Extracts from the SauerReport

The necessity to canvass the world for cheaper raw material alternatives is increasing. All countries, all types of skins of all types of animals are worth looking at in the hope that maybe they offer the solution to work at a profit.

Many say the trade in Europe is slowing down with France as the exception. This country has some special quality hides and calfskins for special customers and products for which there are no alternatives it seems (latest: End November heavy bulls and calf also began to ease).

European tanners bought a lot of hides in August, September and early October and there were continuous fights by abattoirs to increase their hide prices and by tanners to get more money for their leather. Since the abattoirs came out winners and since tanners hardly succeeded in getting more, margins for tanners have largely disappeared which further diminishes their enthusiasm to keep buying.

Although there will be plenty of Italians to deny it, visible world activity leads us to believe that Italy is really the world's market maker at this moment. Orders are plenty and well spread from the north to the south of the country. Even in Solofra, a long time troubled area, things are getting better.

There is even some optimism among the sole leather tanners of Ponte a Egola who have been going through very hard times. There is more demand now for heavy sole leather which they gladly deliver. Still it is delivered at a loss on most occasions.

The big profits in tanning, as always, are in the hands of the ones who operate in the fashion sector and who produce the right articles at the right price and time. Indeed, some of the big tanning groups might not even find enough of the raw material they need to fulfill their orders. At least one large tannery was forced to pay 5 cents over the market price in order to get a big volume of hides.

In the upholstery leather area around Arzignano tanners are getting depressed. The finished leather price they can get and the present costs of the raw hides just do not match. Countries like Brazil, Venezuela, Colombia etc, have all increased their wet-blue prices to what the Italians call unworkable levels.

French slaughterhouses are in a powerful position and some of the best among them report being sold forward into the new year and at very high prices too. All is not gold for the abattoir trade: a well known meat group owning three big abattoirs went bankrupt but was immediately taken over by another big name. Prices are, therefore, firm.

Good news from the four or five French fellmongers who are enjoying good orders at the moment. Some say the fellmonger skins are sold to 'tough guys' who sell them on as 'doubleface' qualities.

There has been further confirmation that Spanish nappa skins are now too expensive and that the usual buyers have started to look elsewhere. People are curious to see how the other Turkish doubleface buyers will react to the scarcity of skins and the high prices.

In Australia, goat skins are still trading strong but there appears to be only a very few willing to pay high prices. There is very strong demand at cheaper rates. We should start to see increased numbers towards the end of the year as skin-on product slows down and more goats become available in Western Australia.

Cattle hides in the south Pacific are under increasing pressure of competition. Although only small numbers are traded, as long as demand outstrips supply, buyers go further and further to find what they are looking for. Suddenly everything is interesting (if the price is right).

Sheepskin prices remain very firm and all prices increased. Offers are plenty due to the dry weather. China buys most of what is offered. Also for lambskins it is mainly one specific Chinese buyer who keeps prices up. Even shorn lamb still brings good prices in spite of damage caused by the drought.

In New Zealand, now at the start of the new season, the stock of old season skins seems to have strongly reduced although an odd lot is still to be found here and there. Skin producers are trying to sell their new season skins raw as much as they can since they make more money on raw sales than on the pickled and without having to bother with any production costs.

Tanners in East Africa are going more and more for wet-blue exports instead of raw because of all the duties on raw on both sides of the market (export duty in Kenya, import duty in China). Looking at the actual situation in East Africa one should not forget we are talking about five or so tanners in Kenya, Uganda and Tanzania together capable of producing decent and continuous volumes. Another thing to note is the fact that the actual leading buyer of wet-blue hides is Italy, not China.

Demand for Rwandan hides is quite good, but buyers are not ready to pay higher prices. Each sale is a battle. Goat remains very weak and buyers continue talking the market down. For both goat and sheep prices are down by up to 10%.

The market in East Africa for cow and goat is crazy. The sheep market is still slow. In general everybody is looking to sell their stocks of sheepskins at any price they can get.

The market for Kenyan wet-blue cow has been going wild. The prices have gone up so high in the local market that the exporters of w/s hides are finding it difficult to get the material for shipments against pending orders.

In Nigeria, the rather chaotic conditions on the raw market have seen crust prices increase by 10% or more. There are talks the government will allow the export of wet-blue again as from January next year. This is a move to help the small tanners who do not have the resources to expand into crust production and who are now forced to sell their wet-blue to the few 'kings' of the industry in Nigeria who do produce crust and finished leather. However, well informed traders in Nigeria have strong doubts this rumour will evercome true.

Contrary to the Eastern part of the African continent prices in West Africa have mostly remained unchanged.

A Brazilian trader who visited over 15 tanners in Brazil recently says none of them has changed prices. Orders are good especially from Italy for medium to low grades in wet-blue but increasingly also in crust. Low grades are now hard to find while there are still better selections waiting for buyers. But did we not think that Italy bought the best selections and that all the low grades went to Asia? Are the Italians now forced to look for 'cheap' in order to secure a margin?? Interesting!

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