The bristle market is firm and there is little likelihood that this will change anytime soon.
There are no stock piles of bristle in China and demand is relatively firm in both the International and domestic market (in China).
Black bristle is scarcer than white and the most demanded sizes 57/64/70mm continue to increase in price on an almost daily basis.
The bristle dressing factories are faced by the continuing increase in the price of raw materials as well as increasing costs of labour and utilities.
These costs are all calculated in RMB and we think it is impossible to escape the fact the G20 are putting great pressure on China to allow the RMB to appreciate, which it has done by approx 3% in the last few months. This has added in US$ terms to the price inflation, which we expect will certainly continue-the pace of which is hard to estimate, but it is obviously absolutely not in China’s best interest that this happens to quickly.
In my last report we said that times were particularly difficult for those living in Euroland as the currency was so weak, this has however changed dramatically with the Euro strengthening enormously against the US$ in the last few months. The Euro appreciation against the US$ will go a long way to mitigating the prices rises in China, so we guess today is a good time to be in Euroland.
Under these market conditions we would recommend to keep a healthy level of inventory.
by Tim Kleingeld