August 2009
The International Bristle Market has possibly seen more changes over the last 12 months than in the last 12 years.
Increased competition
Increased competition from China direct and the constant price pressure being applied by the retail sector to brush manufacturers has brought about the demise of the old traditional Bristle Merchants, who historically held large stocks, but are unable in today‘s market conditions to finance these stocks and cover their overheads.
A number of the larger merchants have either ceased trading in bristle, or drastically scaled back their operations, to such an extent that they are no long the dominant force in the market. As a result companies like Anglo China Sourcing Ltd. are filling this void, with decades of experience in trading bristle in China, a new business model and subsequent lower cost base, they are able to sell at China direct prices but with the added security that their own employees in China will take the hassle and strain out of finding the right factory to produce the required quality and inspect goods prior to being shipped to their onward destination.
Bristle prices
Bristle prices in China have certainly become firmer over the last 6 months, particularly so for shorter sizes, as demand has picked up in the domestic market. Last year the strengthening RMB was an important factor but over the last six months or so there has been little movement between the RMB/US$. The increasing prices are a result of a combination of factors, the continuing transfer of the production of brushes to China from high labour cost countries and in part to a reduced availability of raw materials.
During the last collecting season bristle dressing factories were very cautious in purchasing raw materials as it was absolutely unclear how long the world economic down turn would last. Many factories had reasonable stocks of longer sizes and were worried that the market would turn.
As a result less raw material was purchased and the last 6 months have seen these stocks slowly being depleted The Chinese suppliers were even prepared to sell longer sizes alone without significantly recalculating the assortment and this clearly indicates how relatively weak the market had become, with supply exceeding demand.
The price of natural bristle had become so high many manufacturers, in order to bring down manufactured costs, had been turning to either pure synthetics or synthetic bristle mixtures, and it is unlikely they will ever return to using just natural bristle unless prices fall dramatically, as the difference in price between 76mm and up bristle is 200-300% higher than that of acceptable synthetic material.
The surplus stocks of 76mm up has reduced significantly and it is unlikely that prices will fall before the next collection season around the Spring Festival.
Price preditctions
To make price predictions any further forward than the forth coming Spring Festival is extremely difficult at the best of times. The supply of material should improve after the Spring Festival, but with the uncertainty as to when the global economy will start to pick up, and therefore affect the demand side, it is obviously extremely difficult to know where the market will be in 6 months time.
I suspect that most manufacturers have reduced their raw material inventory as much as they possibly can, and therefore if anything demand is only likely to increase as and when we come out of the down turn, and as such I believe prices are more likely to remain firm than fall.
by Tim Kleingeld
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