Cashmere market risk

Cashmere is a fine textile fiber obtained from the undercoat of Cashmere goats, a breed native to the mountainous regions of Central Asia, including the Kashmir region, Mongolia, and Tibet. This fiber is renowned for its extraordinary softness, lightness, and heat retention properties, making it ideal for luxury clothing items such as sweaters, scarves, and coats.
The following chart shows the historical series of customs prices for cashmere, collected at the customs of the 27 countries belonging to the European Union.

European customs historical prices of cashmere, expressed in euros/ton

The chart highlights the strong relationship between the price dynamics of Cashmere goats hair and Combed cashmere goats hair. A statistical measure of this relationship is given by the correlation coefficient between the two historical series, which is higher than 0.9, with a maximum of 1.
From the analysis of the levels, it is evident that Cashmere goats hair, which is the most economical type of cashmere that has not yet been processed, shows extremely high price levels compared to those of common wools.
The table below compares the annual averages of cashmere prices with those of other types of wool.

Table of annual average wool prices, expressed in euros/ton

The prices of Combed cashmere goats hair are more than four times higher than those of Angora rabbit hair, a high-quality wool type.
From the comparison between the average price of virgin wool in 2024 (3784 euros/ton) and that of Combed cashmere goats hair (118441 euros/ton), it is clear that virgin wool costs about one-thirtieth of the price of Combed cashmere goats hair.

The Importance of Cashmere in the Italian Market

The Italian economy has historically been a transforming economy, specialized in the processing and transformation of raw materials into high-value-added finished products. A prime example of Italian excellence is the textile sector, where Italy predominantly imports raw materials to transform them into high-quality products that can be resold in international markets.
Italy's specialization in luxury brands that produce clothing made from cashmere has made it the world's leading importer of this textile fiber.
The following chart shows the top 10 global importers of cashmere, both raw and processed, in 2023.

Top Global Cashmere Importers

From the analysis of the vertical bar chart, the dominance of Italian imports within the global cashmere market stands out. With total imports amounting to 370 million euros, Italy surpasses the United Kingdom's cashmere imports by over eight times, with the UK in second place with a total of 45 million euros in cashmere imports.
Of these 370 million euros of Italian imports, over 300 million come exclusively from China. This highlights the enormous dependency of the Italian economy on Chinese cashmere exports. Therefore, there is a risk that any disruption in cashmere supplies from China could drastically reduce the ability of Italian transformation companies to source raw materials.

This risk could be significant in the presence of trade tensions generated by an increase in protectionist policies implemented by various countries around the world.
In a world less open to international trade, China, which competes with Italy in the global market for cashmere sweaters, pullovers, and other garments, could limit its cashmere wool exports in order to favor its finished product industry.
An indirect signal of the importance China might attribute to raw cashmere exports is the "opacity" that characterizes Chinese statistics on this product.

Discrepancies in China's Customs Declarations

Upon analyzing the customs declarations for the cashmere market, significant discrepancies have emerged between the data published by China and those declared by the rest of the world. While China reports cashmere exports of only about 10 million euros, Italy alone reports an import of over 300 million euros from China.
The following chart shows the main countries of origin of declared cashmere imports globally in 2023.

Main Countries of Origin of Declared Cashmere Imports Globally in 2023

The analysis of these data highlights that, overall, countries around the world declare importing cashmere almost exclusively from China, with a total import value of 370 million euros. This strong market concentration poses a significant global supply risk. The almost total dependency on supplies from China exposes the market to potential vulnerabilities, making the risk of supply disruptions particularly high.

Conclusions

For many years, Italy and China have competed almost equally in the global cashmere garment market. Italian producers have managed to stay competitive against Chinese competitors and gain global market share in recent years, also thanks to a sufficient availability of raw materials.
However, the availability of cashmere is strongly dependent on Chinese decisions, given the irrelevance of other supplying countries in the global market for this specific type of wool.