A RECORD US$38 billion ($55b) 24-hour e-commerce bargain sale in China on Monday may have cleared a product backlog, paving the way for fresh demand for Western Australian wool in the five weeks left before the Christmas recess.
The 10th annual Alibaba Singles Day - it celebrates those who are not in a relationship by encouraging them to treat themselves to something special online - reputedly turned over US$19b ($28b) in its first hour.
The day's total turnover was 25 per cent up on last year, but still ranks as the smallest annual increase in a decade of Singles Day.
While it is too soon to tell if the buying frenzy included stockpiles of woollen fashion apparel, particularly women's coats made from an innovative double-sided fabric as China heads into winter, the signs were good, according to Scanlan Wools' Steve Noa.
"It (Alibaba sale) was massive and while I haven't heard specifically how it related to the backlog of wool product on the market, I did hear everyone was chasing a bargain which is promising," Mr Noah said.
"If that backlog of finished product was cleared out and sold on Monday then that frees up capital previously tied up and we might see a better demand for wool between now and Christmas."
While Chinese wool processors did not have big inventories of raw wool, recent factors including slowing economic growth in China and uncertainty and confusion around future trade with the United States, had seen most slowly accumulate a backlog of finished product, jamming up the supply pipeline from the retail end, Mr Noa said.
As a result wool buyers at the Western Wool Centre (WWC) and the other Australian Wool Exchange (AWEX) live auction centres in Melbourne and Sydney who supply into China had been "cautious" as the wool market yo-yoed - down one day, up the next, he said.
Mr Noa said it seemed obvious financial constraints had been hampering buyers' ability to continue bidding up.
The WWC and other centres will shut down for three weeks over Christmas while Chinese woollen mills keep operating, so brokers are hoping that with product inventories cleared and capital freed up, processors will be looking to build raw wool stockpiles in the remaining five weeks to get them through the auction recess.
With firmer demand, they are hoping the market will end the year in a more stable manner than recent weeks' trading.
Last week at the WWC the Western Indicator dropped 35 cents on Wednesday and clawed back 10c on Thursday to finish the week at 1662 cents per kilogram clean.
At 1857c/kg, the 18 micron price guide slipped 16c for the week with the incremental price guide reductions increasing in magnitude through to the 21 micron guide which finished the week down 32c at 1719c/kg.
While still a rollercoaster for a second week in a row, the WWC wool market was much less volatile with price movements almost half those at either Melbourne or Sydney centres, according to AWEX statistics.
There was significant buyer resistance to pricing levels both days with, surprisingly, more resistance on Thursday when the market was firming slightly - perhaps buyers expected a stronger market turnaround.
On Wednesday 21.7 per cent of Merino fleece bales were passed in after 15.95pc of the offering was withdrawn before the first bid.
On Thursday 34.2pc of Merino fleece bales were passed in after 22.4pc were withdrawn.
PJ Morris Wool and China supplier Tianyu Wool featured in the top three WWC wool buyers both days, with Techwool Trading on Wednesday and Swan Wool Processors on Thursday.
This week the WWC is set to offer 7345 bales, 619 fewer that last week, in a national offering of 38,497 bales, down 4413 on last week.
