Bulletin

Considering we have been in the middle of the holiday period, there has been a surprising amount of activity in the hide market. All sectors of the leather industry, from automotive leather to shoe upper leather tanners, have been in contact with suppliers. 

Selling hides to China has been reported by one supplier as completely dead for a few weeks now. However, Italy has shown more life, and even some price gains have been achieved. A shortage of the heavier weight hides in particular meant that, even with a smaller demand for finished leather, prices for these have been increased. 

As the country slowly returns to normal life, the economy will start to grow, the public will feel more optimistic and they will spend more. Meat demand has started to increase, which means that more domestic hides are becoming available, and this is being matched by the increased demand for domestically produced leather. 

The slaughter remains low, but this is the seasonal norm. However, this has not stopped slaughterhouses from asking more for the green hides. In some cases, higher prices have been paid but, generally, prices at the abattoir door are stable – just because there is a squeeze on cattle prices, this does not automatically mean the hide price should go up, despite the wants of the slaughtering industry. 

Production at many of the major tanneries is reported as being only 50-60% of capacity, this is put down to the labour shortages with Coronavirus infection rates still running high and workers having to constantly isolate for days at a time. With production being so severely hampered, 2022 has been described as not having really started.

Bovine kills have been slow throughout January, and cattle availability is the limiting factor, not meat consumption. The hide market has been steady to firm since the New Year. Chinese tanners were relatively quiet on the run-up to their holiday, but European tanners have been actively purchasing.

Domestically, prices for green hides paid to slaughterhouses have remained steady for the last two months. The hide numbers available in the system are still very low but, with everyone in the industry experiencing a dire shortage of workers, it means that no one wants any more hides in their sheds than they are contractually committed to. 

Brazilian wet-blue prices for the latest round of sales to Chinese tanners have held firm at US$0.98/sq ft for whole hides. There is a similar story in Argentina where both green prices have held steady and, on the selling front, prices for both wet-blue and cured hides have remained unchanged.

Long term, the problem facing the leather supply chain looks to be freight availability and prices, often making shipping untenable for some suppliers. Short term, the problems are labour shortages across all parts of the industry. 

The news from one Italian commentator is that tanneries are feeling the squeeze. They are having their finished order books cut by both the fashion industry and the automotive industry; the former due to a downturn in consumer demand, the latter due to the semi-conductor shortage, which has almost completely halted production in some cases.