Are we at a tipping point for hide prices?

Worldwide
Published:  22 October, 2020

This year has been one hell of a roller coaster for hide prices. We entered 2020 in a buoyant mood, with renewed optimism that followed two years of flat leather sales and decreasing cured and wet-blue prices. The thinking was that maybe a corner had been turned, writes theSauerReport Editor Ian Banks.

At the online raw materials and analysis platform, theSauerReport.com, industry experts and analysts have reported that, during January and February, there were some slight price rises along with an increase in required volumes from tanners in both Europe and the Far East. Then the news started to come from China that they had a virus problem sweeping across the country. During the February edition of the Lineapelle trade fair held in Milan, Italy, there was even talk that the problems in China meant that tanners in Europe could benefit from picking up work normally destined for the Far East. Little did we know that the virus had already spread into Europe.

What followed is well documented; hide selling prices crashed and green prices went below zero in many areas. After a couple of months of not being able to sell too much, the Chinese market started to recover, and has continued to do so ever since. Some suppliers have reported seeing their hide selling prices rise by as much as 60% in just the past two months alone. At one point the supply of hides was not enough to satisfy the demands of the tanners, particularly those working in the upholstery leather sector. However, only the Chinese domestic market can be described as in good shape, and without it, the world of hides would be in a sorry state.

Obviously, prices have also been helped by the reduction of slaughter rates around the world, which has artificially reduced supply. Now we find ourselves in a position where tanners are saying: no more. Many in China are reporting that if they cannot buy at current levels or lower, then they will cut back production. The conclusions that can be drawn as we move further into the final quarter of 2020, are that finished leather can continue at the current volumes as long as there are no further price rises, or we risk killing the golden goose that has propped up the industry.

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