 June 1973, Page 13

The wool scene

This week Mr D. V. Damerell, director for the Internationa) Wool Secretariat in North and South America and also worldwide co-ordinator for carpets and home furnishings, has been in Canterbury talking about the reasons for the decline in wool prices in 1966-67, the great recovery in prices in the last 18 months and the likely prospects for the future. The whole situation could best be described as very complex and confusing.

Talking about carpet type wools, of which New Zealand is a major producer, Mr Damerell recalled that in 1963 about 163 m lb clean weight of wool went into carpets in the United States. Then, he said, there were only about two competing fibres. But in the next three years consumption fell to about 100 m lb and this, Mr Damerell said, was the major factor in the decline in carpet wool prices. Japan was not a major factor in the market at that time. Then there had followed a so-called flat period, when prices remained low and it was towards the end of this period that overseas manufacturers told Mr H. P. Ralph, the chairman of the Wool Marketing Corporation Establishment Company, that they could not stand a rise in prices for the raw material. But Mr Damerell said that these manufacturers did not fully appreciate what was happening to the New Zealand stockpile and that it was contributing up to 10 per cent of the New Zealand supply. At the same time the secretariat had done an outstanding job in persuading European carpet manufacturers to move back into wool, with prices having also shown a reasonable degree of stability for some time at a low level. Now Japan was coming into the market on an increasing scale. There was also an increase in demand resulting from booming economies in the United States and Japan. At the same time there was a shortage of wool and coarser wools were also being diverted from traditional uses to new uses, and in particular women’s apparel made on the woollen system. With no early prospect of world wool supplies increasing much, Mr Damerell foresaw prices and demand for the fibre remaining high for the next two or three years, provided that there was no major downturn in economic conditions in consuming countries. He noted that a lot of New Zealand wool went into what he described as dangerous end uses, like

carpets in which wool could form .30, 40 or up to 60 per cent of the final cost. And while on the one hand he reported drastically reduced use of wool in carpets in the United States following the recent upturn in values, and a similar but lesser fall in carpets in other markets, he also reported that greater and greater quantities of this wool was now going into women’s apparel, but he added that he did not know how secure this outlet really was. Another interesting development has been the rise in wool usage in Japan and the Japanese he reported did not seem to be much concerned with price, which was related to the revaluation of the yen and devaluation of the dollar. The Japanese are apparently using wool internally and exporting artificial fibres. Japan has lately taken 11 per cent of New Zealand wool compared with 7 per cent in the previous season. For an affluent country, Mr Damerell noted that Japanese wool usage was not yet really very high and it was anticipated that there would be a continuing demand from that area, bu,t he warned that if outlets for Japanese man-made fibres shrank, the Japanese, with a big capital investment in plant, might decide that they had to use more of these at home. Mr Damerell also reported a comparative shortage of synthetic fibres and the likelihood of rising prices for these, but pricewise they were now trailing far behind wool and increases in prices would be on a very modest scale compared with those recently shown by wool. Asked about the future for the medium fine wools produced in North Canterbury as distinct from the coarser wools, Mr Damerell said that a fair amount of these went into knitwear, hand knitting yarns and women’s apparel, and in the latter end use a great deal would depend on success in fashion and the big demand this season in women’s wear, he thought, had camouflaged what had been happening in the knitwear and hand knitting yarn areas.