Extracts from theSauerReport

On the other hand leather prices were judged too high for the domestic Chinese market (unless one knew how to avoid import tax - but who still dares?)

North American but also many European hides, especially German, were sold and at prices better than can be obtained in Europe. However, what are these sales worth? Not much yet, sellers say, as with the volatile dollar/euro rate nobody dares to cover either currency or hides before they have the letter of credit safe in their pocket.

The interest from the Chinese was clearest for Italian fashionable leather types and European mostly light raw hides. Does that mean they intend to produce those leathers themselves instead of buying them finished in Italy? They will probably do both.

A number of exhibitors who came only to sell may be disappointed while those who came to show, see and meet are likely to be happier. But is it not always like that at a trade fair? It is a place to make contacts and show products; immediate business is an extra but not a necessity and not even a probability any longer.

The euro rate against the dollar is another blow to the European leather industry. Seventy percent of the world's leather and 75% of the world's footwear is made in Asia in dollar operating countries which do not care about our euros. European hides and skins are getting more expensive by the day for Asian tanners. Finished products from dollar areas are becoming cheaper for us here in Europe so imports from Asia are bound to increase.

If European leather is too expensive, it will not be sold and if it cannot be sold it will (after a while) no longer be produced and if we don't produce we do not need to buy the hides and skins. In short, it seems European raw prices simply must come down to compensate for the dollar losses and in order to remain competitive.

When asked their opinion about the Canton and Lineapelle Asia fairs, most visitors and exhibitors seemed to feel that Lineapelle was the better one. Although out of town and half an hour drive from the city centre where the Canton Leather and Shoe fair took place, Lineapelle was considered the more professional and better targeted event. Because it was out of town the people who did take the trouble of going there had a clear commercial reason and were 'high quality rated' visitors. Downtown at the Canton fair one never really knew who the visitors were but it surely included plenty of 'low quality rated' people from town just looking around and maybe not even connected to the leather trade. With regard to doubleface, since the main buyer Russia still did not buy the number of garments it was expected to buy, stocks of skins in Türkiye and other doubleface producing countries are thought to still be enormous. Today it is impossible to finish these expensively bought skins and sell them at a profit.

In order not to take losses we see that a number of tanners just put them aside (mostly in crust) and buy fresh and cheaper skins today to work on profitably. The expensive skins on stock are to wait for better times when they can be finished and sold profitably. When that will be nobody knows.

Fresh skins come in every day but demand remains limited. One of the explanations for the large quantities bought earlier this year is the fact that new tanneries have been built in Türkiye when money was plentiful and the sometimes inexperienced owners just bought and bought in order to have skins to tan in their new tanneries.

Estimations say there must be close to two hundred doubleface tanneries in Türkiye now. A lot of money is tied up in their stocks. When the cash will be needed (which seems unavoidable) there seems no choice but to unload them on the market at the going prices. Big losses could be the result. Further price declines also which would make the problem only bigger again the next day.

European hide production 2004

1) Red meat consumption in Europe continues to decrease for health/fashion reasons mainly - so less hides.

2) We are importing more of our red meat from places like South America - less hides.

3) Next year ten new member states enter the European Union and some of them, like Poland, will supply plenty of cattle to the West at presumably competitive prices. Farmers in Western Europe don't know how their own cattle will be placed on the European meat market when the new suppliers come in. So better wait and see and not have too many new calves next year - less hides.

4) Subsidies to farmers will be reduced and the dung problem is becoming ever more serious. It will be less interesting again to own so many animals - less hides.

Poland will be the leading cattle and meat producer of the new member states. It counts more than 2,000 abattoirs of which only a limited number will be able to respond positively to EU regulations. However, the same animals still need to be slaughtered and thus it is presumed that many of the smaller and older abattoirs will disappear and that some really big ones complying with EU meat regulations will take control.

Individual abattoirs or groups that can be very big and powerful as meat but also as hide producers may develop. Possibly important new hide suppliers to count with are on their way. Trade specialists in Europe do not all agree with my personal theory. One stated the reduction in meat consumption in Europe is moving towards stabilisation and it will take more time for the new EU member states to adapt to our trading system and quality regulations before they can start to become a threat.

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