Extracts from the SauerReport

In Tuscany there are few new orders on chrome leathers but improving these last days. The situation is a bit better on quality vegetable tanned and mixed tannages for leathergoods and belts. The general loss of work in Santa Croce is reflected by the problems with financing the communal water treatment facilities. The volume of water to be treated has reduced by 35% but the costs remain the same.

This means tanners must pay more per unit while they are already struggling. It seems they have now asked the government for help. It has also led to increased imports of wet-blue by the S Croce tanners (especially English cows) to avoid the problem.

Unfortunately for Nigeria, their sector is partly missing out on the increased world demand for goats due to the ban on exporting wet-blue. The world's goatskin buyers have far less interest in crust. Yet more proof that banning the exports of raw hides and skins does not always bring a country more business.

Certain international hide and skin traders estimate that no single month this year has seen their business of selling raw material to China reach the volumes of last year. Some say activity is 30-50% less. The upsurge which all have been waiting for since the beginning of this year has still not arrived.

The recent Shanghai leather fair confirmed the strong demand for cheap origins and low grade hides. But this is nothing new and has little to do with the leather fair. The Chinese are always looking for cheaper raw material.

There is more and more demand for horse hides and for anything else new which is cheap no matter what it is. On the other hand the demand for medium to medium/ high qualities is shifting a gear higher also.

In a certain price range we see increasing demand for better quality origins and material but this again is what we can call a 'niche market' in China. It seems Chinese demand splits in two: from the medium to higher qualities and from the medium to lower qualities. Result: the demand for the real medium qualities in the middle is suffering. Unfortunately this is where the volumes are!

China shows an increasing interest in good quality European calfskins, something they would never have looked at a few years ago. It confirms stories that China is moving into the production of the better quality leathers (and if they succeed there won't be much left for Europeans to do!).

In Argentina prices are stable due mainly to an agreement between the government and the Tanners' Council (CICA) to maintain present levels which would supposedly compel meatpackers to reduce meat prices (which is not happening!). A government ruling effective November 1 states that no more cattle under 300kg (660lb) are to be slaughtered. This is aimed at increasing meat production both for local and export markets which, if effective, will mean that there will be a reduction of the famous Argentine vaquillona (sides of average 16-17 ft).

While kill figures in Europe and the USA remain low, recent publications show that the kill is also down in Argentina by 7% this year and Australia reports an average reduction of 9% for July alone (26% in NSW). Australia and Argentina are two major suppliers of hides to the world market. Surely all these lower figures prevent hide prices from dropping too far despite reduced demand from the tanning industry.

ACLE Shanghai also showed a reconfirmation of the hunger for goatskins. This no longer applies only to suitable skins for suede however; all goat is in strong demand. Prices, of course, went up and the Chinese buyers are the only ones left who can afford them. The party may not last long since the skins are needed from October for goods to be delivered before the Chinese New Year of 2006. A number of traders in Hong Kong who usually only deal in cattle hides have also switched to the goatskin trade for the time being.

There were very mixed reports from ACLE. To see existing contacts and make new ones it was fine - no complaints! For ox and bull hides there are happy faces with those who were ready to accept counter bids and thus by the end of the fair did some of the business they came for. Very happy faces with those who had the right calfskins or other light hides for some top quality niche markets but those guys are always few and volumes small. Disappointed were those who did not move their prices and hence sold little or nothing.

On September 7, Rwanda imposed an export ban on all raw hides and skins. Large contracted and paid quantities are lying in Kigali. There is no credible alternative to exporting raw hides and skins as the local tannery is in total disarray due to bad management and even worse processing quality. Until the ban is revoked there are no prices for Rwandan hides and skins.

Spanish warehouses still hold plenty of unsold skins especially those that do not go for doubleface or glovers like goat and baby lamb (lechales). Unfortunately the Spanish goats are too good, too expensive and too thin to benefit from increased demand for suede.

Spanish exporters of lambskins who traveled to ACLE found that China is not yet ready for high quality European lambskins, although demand from other parts of the world is up on last year. Exporters now have to prepare different lots adapted to buyers' needs: those who come for quality and those who come for price. Ovine livestock kill in Spain in 2005 is expected to be lower than that of last year. Domestic raw hide prices do not move much although the lack of orders should logically lead to reductions. Not all suppliers are ready for that though.

Doubleface lamb finds buyers in the better qualities while everything below that has a problem and fails to fetch good prices or any price at all. Good nappa lamb finds outlets with its traditional buyers. Splits do not move much in price but there is more interest. Some better prices for the best ones and for those suitable for suede may be obtained.

In New Zealand most sheep and lambskin selections came down in price by up to $10 per dozen. It is rumoured that at the Shanghai fair about twenty containers of thirds were sold as low as $30. Slaughter has stopped but there are still important quantities of third grades around. Only fourth grade lamb and 'ribbies' show higher prices because of their scarcity.

A less firm US hide market has also influenced Australian and South African hide prices which on average came down about 5% when compared to the pre holiday levels (and in spite of lower kills!).

Brazilian stocks of wet-salted and wet-blue hides are considerable but prices do not seem to change anymore. Some big volumes are said to have been quietly disposed of in China. For the rest trade remains calm. Import duty for wet-blue goats (and possibly other material as well) was increased from 2% to 8% this month. This has angered some buyers who have set off to Brasilia to ask the authorities for explanations.

Cow prices remain under strong pressure but where reductions are made outlets can be found. There is no talk of raw material shortage except for maybe the cheapest and lowest grades always in demand by China. This country also shows increasing interest in the world's better hides and calfskins but still has a problem with the prices for this material.

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