Extracts from the SauerReport

Car leather upholstery has its usual problem which is that the buyers who make multi-year contracts want to pay 5% less every year. Their logic is that if one is sure of a multi-year standard production of the same type of leather, the production costs per unit should come down.

They do not (want to) take into consideration that raw material prices can go up in the meantime just like other production costs such as energy, labour, chemicals etc. Thus, it is very hard to make a profit in this sector also.

Shoe leather business is not attractive since we are starting the summer season with much smaller volumes required than for winter shoes and boots. The garment leather business was and still is, as good as dead.

The most interesting item is handbag leather for the few who have the right product. But today this can only be found in the higher quality sector.

Many tanners still have plenty of stock in the tannery. This is in contradiction with others in the trade who believe tanners in Europe are running out of stocks and must buy and replace if they want to keep on working, orders in hand or not.

In reality both cases probably exist but one would say that those who do not need are far bigger in number than those who do.

The Istanbul Leather Fair in Türkiye showed that there is little activity in the doubleface sector (no surprise). Traders say that the dates of the fair were wrong. For doubleface coats it was too late for this winter and too early for next. Nappa business counts for the spring and summer season.

The trade complains again about too many fairs and the fact that the dates are now chosen by the fair organizers instead of the trade who just have to follow.

The Turkish leather industry is not in a healthy state. During the past six months five important doubleface tanneries are said to have closed down in the Tuzla Leather Industry Zone of Istanbul.

This is due to the rivalry with China which proved a disaster for Turkish tanners who obstinately continued to produce low and medium quality products at higher cost than the Chinese. Also, mismanaged trading with Russia led to closure of the borders.

When it comes to Australian skins the Chinese continue to dominate the market and there is little interest from elsewhere. Sheepskin prices in general remain unchanged but doubleface prices are down.

Rain has started falling in the south which strongly reduced cattle slaughter. Farmers let their animals enjoy the free green grass to fatten. The exchange rate between the Aussie and the US dollar continues to hamper export business.

The leather market in Greece is quiet and the entire industry including footwear is depressed as became clear at a shoe fair which was held in Athens at the beginning November. Most shoes are now imported from the Far East and most Greek hides are exported to Türkiye.

Traders in Hong Kong tell us that the cheap hides from Central America and Africa which were in demand for so long by China, are now only of interest if prices are about half a dollar per kilo lower than those of their last contracts.

And before buying new there is still plenty of such material around in Whenzhou looking for (new) buyers. Clearly this material, which is stuck inside China, can be bought at rock bottom prices (if there is somebody who wants it!).

In Argentina, after unsuccessful attempts to auction it off, the former Yoma tannery at Nonogasta, which is in northern Argentina, could now be taken over by a consortium of five companies. The tannery became available after Yoma filed for bankruptcy in September.

In Uganda, it has been a mixed couple of weeks for the Chinese-owned Skyfat tannery company in Jinja. Having first been commended by the International Textile, Garment and Leather Workers Union earlier in November for signing an agreement allowing workers to join the Uganda Textile, Garment, Leather and Allied Workers Union and thus open the way for improved workers rights, the company have now been closed down by the local council due to pollution.

The tannery has been ordered to cease operations for three weeks and advised to carry out an environmental audit after local residents complained about the odour emanating from effluent deposits.

Five East African nations and the European Union have agreed an interim trade deal to replace preferential tariff agreements due to expire this year. Under the accord reached last week in Brussels, the East African Community (EAC) states Burundi, Kenya, Rwanda, Tanzania and Uganda will enjoy duty free, quota free access to the EU for all products - except sugar and rice - from January 1, 2008. The new deal is intended to help EAC countries diversify their economies while allowing some access to European goods and services.

Burundi and Rwanda, which joined the EAC bloc this year, will be excluded from the deal until December 2009 to allow them to finish implementing the EAC customs union. The EAC States now have up to December 2009 to sign a comprehensive Economic Partnership Agree-ment (EPA) with the EU.

An EU-wide ban on the production, marketing, import and export of products containing cat and dog fur was approved and introduced into EU law by the European Council of Ministers at the end of November. The ban will apply from December 31, 2008, to allow member states sufficient time to introduce sanctions for breaching this legislation.

The proposals were first put forward a year ago, after evidence was presented to the European Commission that cat and dog fur is being placed on the European market, usually undeclared as such or disguised as synthetic and other types of fur.

The vast majority of the cat and dog fur is believed to be imported from third countries, notably China, where the rearing of these animals for this purpose is practiced. The new regulation harmonises and strengthens rules across the 27-member EU bloc. At present, only 15 EU countries have some sort of legislation in place with regard to cat and dog fur, and rules differ from state to state.

Printer friendly version

Email this article to a friend