Chinese desperado gobbles up Aussie wool

It likes to pretend it can hurt our commodities but, in the end, the Chinese paper tiger is desperately short of pretty much everything, via Bloomie:

Mill shutdowns in China, along with weaker demand for textiles, had “turbo charged” a downturn in the market earlier in the year, Robert Hermann, managing director at adviser Mecardo, said by phone.

There’s been a fundamental change in recent weeks as mills and manufacturers prepare for an anticipated increase in consumer spending after pandemic lockdowns, Hermann said. Wool purchases typically need a long lead time, and there have been reports of Chinese mills receiving more orders from downstream, he added.

Australia typically exports about 80% of its greasy, or untreated, wool to China, government forecaster Abares said in September. That figure surged to 96% in the June quarter, amid Covid-19-related disruption in export markets, particularly in Europe.

…China “has pretty much opened up, back to normal as of August this year,” Symes said. “We’ve seen enormous support from the Chinese marketplace. In recent times 92% of our wool has been heading into China.”

We should immediately apply a huge wool export tariff to gouge such nice folks.

Meanwhile, the AFR tries to put lippy on the China pig:

A quarter of directors believe that engaging with Asia, and China in particular, should be a key priority for the government, up from just 13 per cent six months ago, according to the latest Australian Institute of Company Directors (AICD) survey of director sentiment.

The headline should of course read “three-quarters of Aussie directors don’t give a hoot about deteriorating China relations”.

They do not include the coal barons, also at rentier central:

Coal bosses say this country must get its bilateral relationship with China back on track as evidence mounts that Australian coal is being blocked by Chinese customs while rival coal-exporting nations continue to sell there.

Speculation that Australian miners were facing unique discrimination from Chinese customs was fuelled on Wednesday, when Coronado Global Resources confirmed it was still selling coal into China from its Buchanan mine in the US state of Virginia.

Meh. Stop whining and do the work to sell into another market. Thermal and coking coal prices are rebounding as Asian LNG lifts so you may not even have to discount much and it will only be short term anyway as the market rebalances.

That’s the thing you see. Coal is a commodity, there’s nothing unique about it, it’s fungible and can go anywhere.

David Llewellyn-Smith
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Comments

    • happy valleyMEMBER

      Breaking news – we long ago lost our sovereignty, so there’s no impingement to trading with chin-ah as long as it’s on their terms.

  1. Who is going to buy 96% of our wool ?

    So far you have campaigned on the destruction of exports in education, commodities (coal, gas, and iron ore), agriculture including barely, now wool.

    Which country – specifically – is going to replace the absolutely massive Chinese component ?

    Certainly not Vietnam, India, EU, Japan or USA – and this is the basis of your argument. So which country is going to supplant this economically catastrophic collapse in exports to China ?

    I mean you just say – “they are fungible” but never provide any examples. Barely was put up as an example of redirection to the middle east – but in reality it was less than 4% of the total export collapse made up.

    I think if you are going to campaign so vociferously on this issue you have an obligation to back it up.

    .

      • Said person may not want their paid account tarnished as a dissenter.

        The point raised seems valid though.

    • Internal demand?
      Slap a tariff on exporting the stuff and the returning finished garment will be cost-prohibitive. ergo, local companies will re-establish to make the goods out of what is now an internally demanded product? And….it creates the long sort after Inflation to boot!
      Sure, it will take time ( there can even be a new ‘stimulus’ measure to acquire the stuff to keep growers alive), but what’s the great thing about wool? It can be stored for years/decades and used as and when required.

    • DodgydamoMEMBER

      Sounds like quite a lot of wool… where else will they get it from? And the previous destination for that wool will then want/need ours

    • The demand comes from the end customer.

      The world’s not going to suddenly want fewer wool jumpers because we’re having a spat.

      Someone in the 200 other countries will seize the opportunity and expand into it.

  2. The CCP has 1.4b people to keep happy. Which mean giving them hope for a ever increasing standard of living.
    For 1.4b people to reach a Western world standard of living, they would need to consume almost all natural resources on the planet. So one one or another they need our resources and Brazils and Africas etc.
    With the USA still in charge, OZ has a limited time to push China for better deals on everything, and print our way through the indigestion. China is not just vulnerable on commodities imports, but also on their hard asset investments in Australia. Covid related budget deficits of states and feds provides perfect cover for raising taxes ( Land tax, income tax, royalities ) of foreign owned assets. Time to stop being fair, and start to get into a survivalist mode, just like China has been for 30 years.

  3. “We should immediately apply a huge wool export tariff to gouge such nice folks.”
    We should apply an additional tariff to all our exports to the china.
    And call it “The China Covid-19 Pangolin reparations tax” just to stick it to those jerks.
    Then rename the street the Chinese embassy is located on to the “Covid-19 Pangolin” highway.
    Just to make it sting a little bit more.