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Superwash wool refers to yarn that has been treated so that it can be washed in the washing machine without shrinking or felting. 

There is an excellent article on the Wool Channel the goes through the process of creating a superwash wool. 

Below is an except from the website

"There is no single, universally practiced process for shrinkproofing wool. But the current standard is a chlorine-polymer shrink-resist sytem called the "chlorine Hercosett" process. This involves exposing the fibers to a dilute chlorine solution (about what you'll find in a swimming pool, which may explain why pools are so terrible on our hair) and then sealing the fibers with a crosslinked polyamide resin known as Hercosett 125."

"This all takes place long before the wool has been made into a yarn, fabric, or product. If the wool is processed in accordance with Woolmark standards, it can be called Superwash.


 
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