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Woolmark Economic Service Proves Gattung Wrong

24 July 2008

Woolmark Economic Service Proves Gattung Wrong

New Zealand wool exporter Peter Crone said the Woolmark’s economic service was at odds with recent remarks made by new wool company chairman Theresa Gattung.

The Wool Company has been set up by the Wool Industry Network to restructure the wool industry, but there is growing concern at the lack of knowledge the company has of world wool or other fibre markets, Mr Crone said.

Ms Gattung presented a simple panacea for New Zealand wool by suggesting US manufacturers were anxious to shift away from synthetic carpets because high oil prices are driving yarn costs to a point where wool has become the preferred choice for manufacturers.

Mr Crone said Ms Gattung, the former Telecom CEO, seemed to suggest The Wool Company could achieve wool prices that would mirror the massive rise in crude oil prices.

He said the Woolmark’s economic service reported that nylon carpet filament prices had remained unchanged since last September and with USA house construction at a 17 year low there are no signs of any upturn for carpet sales. Discussions with major carpet manufacturers show that nylon filament prices have not in fact moved far from their 2006 prices.

The Woolmark Company says that downstream manufacturers, meaning filament yarn makers, are being held in a pincer movement with record oil prices inflating raw material costs and the housing market crash affecting demand for their products.

Mr Crone said New Zealand was naïve if it thought it could battle against this massive downturn by providing “eco friendly wool” as suggested by Ms Gattung.

Woolmark reported the rise in prices for carpet wool types performed better than apparel prices in 2008 with the Australian Eastern Market Indicator falling 10 percent in US dollar terms while the benchmark NZ fine crossbred indicator for wool between 32 and 35 microns rose 6 percent, Mr Crone said.

“Wools coarser than 35 micron, best style second shears have risen variously between 15 and 20 percent in US dollar terms,” he said.

ends

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