Swift do not sell their hides to the trade but deal directly. There is now fear with hide traders the same policy will be applied to the hides of National Beef and Smithfield. If so, traders will only have a few sources left where they can buy hides. Some might find nothing if those – free – packers stick to their existing customers.
It is more likely, however, that in the kingdom of free trade, competition to buy from these packers will simply increase!
In China, besides the already known bank credit squeeze, ever stricter effluent treatment control and the new labour law, another new brake is put on the leather industry: the electricity distribution system was severely damaged in January by the snow storms.
This has meant that factories, especially industries with high pollution, high energy
consumption and high
consumption of raw material resources, are now discriminated against by a reduction in their electricity supply.
Although many tanners have their own generators diesel fuel prices went sky high. It will cost tanners four times more to generate their own electricity. Also water costs have doubled from one year ago.
High grain costs are discouraging people from raising pigs and cattle. Normally domestic cattle hide prices dip right after the Chinese Lunar New Year but not this year, which means that the price of domestic hides will increase in 2008.
An article from Just-Style.com concerning the Chinese garment industry says that China amended its pollution laws so that managers of factories that pollute waterways face losing half of their annual salary.
This is just one way in which garment makers are increasingly being held accountable for their impact on China’s environment as both government and local communities start to tackle the country’s huge pollution
problem.
According to local reports, China’s leather footwear exports fell for the first time in a decade in 2007, slipping 6% year-on-year in terms of volume to 1.3 billion pairs. However, despite this decline, revenues from leather shoe exports continued to rise, increasing 9% to reach US$9.56 billion as manufacturers moved into the production of higher quality, higher-priced products.
As a result the average price of Chinese footwear rose a
significant 13.5% last year to reach US$7.29 per pair. In the meantime, as consumer spending continues to rise, imports of foreign footwear also increased in 2007, rising 42% in terms of volume to reach 11.31 million pairs and by 48% in terms of value at US$3.31 billion.
In Ethiopia, the already several times announced export tax on wet-blue and pickled is now said to become effective from March 1. The taxes are 20% for wet-blue hides, 10% for pickled sheep and 5% for wet-blue sheep and goat.
In New Zealand, the situation on lambskins is hot hot hot. The prices for the finished leather garments have no relation at all with the price of pickled skins being paid.
Garment manufacturers and fellmongers are desperately searching offers and buying the skins they can find to build stocks so they can keep their factories going. Some at almost every price!
From the producers side, where production is high at present, there is still far more demand than supply. The hunger for raw skins from China is enormous. It is thought this situation will remain unchanged for the rest of the season until everybody has the stocks he wants. But that is clearly not tomorrow.
Despite its beauty, doubleface is now totally out of fashion which has not been without
consequences. Four big names in Europe have closed down plus a number of lesser known tanneries in Türkiye.
At fairs this year in Milan and Paris it was clear that interest was totally lacking. This is also influenced by the fact that money from major buyer Russia for still pending contracts is coming slowly or not at all!
Add to this the fact that the remaining tanners are sitting on stocks for which they paid three times today’s value! There is no solution. Their loss is guaranteed. Buying new stock at today’s low prices to average the purchase price down is useless since there is no demand. There are no new orders from the
garment manufacturers.
Large stocks of wet-salted doubleface lamb are reported to exist in Greece, Spain, Italy and France. The recent big Easter kill only added further huge quantities.
Although demand for nappa lamb is strong in the world (and outrageous in New Zealand) new problems have appeared in Spain. Since the price of fodder/cereals has gone up so much farmers are trying to save on feeding costs by giving the animals food with lower nutrition value. Lambs, which are killed when three months old, produce skins of much lower quality.
Skins are weak, loose and break quickly at the abattoir. Thus the yield is poorer and a tanner must buy more skins to find the right number of the quality he needs.
There are far more rejects. A tanner must invest more money in raw purchases while also his production costs are up (skins that finally turn out as rejects still have to be processed!)
The number of rejects can now run as high as 50%! Unfortunately the tanner does not have more money to invest. Neither can he afford to stock a large part of his production to be sold one day as lining for whatever price he can get.
