Demand discussion at Chinese conference

DEMAND, not price, was the key focus at the Nanjing Wool Conference last week.

This was vastly different to the same conference held in 2011, where the chief concern of Chinese processors and importers was the high prices they were paying for Australian wool.

Some Chinese representatives still indicated the price was too high, despite the depressed market, but according to the Australian Wool Innovation (AWI) group manager of market intelligence and reporting Paul Swan, who spoke at the conference, there was an understanding from China that long-term sustainability was the key to securing supply.

"Some of the Chinese were telling us they thought the price was too high," he said.

"But a majority recognised supply was tight, which is putting the prices where they are now.

"The Chinese would like to see Australian production increase but also understand this will only occur if the price is sustainably high.

"We sent a strong message that China is going to have to get used to these kinds of prices."

Mr Swan said a major focus coming from Australia at the conference was on the long-term sustainability of prices and improved market prospects.

"The tight supply is likely to remain," he said.

"So what we have to do is work on our marketing and grow demand for the product to justify higher prices.

"We are positive about the future but we need to market our fibre."

In his address, Mr Swan outlined the importance of lifting demand for wool in younger people.

He said there was an overall need to address the changing demographics and create new products to suit new markets.

"Our traditional market is getting older and this is changing the picture," Mr Swan said.

"AWI is working hard to develop new products to target the 'mother and baby' area and in 2013 we will be launching a new Pink Woolmark."

Mr Swan also discussed the work the Sheep CRC was doing in developing the skin comfort meter which will be used to underpin the Pink Woolmark.

"These are very positive developments," he said.

"We need to be moving our thinking toward stimulating the demand for the product."

The other major initiative to come out of the Nanjing Wool Conference was the launch of the new Standard Contract for Australia and China.

Although Mr Swan said it wouldn't impact on the market directly, it significantly improved the long-term relationships between the two countries.

"China is very important to us and things like the development of this contract, which will assist in the purchasing and processing of wool from Australia, is an excellent step in the right direction," he said.

"It is all about improving the confidence of parties in both systems."

The Nanjing Wool Conference has become one of the most important wool textile global trade fairs with more than 450 delegates from around the world attending.