Over recent months, US$ prices of domestically produced worsted weaving yarns in Japan, 2/48s and 2/60s, have both tracked downwards after peaking in March. By comparison, monthly average raw apparel wool prices, as measured by the Australian EMI, rose solidly in US$ terms.
This divergence of rising raw wool apparel prices and modestly declining yarn prices is placing significant margin pressure on Japanese spinners. The margin pressure could be a good reflection of what is happening globally and especially in East Asia.
Last year, well over half the total worsted yarn used by Japanese spinners was imported, meaning domestically produced yarn competes directly against Chinese yarn and other yarn producers in South East Asia such as Malaysia.
As such, the trend and level of yarn prices produced domestically in Japan in US$ terms is likely to be a good representation of global worsted yarn prices.
Overall, the evidence supports that global yarn prices have not risen in recent months, which has added significant pressure to profit margins further up the wool textile pipeline.
This divergence of rising raw wool apparel prices and modestly declining yarn prices is placing significant margin pressure on Japanese spinners. The margin pressure could be a good reflection of what is happening globally and especially in East Asia.
Last year, well over half the total worsted yarn used by Japanese spinners was imported, meaning domestically produced yarn competes directly against Chinese yarn and other yarn producers in South East Asia such as Malaysia.
As such, the trend and level of yarn prices produced domestically in Japan in US$ terms is likely to be a good representation of global worsted yarn prices.
Overall, the evidence supports that global yarn prices have not risen in recent months, which has added significant pressure to profit margins further up the wool textile pipeline.
