Extracts from the Hidenet World Reports – February 201714 February 2017
The latest news from the global leather industry.
Argentina’s market remains quiet at the start of 2017 and most automotive leather buyers are waiting to see how the inauguration of the new US president affects trade. However, tanners are seeing a great deal of volatility in the requirements from one week to the next. Buenos Aires steers and heifers are selling at $1.03–1.06, cows at $0.97.
Australia’s limited supply of cattle throughout 2016 affected export meat exports. The herd hit a 20-year low of about 26 million head, creating strong competition among market players. Year-to-October slaughter numbers were back 21–6.6 million head. This is 10% lower than the ten-year average, underlining the tight supply, which has processors and tanneries struggling to source material as new-year production started.
Grade A Australia wet-blue ox, 18–23kg and 23–27kg, were up in mid-January by $4.00 and $3.00, respectively, selling at $67.50 and $77.00 a piece.
Exports of leather and leather goods crossed $1 billion for the second year in fiscal 2014–15, according to data from the Export Promotion Bureau.
In 2014–15, Bangladesh exported leather and leather goods worth $1.13 billion, compared with $1.12 billion in the previous fiscal year, making it the second highest contributor to national exports after garment.
Bangladesh aims to export $1.21 billion of leather and leather goods in 2015–16, which is 7.28% higher from last fiscal year, he said.
In Brazil, regular TR1 23kg was listed at $1.30, which saw resistance from customers, due to a lack of demand for this material. Extra heavy was trading at $1.35. TR2 and TR3 were well sold. The general feeling was that the recent price increases are not sustainable.
Exports were very calm for new contracts, and the numbers for the first two weeks of the year were worrisome. The average daily revenue was $6 million, while in the same period in 2016 it reached $8.2 million.
The price of raw hides in Central Brazil went up by $0.15 in the first few weeks of January. The short offer of kills and the currency situation pressured prices to increase.
Some major players in Brazil were contributing to increases because of contracts for automotive leather.
Facing exchange rate challenges and a lack of demand, sources said that top tanners lost money during almost all of 2016. In the new year, they are still fighting for hides and struggling for sales.
Slaughter remained stable, and Brazil closed 2016 at around 22 million head. This is a 2% drop compared to the 22.5 million slaughtered in 2015.
At press time dry-salted Somali hides (7–9kg per hide, 70/30% I/II) were selling at $0.60/kg C&F.
Dry-salted camel hides, 9–11kg per three pieces (two sides plus neck); short shanks (70/30% I/II) were trading for $0.50/kg C&F.
Across Europe, bulls were doing well in January. While the continent’s auto market was slowing, high-end cars continued to sell well in China. General expectations are for maintaining 2016 numbers, or more likely a return to those of 2015. As a result, prices in January were mostly unchanged.
At the end of 2016, Europeans were selling more cows in China than within Europe, however purchases were expected to slow down ahead of the Lunar New Year.
Early January price increases for French and German selections were transferred to similar origins.
Spanish and Italian cows earned 5¢, which tanners paid, and at the same time the Netherlands selections reached the level of Northern German quotations.
Prices remained unchanged for southern German cows for automotive uses, selling at €2.08/kg, while the best French cows intended for leather goods got a 5¢ increase, trading at €2.05-2.10/kg, delivered to North Italian tanneries on 30-day payment arrangements.
Prices overall should remain stable until the French and Italian leather fairs. The next winter season holds improved prospects for the leather goods and footwear sectors, and major orders are expected to start in February.
At this point, everyone is waiting for indications from the furniture sector.
January saw a market rebound for French cows. Slaughterers increased prices by 5–10¢/kg, and in general, those bids were accepted, although these mainly involved small batches of selected leathers. French Bretagne (32kg and up) was trading at €2.05-2.10/kg; 32kg and under at €2.05-2.15 and Central French (32kg and up) at €1.85-1.90.
All prices are based on delivery to North Italian tanneries on 30-day payment arrangements.
EU, French bulls remained steady, trading at €2.40-2.45 for French Bretagne origins (37kg and under) €2.30-2.35 (37kg and up).
French calves are seeing much demand, with little supply. A generally satisfied market means that prices (€7.70–7.80/kg for the best skins when this issue went to press) are not expected to increase imminently
German bulls enjoyed a good January, selling at steady prices of €2.20 for southern German and €1.80 (40kg and heavier) Northern German.
These selections found more of a market in northern Europe than in Italy, thanks to continued water treatment problems in Arzignano.
Greek lambskins (70/20/10) were down slightly in January, trading at $100.00–110.00 a dozen (pickled), compared with $125.00 in early November.
The government’s demonetisations hit trade in major clusters of leather and leather products.
Tanneries in Chennai recorded a drop of more than more than 60% in skin deliveries and other major leather clusters – Agra, Kanpur and Kolkata – saw a decline of at least 75%.
The cash-based leather industry was particularly crippled by butchers refusing to provide animal hides because they were not being paid in cash; tanneries could not get hides transported because they could not pay drivers in currency. In January, the situation was still disrupting daily life for citizens and businesses.
Indian buffalo prices have been unchanged for the past several months, selling at $0.75 for crust (1.2–1.4mm), and $0.70 for crust (0.9–1.0mm).
The market for Iranian mutton/goat process has declined slightly in recent months. Mid-January mutton skins were at $60.00 a dozen (pickled), down $5.00 from early November.
Similarly, medium goatskins were at $27.00–28.00 a dozen (pickled) also down from $33.00–35.00.
As many in the industry were waiting for price indications from the upcoming leather fairs, Italians did not buy large amounts in early and mid-January. They were also holding back because of continuing water treatment issues in Arzignano.
This was pressuring tanneries to buy wet-blue and to focus on the finishing of items intended for use in medium-quality furniture and leather goods.Italian cows, meanwhile, were up, trading at €1.30–1.35.
The Italian veal skin market also saw a bump in the middle of the month. Hides of 18kg and up were up by 5¢, trading at €3.70–4.05, while 18kg and under was at €3.55-3.90, up by 5–10¢.
Wet-blue goatskins averaging 60–65ft² per dozen, selection 20/40/40% TR/IV/V, were trading at $35.00 per dozen C&F, which is comparable to autumn 2016.
Wet-salted Kenya hides averaging 13/15kg per hide 80/20% I/II, were also unchanged, selling at $0.95/kg.
Wet-blue unsplit whole hides, at an 18ft² average (24/28ft², 20/40/40% TR/IV/V) were up from last autumn, selling at $0.65/ft² C&F.
Wet-blue, unsplit whole hides, 28/ft², averaging 30/33ft² 20/40/40% TR/IV/V, sold at $0.75/ft² C&F.
Dry-salted Madagascar hides, weighing 9–11kg a hide, were up from November, trading at $0.85/kg C&F.
Mexican hide prices jumped 10.36% in November after five months of no change, and then dropped by 2% in December. The price was $0.76/lb, over 53lb a hide, US, Chicago FOB shipping point.
Dutch calves saw rising prices, stable orders. Sellers got the prices they were asking and the best selections increased 5–10¢, selling at €1.50. Dutch veal skins were also up, with 14.5kg trading at €4.40–4.90 and 16.5kg at 4.50-5.20. All prices quoted are euros/kg and delivered to North Italian tanneries on a 30-day payment schedule.
Lambskins were up two dollars over last autumn, with standard offerings trading at $32.00 per dozen (pickled).
Similarly, wet-blue ox selection (80–20%) also saw an increase; 20–24kg was trading at $86.00 a piece, up $2.00 from November. Heavier weights remained unchanged.
Nigerian markets were unchanged overall, with lamb selections, as well as goats, unchanged. Cross lamb A was trading at €2.70/ft² and ABC goat skins were at €1.80/ft².
The quantitative export of finished leather declined by 32.72% during the past five years from 24.985 million square metres in 2011–12 to 16.810 million square metres in 2015–16, whereas in terms of value, it went down from $1.049 billion to $0.981 billion during the same period. Finished leather fell by 25.98% from 5.939 million square metres in July–October 2015 to 4.396 million square meters in July–October 2015–16. In terms of value, it showed a decline of 10.08% from $126.209 million to $113.487 million during the same period.
Paraguay’s prices have been generally stable in the past few months. Offers in mid-January for Frigorifico full-substance hides were TR1 at $1.32–1.28, TR2 for $1.22–1.18 and TR3 at $1.10.
Lower selections continue at much lower prices. Market sources reported that the automotive upholstery sector continued to be the strongest. With regard to cattle supply, the country’s herd dropped in size by 8%.
Dry-salted goat skins, averaging 1.0/1.50kg, 4/7ft² sold at $2.10 a skin C&F. Meanwhile, dry-salted sheep skins averaging 2.0/2.50kg and 4.5/8.0ft² sold at $2.75 a skin C&F.
Prices were steady in South African lamb markets as the new year got under way. That said, prices were down from the start of November. Top-quality lamb I-III was trading at $190.00 a dozen, down substantially from the October/November price of $245.00 a dozen. Lamb TRA, however, was up slightly at $68.00–70.00 a dozen compared with last fall’s $55.00.
The best selections in the Mediterranean area are seeing an increase in price, thanks to fears of a drop in calf availability. The latest Spanish prices indicate a substantial leap in Lechal and Tigrados, while among the most expensive skins, the already costliest merino double face gained further ground. In early to mid-January, Lachaune Lechal gained €2.00 in one week, trading at €8.50. Lechal jumped from €2.00 to €4.50, and Tigrados went from €1.80 to €2.25. All prices are quoted on FOB origin, euros per-piece (5.5-7ft range, 6.5ft average.).
Dry-salted hides 7–9kg a hide sold at $0.75/kg C&F. as we went to press.
The fluctuating pound hampered markets throughout the period, however by mid-January, the situation had settled down. Prices for UK/Irish ox/heifers were unchanged, but some sellers were looking for increases, especially in the 31–35kg category.
The top sales recorded were at £1.65/kg. For 36kg and over, the right price was £1.55/kg but there were also unconfirmed reports of contracts closed at £1.60 for the best selections.
Weekly cattle slaughter closed out 2016 at levels not seen since 2010, with weekly slaughter numbers surging above 50,000 head on more than one occasion. Total cattle slaughter for 2016 was 2.26 million animals, which was the highest total slaughter recorded since 2009.
In 2016, steers represented 47.7% of the total slaughter, down from 49% in 2015. Heifers accounted for 50.2% of the 2016 total, up from 49% in 2015, the highest since 2010.
Producers of a majority of selections were typically far enough forward sold to enable them to reject bids below last sales, keeping prices steady to firm and volume-light ahead of the Lunar New Year in Asia. Heavy Texas was trading at $71.00 and $72.00 on 66/68lb in mid-January. The cow sector was particularly firm, with plum cows gaining a dollar or two, with heavy natives at $46.00, and 55lb. minimum average branded cows were at $37.50 to $38.00. Branded and butt-branded steers also gained.