Extracts from the SauerReport

Figures have been published which show that in the first three months of the year seven million US hides were sold against 5.7 million in the same period last year, an increase of 22%. China increased its purchases by almost 60% during the period, Taiwan by almost 57% while Korea shows a decrease of 20%.

Why did China buy so many hides (over 1 million) more than last year? Is there suddenly so much more demand for leather in the world? Is it because Chinese tanners are filling up custom book quotas while they still can? The third possibility is that China has simply (again) taken a bigger part of the global trade to the detriment of other countries. In this case there would have been no need for total world leather demand to increase. The cake is simply divided in a different way.

A mob of farmers attacked a newly opened tanning centre in the Fujian Quang Gang tanning zone during the weekend of April 8-9. Although there is an effluent treatment plant there, it was the smell that enraged the farmers. Public security guards are said to have been watching the outrage in horror. Others, well familiar with the various tanning areas of China, declared that in comparison the smell of this new centre was like roses!

Most European abattoirs and hide traders are comfortably sold forward. There are plenty of stories saying one can sell hides at a higher price every day; others say there is nothing on offer anymore and some even say prices increased by 20%. The first part of good sales and few offers is true. But European hides still have to compete with other origins in the world and excessive price increases are to be taken with a lot of salt. Looking at Europe as a whole I would say prices have increased 5% on average over the last 2-3 weeks.

Shoe suitable North German hides in the 30-40 kilo range increased in price while other selections remained stable. Business is found steady in not exciting volumes. The car leather industry continues to push for lower prices while volume in that sector is restricted. Heavy bulls, therefore, remain difficult to sell.

For South Germany new prices are under negotiation. Abattoirs no doubt want more but traders and tanners hope that their arguments about the car leather industry and reducing qualities will convince them that higher prices are not really what the market can absorb.

The reduced number of animals and hides in Germany caused by lower meat consumption and changed EU subsidy rules continues to make price reductions just as unlikely if not impossible.

The local raw hide market in Argentina saw 35% price increases in all categories of hides. This is a direct consequence of the government prohibition on meat exports which has so far seen no meat price changes for the local consumers but has produced widespread closures of export orientated meat packers and strong soaking reductions in the tanneries.

After the drought in South Africa, there are now plentiful rains in the north of the country and farmers are keeping their cattle to rebuild their herds. Good for later, of course, but at present it causes a shortage of hides.

It is remarkable that wet-salted Tanzanian hides can fetch the same prices in Pakistan as Kenya and Uganda hides do in China and this in spite of the lower quality. The secret is in the better yield of Tanzanian hides which is of bigger interest to the Pakistani tanners than the quality.

Things have changed in Russia and Boina hides can easily be of better quality than the previously famed Kombinatskis. The latter are the big meat packers while Boina stands for small packer or butcher. The reason is that the big Kombinatskis no longer have enough money to buy the best cattle and to give the animal (and the hide) the best treatment.

Tanners prefer the Boinas because they can buy them selected per type and weight range. Kombinatskis often insist on selling their entire hide production in one go which only the (very few) biggest tanners in Russia are capable of. For these reasons many tanners are ready to pay a justified premium for Boinas which a couple of years ago was unthinkable.

There is no good news from the European lambskin trade. Hong Kong brought them next to nothing while reports from Türkiye say that some contracts for Spanish skins were cancelled (even at 12 euros delivered Türkiye for which price one can hardly buy ex factory in Spain today). Lambskin prices at the Spanish abattoirs continue to rise leaving many involved in this trade to watch with fear in their eyes. If the Chinese and the Turkish buyers are not active then who is?

New Zealand lamb and sheepskin prices continue to fall. Stocks are enormous and while low grades are picked up at bargain prices the good selections have big problems in finding buyers.

Hong Kong seemed to supply a confirmation that the race for goatskins lost some of its spirit. The article is still sought after but the top prices of the past months no longer seem to work. We would call that market steady now and in some places a bit off the top.

The stories and final opinions on the APLF fair are coming in from many different countries and places. As usual there are contradictions but most agreed that:

1) It was a good fair and better than many expected; 2) There were fewer visitors than in previous years but they were of higher quality; 3) Not a single hide price came down; 4) The shoe and leathergoods manufacturers are the winners in the sector. 5) Home furniture upholstery leather suffers from lower home sales in the US and the increased interest rates do not assist consumer demand; 6) Car leather prices remain under pressure; 7) Garment leather remains a problem area. Nappa is 'at the bottom'. The good quality doubleface sector remains limited to a few very selective buyers. The bulk business in standard doubleface material is for the Chinese alone. They rule the game and the prices. 8) The fair added confidence to the near future of the global leather industry. I write 'global' since clearly not every producing country will come out a winner; 9) The Russian tanning industry is developing fast and tanners there are very busy on the domestic market; 10) The confusion about the Chinese import duty and taxes has only increased; 11) African hides have sold at their top of about a fortnight ago but the latest (higher again) asking prices could not be obtained.

The big disagreement over the Hong Kong results is on how much business was actually done. Here the contradictions could not have been bigger. So I only dare to write: it was not bad.

Printer friendly version

Email this article to a friend