Bulletin

Chinese domestic demand for upholstery leather is reported to have started to slow, after several months of growth, it was always expected that towards the end of the year this would happen. Many tanners were able to achieve price increases on their finished leather for their October contracts, and again for the November contracts, but these were soon swallowed up by the rises in the raw material costs, which have continued to increase.

From the selling price to the green purchase price, most hide selections are up again. The green prices for ox and heifer hides have risen again, there has been no change on the cowhide green prices. On the selling front, there is better news; here, some of the sales price increases have been at greater rates than the green prices, although there has been some catch up in the system being made, due to the fact that green prices have risen continuously for the past few weeks.

As we pass the middle of another week, it is reported that the initial silly low price bids from tanners appear to have been a thing of the past. Suppliers report that they were able to obtain an extra US$2.00/hide on ox and heifer hides, over the prices achieved two weeks ago.

The direction of the flow of cowhide sales and shipments continues towards the Far East, as it has done for most of 2020. Italian tanners have only dipped into this market, and at numbers well below their normal volumes, and the selections taken have been only for the premium hides. All other cowhides have gone in the main to Chinese tanners, with a few sales reported to Thailand and South Korea.

The slaughter rates within Germany seem to have improved at faster rates than some neighbouring countries, although after the festive season is over, it is expected that rates will drop back down again. Until the population of the country starts to get vaccinated, any kind of normal life must remain on hold.

Normally during troubled times, the luxury end of the leather market remains resilient. In fact, during the financial crash of 2008/09 this segment carried on as usual as if nothing had happened. Those with large quantities of disposable income remain somewhat immune to the spending constraints the rest of the population is dealing with.

In late November, theSauerReport gave news that the expectation was that both green prices and wet-blue prices would continue to rise. For week 49 of 2020 the CICB green price indicator has shown that, after just one week of stability, the price has shot up again.

The slaughter rates are starting to slow in the U.S. The numbers are already lower than for the corresponding weeks of 2019, and are expected to slow further as we draw towards the end of this year and into the start of 2021.

Up until the early months of 2020, shipping was never seen as much of a problem. It is true to say that many carriers did not like shipping wet salted hides or even wet-blue, but there were always enough of those willing to offer container space to keep the flow of hides going.

If we go back just 25 years in the leather industry, China was a much smaller player in the market, and a modest consumer of beef. But, ever since, the growth on both fronts has been on an unprecedented scale.