Chinese buyers stand back

18 November 2009



The Shanghai Fair this year was very interesting as Chinese buyers decided that the market had become over cooked, and consequently they stood back to see what would happen.


In the last year we have seen some extraordinary behaviour in the market place. It started with wholesale abandonment of contracts by the Chinese tanners. Then when the market had crashed sellers in turn did not ship lower priced hide sales until buyers took up the previously higher priced contracts. The kills worldwide have fallen and as tanners have run down their stocks hide prices have firmed strongly as they returned to the market searching for hides.
There are many tales of sellers not delivering, or slowing down drastically shipping of lower priced contracts. This is because the higher prices offered by tanners was for prompt shipment only.
This way of doing business has the potential to have a serious effect on trading in the long term. Buyers must honour their contracts and the same applies to the sellers otherwise our business will become the home of spivs and hawkers. No one wins when business is conducted in this manner.
On to prices after Shanghai, the fair was very well attended and was busy over the three days of the fair. The story to emerge was that the big American sellers had travelled widely in China before the fair as usual but had run into stiff resistance to prices that were being asked. Some deals had been done at a level $2 below the highs achieved in the two weeks before the fair and on the Friday deals were concluded at $5 below the top of the market.
European hides had risen at a slower price than the American market. Consequently, when the American market fell, Europe just stopped rising. After the fair attention switched to European tanners and hides were sold at prices higher than the Chinese industry was prepared to pay. Prices at the middle of September were as follows:
36kg+    65p ($0.94)
31/35.5    67p ($0.97)
26/30.5    74p ($1.08)
Cows £18.50 ($23.20).
There is very little interest in doubleface at present and those that were sold went for £2.80 ($4.08) ex yard. Fellmongering skins went for £1.80 ($2.62) ex yard.



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