Developments in the hides and skins market6 February 2002
Raw hide resources in Russia continued to fall in 2000 due to reduced livestock numbers. However, the decline in livestock slowed somewhat as a result of reduced slaughter rates and loss of cattle during the previous two years. Cattle hide resources have declined from 13 million pieces in 1998 to an estimated 10.9 million pieces in 2000. During the period under review, Russian imports of raw hides and skins have also fallen, from 7,500 tons to 5,600 tons corresponding to around 255,000 pieces. Italy supplied 2,800 tons of raw hides and skins to Russia in 2000, at an average contract price of US$0.56/kg, and 2,300 tons at an average contract price US$0.38/kg to Kazakhstan. Taking into account imports of semi-finished leather as wet-blue in 2000, with a volume equivalent to nearly 200,000 hides, the total cattle hide potential was estimated at 11-11.4 million pieces. Sheepskin resources amounted to around 9-10 million pieces in 2000. Russia exports the most part of its hides and skins output. However, exports of hides are gradually declining, while those of leather have been expanding recently. In volume terms, cattle hide exports were reduced by 4% in 2000 as compared with the previous year, whereas shipments of bovine leather nearly doubled. In the first part of 2001, exports of cattle hides declined further by 14% as compared with the same period of 2000, mainly due to the raised export duty rate to 20%. Exports of bovine leather, on the other hand, increased by nearly 40%. In 2000, Russia exported 5.5 million cattle hides or nearly 60% of all procured raw hides and skins. Up to 90% of the country's output was supplied as fresh or wet-salted hides. The main buyer was Italy, which took over 60% of the Russian supply, with the share of twelve countries accounting for almost 90% of all Russian cattle hides exports. Russian cattle hide exports to CIS countries, the main buyers, declined by 15% in the first part of 2001. Sheepskins shipments dropped from 2 million pieces in 1997 to 165,000 pieces in 2000, rising again in the first half of 2001 to 235,000 pieces. Imports of those skins made up nearly one million pieces in 2000, reaching 649,000 pieces for the first part of 2001, a rise of 57.5% over the same period of 2000. The prices of Russian cattle hides on the world market have gone up by 44% from the middle of 1999 to the end of 2000. In April 2001, the price of Russian raw hides on the European market was US$1.8/kg, up nearly 30% from the end of 2000. Despite the rise in the price of hides and skins worldwide at that time, average contract prices of cattle hides exported by Russia from the middle of 1999 to the end of the first quarter 2001 remained practically stable at US$0.96/kg. However, an understatement of contract prices of raw hides and skins by exporters in order to pay reduced customs duties seems quite feasible, considering what is widely considered as unfair practices in Russia's trade nowadays. According to the Russian Tanners Union, the price of cattle hides weighing over 17kg was US$1.40-1.45/kg on the Russian market in March 2001. A duty is levied on raw hides and skins exported from Russia which was raised to 20% ad valore in January 2001. Despite this, a specific tariff was also imposed on hides and skins of all kinds amounting to Euro500 per 1,000kg since August 5, 2001. The Russian domestic market for raw hides and skins in 1999-2000 was characterised by expanded production of chrome tanned leather which doubled, juft leather increased 2.6 times and sole leather was up by 1.6 times as compared with 1998. According to estimates, the Russian leather industry processed 3.6-3.7 million hides and skins in 2000. However, the high level of rawstock exports means there is an inadequate supply to expand leather production in the country. As a result, output of chrome tanned and juft leathers decreased by 9% and 50% respectively in January - May 2001 as compared with the same period in the previous year, although sales of sole leather rose by 4.6%. Provision of the Russian leather industry with adequate raw materials remains an acute problem.