LATEST NEWS:


25 NOVEMBER:
GERMANY: Business remained slow and geographically well spread as was the case the week beforelast. Prices remain unchanged untill the abattoirs and the buyers have agreed on new ones. This is supposed to happen in the course of this week. The general idea is that heavy ox should reduce prices while heavy cows may be able to hold. The is the same tendency elsewhere in Europe and all based on the purchasing activity of the Italians. What the Aseans are doing (not much activity there at present)seems to be irrelevant for European prices at the moment. The German kill last week was very high and possibly the highest of this entire year but numbers could drop sharply early 2006 as some say.

1) Abbreviation list at the end of the report.

2) Prices and quotations in this report are to be regarded as 'photographs' of today's markets. If prices or statements are unrealistic or contradictory I do not change or adjust them but present them as they appear on the market. Readers can draw their own conclusions. The accuracy of information received (coming from about 70 sources worldwide) cannot always be verified. The editor/publisher cannot be held reponsible for the contents of these reports in any way or for the results obtained by using the information published. By subscribing or by acting as correspondent to this service, all readers acknowledge and accept this fact as legal.

3) Please note prices in this report do not mean anything if the meaning of the abbreviation mentioned with the price is not taken into consideration(for abbreviation list see at the end of the report).

4) I repeat that the prices published in this report do not pretend to be the only ones or the correct ones. I do not believe there is something like one correct price for a hide or a skin. Even with the same description quality differences can be enormous and justify big price differences. Prices published in this report circulate on the market. It does not mean there are no other prices around also.

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Remark:

18 November:
Thanks to a weaker Australian dollar and good rains the meat business is improving and so is the hide trade. Good demand from Asia and from Europe especially for lower grades to be used in the shoe industry is reported. The problems in Brazil could be connected with this new interest for Australian raw hides. Calfskins remain much sought after as well.

Lamb and sheepskins improved in volume but not in quality. The many different qualities in the various parts of the country explain the big differences in prices. For lambskins of similar descriptions difference of 6 to 7 dollars were recorded. The sheepskin trade is steady. China keeps buying and in spite of the slow global wool trade China's preference for skins with more wool persists. For the same reason they prefer English over French skins nowadays.

Kangaroo skins remain hot hot hot.

Remark:

17 November:
Prices remain the same as in October.

Remark:

16 November:
There is decent demand for wetblue male type hides but demand for cows is totally absent.

Remark:

2 November:
At the Brussels hide auction of 31 October hardly anything changed. Ox/cow/heifer hide prices remained exactly the same as amonth ago. Others like bulls gained just 1 percent.

Remark:

22 November:
A correction to previous news is necessary. BMC, the Botswana Meat Commission is not bankrupt as was reported last week but they are in a very difficult position. The tannery is up for sale but recent visitors report the costs of cleaning up the sludge dumped for years may cost more than the tannery is worth. No buyer has presented himself yet.

Remark:

16 November:
The problems in China are now the topic of the day and little is heard anymore about the F and M problem in Brazil and its consequences for the leather trade. For the moment at least these consequences remain very limited. True, meat exports are still forbidden to many countries. True, the kill is down a lot in the parts of Brazil concerned; but there is no rush on Brazilean hides and there are no shortages. To the contrary plenty stocks are still around in country as travellers there reported. Brazilean exporters react individually and in different ways. We see some who increased their prices, talk about reduced availabilities or even withdrew their offers while others unload whatever they have too much and accept the prices they can get. Both sides no doubt have good explanations for why they do what they do.

17 November: Although in this report you find prices which really are all over the place (it has never been different) we dare now conclude from information in various markets that the most reasonable value of wetblue unsplit Frigo hides is close to 1.05 USD/sqft. Some even state that production of a Madras type corrected grain could be produced cheaper in Italy than in Brazil because of the expensive Real versus the Dollar.

18 November:
From various sides it is heard that the kill is slowly recovering from the Aftosa problem. In spite of the problem sources in Brazil say that by the end of the year Brazil will still have produced more hides (40 million) than the United States in 2005. We do not notice new changes in hide prices.

22 November:
Things are rapidly improving in Brazil. Transport of live animals from Parana and Mato Grosso do Sul is permitted again. The kill is back to 80 percent of the normal situation as one report states. Export sales are improving also. The currency has calmed down also and the Dollar is now pretty stable against the Real.

25 November:
The latest reports say situation almost back to normal now. Tanners who were out of the market for raw purchases are back in. This increased buying activity pushed prices up by 0.10 Reales (abt 0.05 USD). The kill and the currency show no new surprises so the over all situation has quite improved this week. +++++
Note: Prices may vary tremendously between the different brands even if of the same description. TR descriptions may stand for different percentages of A,B,C,D with the different tanneries who may again have different descriptions for their A,B,C and D grades. Price indications must therefore be taken with reserve.

Remark:

8 November:
The hide market is stable but it seems the Chinese have come back with enquiries. Goats are firmer again like almost everywhere else.

Remark:

14 November:
The changes in rules and regulations concerning the import of hides and skins announced in this report last friday are taking serious form and are now under discussion in the Central Government our source in China reports. The basic change is that new legislation may require importers of raw hides and skins to pay 5 percent import duty plus 17 percent v.a.t. UP FRONT. After re-export 13 percent v.a.t. will be refunded.
The big changes are these:
1 - The present system allows for deferred v.a.t. payment. This means nothing has to be paid when importing. The difference between 17 and 13 = 4 percent is only due upon re-export.
2 - The trick was that many goods never physically left the country and that no tax was ever paid.
3 - The new rules will demand 22 percent more cash on the table on the day of importing the goods to finance the import duty (5 percent) plus the v.a.t. (17 percent. Who has that money? Which tanner can pay that? It is known that the banks are only tightening credits not expanding them!
4 - It is unknown how long tanners will have to wait before getting their 13 v.a.t. refund once the goods are exported. Some speak about 6 months.
5 - The objective of the government is to stop the cheating on taxes and duties and but also to avoid that tanneries move inland from the coast to avoid the strict anti-pollution rules in the coastal areas. Moving inland where control is less strict would probably mean polluting the rivers closer to the source and all the land downstream. Thus if we cannot control it, better to not import raw at all, the politicians must think.
6 - Hence the government directly or indirectly promotes imports of wetblue. But bluing in China costs 7 to 8 USD per hide while it costs around 12 Dollars in the USA for instance. Thus importing wetblue instead of raw will seriously damage China's competitive position in the world of tanning (that is why we wrote last friday that the new rule will be nice music in the ears of tanners outside China).
7 - If the Chinese Government indeed decides importing wetblue is the solution for their problems then who in the world has the capacity to tan all the hides China needs? Could it revive struggling tanning industries in Europe, Africa, South America? Maybe! That would not be bad!

Of course things never work out the way they are logically written down. First of all no clear decisions have been taken yet. And if so, when will they become valid? But if even part of this becomes reality it is not going to help the tanning and leather goods manufacturuing industry in China. Losing part of its competitiveness could result in the loss of possibly milllions of jobs in China. And if the Government sees that happen would that not make them change their mind again? Everything is possible in that country. It is also clear that every new rule which costs money will lead to new tricks to avoid paying or to recuparate the new losses elsewhere. Already now people are talking about an increase un underinvoicing, downgrading selections-values, etc. But will everybody be prepared to do that? All have seen the increasing risks involved this last year(s) if one is caught. All in all interesting times ahead which could change the position of the entire Chinese leather industry and thus of the rest of the world.

15 November:
Business remains disappointing for the Chinese tanners. Orders are not what was expected for this new order season which started two weeks ago. People are very carefull to buy raw material since many have problems in collecting their money from their own customers. It is said nobody would want to pay again the prices paid during the Shanghai fair. Prices for African wetsalted hides meanwhile have dropped to levels as low as 0.80 USD per kilo (up to 1.00 USD maybe for drysalted or dry) delivered China incl. all costs. When checking the African wetsalted hide prices in this report it becomes clear they are far below what sellers are still asking fob and excl. all extra charges, commissions etc.

According to a recently published report China could overtake Germany as the world's 3rd biggest car manufacturer by next year. Sales in China are said to increase 13 percent this year to 5.6 million vehicles. Next year 6.4 million are expected to be assembled.

16 November:
The possible changes in the Chinese raw hide/skin import procedures keep discussions going everywhere. I would like to add two more possible consequences: 1 - Chinese will try to buy whatever they can before new rules become effective (but there is no sign of that yet). 2 - If they do become effective and there is no other way for the Chinese tanners but to pay up, they will probably offer/pay less for imports to make their calculations fit since it is unlikely finished leather buyers are going to pay more because of new legislation in China. Raw material sellers may then get better prices from other countries. This also could lead to a complete revision of the global raw material trade.
Anyway let us not forget it is all just speculation for the moment. Nothing has been decided and nothing is sure yet. Also think about this famous saying we have in the Netherlands: The soup is never eaten as hot as it is served. Big changes have been announced in China every year but finally there never was much that really changed. We'll see what it will be this time.

Traders presently in China report that many Chinese buyers do not want to take any positions while the new import rules and regulations remain unclear. Understandable. The more since more than one Chinese tanner reported disastrous results for this year already BEFORE the new possible new import rules came in the news. The letter on this matter written by CLIA (Chinese Leather Industry Association)to one may presume all its members announces the new policy will be valid as from 1 January 2006. Other voices say this could be 2007 and that anyway nothing has been firmly decided yet. Funny is the last sentence of the urgent notice written by CLIA which says - quote we hope that all corporations can hold this secret and do not show them to the media unquote -.

The latest rumour (all news is still nothing more than that) is that the new import rules under discussion will only apply to foreign owned tanneries/companies. Strange!

18 November:
There is no end to the stories about the new import rules. It was now reported tanners will also need a CIQ licence (no idea what these letters stand for). This licence will only be issued to bonafide tanners and not to traders. A.o. it forbids resales of raw hides to third parties. Tanners must tan themselves what they import. For the moment we shall add this news to the box full of mysteries and wait till the truth comes out through an official government publication.

It is expected that if the new rules will be implented as proposed, the Korean, Taiwanese and other foreign owned tanneries are likely to be the first ones to move out of China and (probably) back to their home country or elsewhere. These factories came to China because of the advantages of tanning there. Once these advantages disappear, or worse, turn into disadvantages, one may presume they will quickly disappear from China. Tanning industries in the owners' countries may then increase again in importance. As said when I started writing about this subject if all goes as is proposed it could turn the leather world upside down. We have to wait and see.22 November:
News coming in from Thailand says the possible changes in raw import strategy in China has already resulted in more orders for the Thai tanning industry.

China has been one of the most active buyers on the goatskin market these last months. From the fact that so many goatskin sellers are now in China or just come back to solve their claims shows that once more the Chinese have been buying products they do not actually know (this is what the trade tells us). It also proves that the need for those skins today is probably not as big as when they were bought. The alarm light is on!

23 November:
Quite a few tanners both domestic and overseas did meet with the Chinese Leather Association for preliminary exchange of ideas on the import regulations. Today they shall meet with seven branches of government offices, including Treasure Department, Taxes Authority, Environmental Agency, Custom and National Development and Evolution Department, Commerce Department and Light Idustries. Korean and Taiwanese tanners were aggresive and said that if the new policy is implemented, they might as well pack and go home. A representative of the Taiwanese tanners talked about competitiveness and financial burden to tanners and down stream industries. Richina explained the financial burden as well. Kasen presented their view on what complicated and financial difficulties they will encounter from tanning to cut and sew to complete furniture export. However, they took a more reserved posture (because they were recently listed on the HKong stock exchange and afraid any negative report might affect their share price which is about 10% below it's high (recovered from 20% below). It sounds as if the Chinese government officers only live in ivory towers and do not understand the real world of the industry (we have heard that in many other countries too - the editor). They asked very naive questions and gave very naive suggestions to resolve the complicated problem. This is the first time that Tanning industries succeed in drawing the attention of so many Government Departments. After listening to the problems the tanners are going to encounter, do they realize how serious and complicated it is? And what will happen if the new policy will be implemented Jan 1st 2006? Questionaries were handed out to the 21 tanners participating in the hearing. One has to wait and what the bureaucrats are going to do next. Amend it, delay it or just go on with it?

While Chinese tanners and their government are discussing how to go from here, what is the trade doing? With so much uncertainty in the air it is easy to imagine whether many Chinese are prepared to buy raw stuff now for arrival after 1st January (I doubt it). And please don't forget the usual Chinese New Year business break; Or whether all sellers are ready to ship goods knowing their Chinese buyers may have to cough up 22 percent more cash to pay for the goods upon arrival and may be less enthusiastic to pick up the documents?(I doubt it); whether all L/C's for pending contracts will be opened ?(I doubt it).

If the Chinese stop buying during this period of negotiations with their government what could happen to American hide prices (I have some idea) and if so what would happen to prices in the rest of world (I have some idea)? What will the market do if the Chinese stay out of the market for some days/weeks or when their raw imports will strongly reduce (I have some idea). In short it would come in mighty handy if they sorted their problems out quickly so the trade knows what to expect!

Remark:

16 November:
Costa Rica like other countries in Central and South America are trying hard to increase their prices using the foot and mouth disease problems in Brazil which results in fewer hides being produced there, as justification. Increases of up to 3 Dollars have been noticed but they were not paid. In spite of lower kills in (certain parts of)Brazil there is no hide shortage. Recent visitors speak about plenty unsold stocks in many tanneries.

Remark:

18 November:
Local prices are higher but export offers remain about the same. There is demand for hides and calf from Italy and from Germany.

Remark:

See under Somalia.

Remark:

23 November:
Finally some movement in the leather industry possibly motorized by the approaching Christmas and Eid EL Keber festivals a few weeks from now. Shops are preparing and setting up more goods in their windows. A leather fair was held in Cairo 17-21 November. Main participants were Italian companies showing raw materials, chemicals, machines and finished products. From the same country there were also complaints about initial invitations to a number of Italians which did not get any follow up. Those involved who had reserved those days to travel to Egypt were clearly not happy.

Most hide prices are 1 or 2 Dollars per piece higher than in October and also wetblue sheep and goatskin prices are up by 2 Dollars per dozen.

Remark:

1 November:
In line with global developments in demand and in prices sheepskins now show fair reductions while goatskins remain as firm as they were.

23 November: In spite of the strong global demand goatskin prices have not really increased further through November although we see some low grades priced at a Dollar more than before. Hides and sheep still show the same prices as well.

Remark:

17 November:
No changes in prices. Demand for heavy hides remains strong. It is thought that the structural changes in the hide trade in South Germany may have something to do it. Now that two thirds or more of the hides available in South Germany end up in the hands of one grou, there are other tanners and traders who must find other sources of comparable qualities. Scandinavia is one of them and for this reason it could enjoy more interest for its hides.

Finland fears its kill may drop as much as 30 percent next year once EU subsidies stop.

Remark:

16 November:
France like the rest of Europe sees demand decline after the short lived enthusiasm of the Lineapelle days. Hide prices are not coming down however.
Traders say the sold forward positions of the abattoirs are such that nobody should count on reductions before end January. A clear and tough statement!
Calfskins enjoy less interest too but for this product there are just as many who say prices will decrease as there are who say the opposite. The lambskin market is dead. The Chinese clearly prefer the English skins for reasons of quality (more wool).

Remark:

16 November:
Hide prices have still not changed and there is nothing new to report which has not already been covered by the general news on the European hide trade. For good quality heavy splits however we see more interest from Spain and prices increased again by about 10 percent because of the small numbers available. The increases have been paid as well.

22 November:
New hide prices will be negotiated next week. The plan is to get bull hides prices reduced by 10 percent. Reason for this are the lower prices paid for automotive leather which are on their turn connected to the disappointing car sales.

28 November:
Business remained slow and geographically well spread as was the case the week beforelast. Prices remain unchanged untill the abattoirs and the buyers have agreed on new ones. This is supposed to happen in the course of this week. The general idea is that heavy ox should reduce prices while heavy cows may be able to hold. The is the same tendency elsewhere in Europe and all based on the purchasing activity of the Italians. What the Aseans are doing (not much activity there at present)seems to be irrelevant for European prices at the moment. The German kill last week was very high and possibly the highest of this entire year but numbers could drop sharply early 2006 as some say.

Remark:

11 November:
A shoe fair in Athens last weekend showed again how depressed the footwear industry is in this country. Over the last decade production dropped from 45 million to just 5 million pairs! Raw material and wetblue prices remain unchanged while trade is very slow. More and more Greek hide exporters are seen in Italy trying to sell their merchandise there no doubt because of the diminishing market back home.

25 November: Hide market slightly firmer but retail leather business for the Xmas period remains very slow.

Remark:
23 November:
The Monsoon rains which have been prevailing for three weeks are reponsible for redcued transport and thus skin and hide production possibilities. This week it finally seems to get a bit better.

DOMESTIC BUSINESS:

Goats: Demand for traditional EI Tanned tr1 and 2 as well as for superior linings which at the end of the day will all end up as finished leathers for export.Prices have eased 0.50 Rs for lighter types and remained unchanged for heavy selection. Due to the climatic conditions there are still too many low grades being produced which is a constant complaint by the tanners. Traders believe we shall see better demand for garment suedes in the months to come. Normal demand for full and semi chrome standard linings reported. Some mesh leather deals take place with the Far East

Sheep: Good demand for high wetblue selections but supplies are poor and no improvement is expected before late February or even mid March. After the Monsoon the skins will have less substance thus making it more diffciult to offer high grades. Business in wetblue low grades reported 10 to 15 Rs below the prices of previous deals. Limited demand for resin nappa. Prices remained the same for low grades. High grades are very rare and offers few.

Cowhides: Steady movement in wetblue and prices up by about 1 Rs compared to earlier in the month. Lining business is not so good which is while more tanners throw all their efforts on the production of wetblue.

Buffalo and buff lights: Good continuous demand and prices are up to 2 Rs. per foot higher. Demand for bark soles also good for both heavy and light weights.

Cowcalf: Trade still slow for low grades but for the better quality thicker substances business is improving and so are prices.

Buffcalf: There sure is business but due transport problems and delays the volume of trade remains restricted. A firm market is expected for the coming weeks.

EXPORT BUSINESS:

Goats: Good demand from Italy for selected brands traditional EI Tanned skins.
Sales reported in 4/6 and 4/7 feet tr1 at 1.40 USD. Bigger 5/8 feet skins are still few and tanners are reluctant to offer due pending commitments. Trade with the Far East in milled finished leathers in the 1.60-1.65 USD price range. Glazed/burnished selections 4/6 feet ABCD are offered at 2.00-2.10 USD for medium colours or 5 cents more for dark colours. Full chrome linings trade on steady basis 3/6 feet tr at 0.90 USD or tr/trr at 0.80 USD. Finished mesh leather is under negotiation at 1.05/1.10 USD but not concluded yet.

Sheep: Full chrome natural suede sold to Japan at 224-225 yen and rejects at 115 yen. A small quantity of LDT brought 170 Yen. Finished nappa in TR sold to korea and Hkong at 1.70 USD.

Cowhides: Prices are firm since tanners still prefer the domestic wetblue business to the export lining trade. Wetblue is simply more attractive to them.

Buffalo and buff lights: Upholstery buffalo prices firm at 1.40-1.45 USD. Glazed buff lights sold to the Far East at 1.90-1.95 USD.

Cowcalf: TR1 and 2 prices are firmer while low grades remained the same.

Buffcalf: Demand is starting to come in.

RAW HIDES AND SKINS:
Goats unchanged. Sheep prices down by 10 Rs in certain centres in the South and unchanged up country. Cowhide prices are 15 to 20 Rs higher again. Buffcalf is up 10 Rs. Buffalo and buff lights up 15 Rs.

Remark:

8 November:
Iranian tanners are going through a difficult period for various reasons. The international market for pickled sheep has been badly hit (see also New Zealand). Prices dropped up to 20 percent while there are still plenty stocks in Italy and no sign of any market recovery. Cattle hide tanners are in trouble because of the short supply due low kill and the high hide prices in the country. Shoemakers have the biggest difficulty in paying the leather prices asked for. The consequense is that Iran is considering importing cheap hides. Something which did not happen for at least a dozen years.

Remark:

17 November:
Hide prices offered to Italian tanners remain firm. Maybe the lower kill in Brazil adds a bit to the higher trend. The shoe upper sector is finishing the winter/spring season but prospects for the coming months and next winter are good. The same counts for leather bags backed by good demand for light ox/heifers. The medium high upholstery business show good movement also while lower corrected grain Madras types could possibly be produced cheaper in Italy than in Brazil (see above) due the latest currency developments. Upholstery tanners who till recently were happy with programs for a week can now be blessed by programs which keep them busy for up to a month. This is good news since it takes the knife off their throat and gives them the possibility to say 'no' to orders at too low prices. A luxury these tanners did not have for a long time!

23 November:
A new theory has surfaced to explain the calmer market of the last weeks in Italy after the Lineapelle highlights and enthusiasm. Italy took all the sample orders at the Bologna fair but once buyers had decided on the product they wanted they placed the real orders in Brazil (or elsewhere)! Nonsense? Maybe not.

Remark:

22 November:
Today is election day in Kenya for the constitution referendum. People hope all will pass smoothly but not everybody is convinced. Hide prices kept dropping but may have balanced now since there are some new enquiries coming from China while also Pakistan is showing some interest. Chinese price ideas are extremely low though. Goatskin prices remain very firm and may have reached levels where interest could switch back to sheepskins. After all goat and sheep have proved interchangable quite often these last years since price is more and more decisive.

23 November:
The new interest from China for wetsalted hides earlier this week is based on a price of 86 cents delivered all costs, profits and commissions included while the lowest price reported at origin is 85 cents fob. A long way to go before a contract can be signed. Taking the pending problems in China into consideration it is doutfull if the Chinese would even actually buy at 86.

Remark:

17 November:
Still nothing changed and hide find their way over the globe at steady prices.

Remark:

14 November:
Further confirmations about continuously dropping skin prices due to the very low price ideas the Chinese have for nappa.

22 November:
Most skin sales reported were at lower prices again but not for all selections. For some ribby and run lamb sales were seen at better prices than a fortnight ago.

Remark:

24 October:
Wetblue and crust prices have hardly changed over the summer months. The quality of the raw skins is low now for seasonal reasons. The better skins should soon start to come and the best time to judge the raw values will be in January/February. In Italy we notice more demand for goats and a decreasing demand for sheepskins.+++++

The big price difference on low grade indicate that skins are used for different purposes and have different values for each of them (suede, upper, lining,etc.).

Please note that even under the same description also wetblue prices may differ from those stated above depending on the exact origin in terms of country, abattoir, brand, delivery conditions or specific "customer's selections".

Remark:

17 November:
Prices remain unchanged.

Remark:

14 November:
Hides - Demand from local industry is pretty good but rumours say it wont last much longer. Still most tanners, even those without full order books, have work enough to occupy their workforce. Hides which come on the market find buyers pretty quickly. This counts for all types except maybe heifers. Stocks of cow hides in traders' warehouses since some time are also quickly diminishing and bring interesting prices. Like elsewhere tanners buy but fight every try for higher prices. Exports finally remain the driving force behind the hide trade.

Lamb skins - Market improved slightly. There is increasing interest even for lower qualities. Prices went up by 1/4 Euro! Good quality double face is traded between 7 -7,5 Euro (FOB). The kill remains very slow and will not improve before Christmas.

Remark:

17 November:
Prices remain the same but there seems to be a clear shortage of bull hides in the country.

Remark:

17 November:
It was noted that Russian wetblue offered at 11.00 USD/m2 or about 1.10 USD/sqft is good value for more when compared to certain other origins.

++++
Please note that even under the same description prices may differ from those stated above depending on the exact origin in terms of region, abattoir, brand, delivery conditions or specific "customer's selections".

Remark:

22 November:
No changes whatsoever. Demand for goat remains stable, but still nobody is prepared to increase the prices on the buyers side whereas the inland collectors are increasing the prices. Demand for sheep from Asia is non existant, but Italy seems to have some interest