Although there was plenty of activity at the Shanghai fair, many had expected more people there. Further, the fair has confirmed what we knew already but made it much more clear:

This entire text and more all lead to this conclusion: All the time the new rich in Asia, in Russia, in South America and we ourselves in the West keep buying more leather products but not meat, we are pushing leather prices higher!
The very strong sales of German top class cars to China have already had their influence on bull hide prices. In North Germany, heavy bulls prices are 10 cents up. In South Germany prices were fixed till early August but one should expect a 10 cents increase also.

While preparations for the important G20 meeting are still ongoing, China has already made it clear it wishes no foreign intervention in its currency policy which it considers a national matter. According to pundits the Yuan could be up to 40% undervalued. Good for Chinese exports, bad for the rest of the world.

Export tanners in China may still be lacking hides to soak. During the long upward march of hide prices, they have been buying hand to mouth hoping that things would get better. We now know they didn’t. At the same time these tanners failed to negotiate full compensation from leather buyers for their increased costs.
In early May, one of the major US packers surprised everyone by offering discounted prices directly to tanners. Together with the softer tone of the cow hide market, many tanners took that as a signal that the hide market was running out of steam. Fewer buyers showed interest and those who asked for offers only a day earlier suddenly decided to withdraw from the market.

Germany, there is strong demand for the better hides from the car leather and top quality leathergoods tanners. Prices are hence firmer or at least steady. For these types one says there are still not enough hides available.

On December 3, 2009, the Rwandan government officially revoked their September 2005 export ban on raw hides and skins. For the moment there is no export duty levied but the country intends to organise a cooperative system for the collection of raw hides and skins.
In Brazil, hide prices stopped increasing in December and many factories were closed for their summer holidays, only returning to work on January 4 this year.

Tightening up of EPA's activities seems to be the major concern among the Chinese tanners. The five year old Fujian Quangang Tanning Centre was shut down for one month (where four hide and seven split tanners are located) due to inadequate effluent treatment. This was achieved by cutting off the water supply.
An estimated 10,000 farmers protested and the deputy commissar was held hostage until 2,000 police were sent in to get him released. Despite this there was no violence reported!
Rumour has it that the Fujian Provincial Government might substantially reduce the number of tanneries allowed at the new tanning centre at Zhangpu. There are 31 new tanneries already under construction, among 63 who bought the land (some could be land speculators as land values have doubled in the past three years). Among the 31 under construction, only eleven have EPA approval for the project. The other twenty do not know what fate is awaiting them.
The old Fujian Kemu tanning centre is limited to run at 75% of capacities. There are two more tanning centres to be built, one in Lioning Province and another one in Guanxi Province.

Ron Sauer and the organisers of the Hong Kong show (APLF Ltd) hosted an open seminar at the recent APLF at which tanners and hide traders from around the world were invited to give their views on the state of the market today. The seminar, Hide Market Crash and its Influence on Trade, took place on April 1. Below are extracts from Sauer’s speech in which he urged the new world players to bring the industry together

Domestic hide prices in Italy have increased by 5 cents for ox/heifers and by 10 cents for cows. A leading domestic hide trader describes the Italian market stable and positive. Surely not all in the leather business in Italy will agree with that.

Going into the holidays, I cannot help repeating myself but it astonishes me to see that the world is crying for (good quality) hides and paying more every day, while under company news we read that all big leather brands are selling less and there is more misery about further job losses, people spending less etc etc.

Most hide producers, meat packers and abattoirs in the Americas and in Europe want more money for their raw
material. The reason is not an increase in global demand for leather but rather some new emerging competition between buyers, low kills in a number of countries, a few better economic novelties but above all, as many believe, by speculation. Speculation by those who believe they have a valid reason but also by people considered outsiders who are only in for the quick buck.

Most hide producers, meat packers and abattoirs in the Americas and in Europe want more money for their raw
material. The reason is not an increase in global demand for leather but rather some new emerging competition between buyers, low kills in a number of countries, a few better economic novelties but above all, as many believe, by speculation. Speculation by those who believe they have a valid reason but also by people considered outsiders who are only in for the quick buck.

Many believe that raw prices will not drop further but nobody has any argument other than stating that they are low enough as they are. Is that argument enough? Fact is we see no big price drops anywhere, either for hides or skins. Still, all are convinced there are large numbers of unsold hides and skins around, part of which will sooner or later be sold in very secretive deals at very low prices.
There are a few more or less convincing signs in the global economy that some improvement seems possible. It makes a number of people in the leather trade say they believe the winter production of 2009 will not be as bad as for 2008. They could be right and let us hope so.

Following the mostly negative news of the last weeks and reduced sales of raw material almost everywhere, more and more people ask themselves - where are all those hides?

Presently hairsheep, goatskins and pigskins are favourites. Hide sales are going through very difficult times, although the US seems the exception. Nothing stops hide export sales there.Some foresee a change in the consumption pattern as end customers change their priorities.

The incertainty about restrictions to operate tanneries around Beijing during the Olympic games do have an influence on the Chinese buying of cheap raw material. This specifically concerns African hides and skins.

A new giant is born! Brazilian based JBS, the world's biggest meat packer which bought Swift in the US about eight months ago, has now in one astonishing strike also acquired National Beef, Smithfield Beef, Five Rivers and the Tasman Group in Australia.
If approved by the US Justice Department the group will show a daily kill of 42,500 head, far above rival packers Cargill (29,000 head) and Tyson (28,300 head). Worldwide JBS slaugher will increase to 80,000 head per day.

Everybody hopes that the end of the Chinese New Year festivities will bring some badly needed new action to the leather trade. 

Some believe the kill in Europe could increase because of the restrictions by the European Union on meat imports from Brazil. I do not believe hide prices will go up shortly. Supply is no problem today (except for low grades). You can buy every hide you want in the world but the thing is, it is not wanted! At least not at the prices asked.

As the trade went into the Christmas and Chinese New Year holidays, there was no good news to report. There is always business in Italy somewhere but today little of it is profitable. This counts especially for furniture upholstery which it seems can only be produced and sold at a loss.

Trying to come up with a final conclusion over the Lineapelle fair in Bologna is a hard job to do. From the commercial side nothing changed and nothing came up that we did not know already. There is work for the leather industry but it is very difficult for tanners to do so profitably.

The Shanghai fair did not bring surprises or new developments. Demand remains mainly for cheap material,forced so by the manufacturers of the finished products who say they can only pay less for the leather due to the instructions and orders they receive from the world’s big marketing companies.

In Germany the kill reduced again in May and on a year-to-year basis is now 4.2% below 2006. Despite this hide prices remain weak in general.

With the new budget announcements for the year 2007-2008 come new export duties in East Africa. The duty on raw has been increased from 20-40% in Kenya and from US$0.09 to US$0.25 per kg in Uganda. Duty remains the same in Tanzania (where it was already high at 30%).

After two major trade fairs in Hong Kong and Bologna nothing has really changed. We are happy with the good demand for leather but unhappy with the impossibility of tanners making a profit on what they are doing. The new weakness of the dollar makes the situation worse again. One can say that almost the entire world trade, or the lack of trade, is ruled by the exchange rate of the US$.

When your editor dared to predict a 50/50 chance for the market to move up or down there were certain reactions. All opposite, of course, which says enough in itself!! An interesting and extreme response came from a well established European trader who said: 'No, it will be 90% down 10% up.'