TURKEY - Turkish leather garment manufacturers/exporters and thus the garment leather tanners consider the present market situation as a lost season and rather depressed. Their hopes are now based on the period after the new year to see how the Xmas sales went. If ok it might bring them some business in January.
Bovine tanners continue to do well but with great caution due to the long and risky payment terms. Domestic hide prices for good qualities remain the same (see above). Home slaughtered Eid hides sell at much lower prices with very long payment terms also.
The discussion of the day is that there are not enough skins moving through the tanneries. There is no hard cash to buy them and there are no orders. A weird situation but the harsh reality.
Since the season ahead is Xmas time followed by holidays till mid January, all expect business to remain quite dull till after February.
UNITED STATES - No new changes in hide prices. Offers are few but surely he who is prepared to pay the price will find a seller.
The talk of the day is the port strike in Los Angeles and Long Beach, the biggest port in the US and the nr 1 connection to Asia. The strike started on 27 november. It is not hard to imagine what problems it is causing. Hide exporters are now looking to get their goods out from Canada or Mexico. Containers can be hard to find, goods piling up and shipments delayed. Lots of extra costs and who is going to pay for them? The port used to handle 1 billion dollars of merchandise per day!
The US Hide Skins and Leather Association co-signed a letter to President Obama to do something about it (but doubts the government will seriously interfere).
The latest kill estimates for this week are 630,000-635,000 head.
There are complaints from Korea about shipments. It seems shippers may not have enough regular weight hides available within the contracted shipment period. Tanners fear to run out of stock. The port strike is not going to help.
AUSTRALIA - As usual the Australian hide market stays glued to the American market which means prices are not coming down. Hides are few it is said. In Queensland, the nr 1 cattle state in Australia, one packer is said to have already closed down for about a month Xmas holiday being well sold forward into February and not offering.
The kill is down from last week but strange enough still 18% higher than the same week last year. This according to figures received.
Hide exporters are tough with their Chinese buyers and ready to cancel contracts of which payments/LCs are not arriving in time as they should.
GERMANY - A VDA report says car production in Germany may rise just 1% next year to 5.4 million vehicles. This covers home and export markets. For the home market sales are expected to drop by 3.2% to 3 million vehicles. Germany is the most (or only) successfull car maker in Europe this year.
NEW ZEALAND - The new season lamb kill has started and interest from China is very good. They are paying prices nobody else can pay, i.e. around 11-12.00 USD per skin in raw.
When comparing this price level with what one can get for the best pickled grades, one understands that this is a golden opportunity the producers should not miss.
However, and consequently, there will be very few (if any) pickled skins available before February. At that time the suppliers will have to restart pickling in volume as the wool will no longer be suitable or less good for the superb wool-on business.
ANTI-DUMPING - Since 2006 there has been an anti-dumping duty of 58.9% on the imports of Chamois leather from China into the Europea Union. Basically to protect chamois tanners in the UK and Italy. Chinese imports have since then dropped from 30% to 3-5% today. The EU has just decided to renew and continue the duty.
However, we know the Chinese have recently been able to make the European Court of Justice decide that the anti-dumping duty on footwear from China was illegal. The duty has then been cancelled. It would be surprising if the Chinese would not try and do the same for this chamois leather. But maybe the article is not important enough to go through all the hassle again.
CHINA - Talks with Chinese shoe makers had a more optimistic sound. The slowly improving economic situation in the USA is already felt by manufacturers in China.
Sure the production in China no longer shows the same growth as in previous years. And that is not only because of the economic crisis in the Western world but also because many of the brands have moved part of their orders to other Asian countries outside China.
However also in these countries costs, especially wages are increasing together with their increasing business and the Chinese see the gap with their own much increased production costs getting smaller. Maybe some of this previously lost business will eventually come back to China they say. As an example Indonesia was mentioned where wages in the shoe industry came up 50% in one year.
Because of the increased costs, factory shoe prices in China have gone up 30-35% over the last 5 years. The leather price being one of the major factors. For shoe makers it is clear that the maximum they can afford is very close if not already there. They have been paying more for leather every year they say. The present stories about further increases next year scare them.
It can only lead to more shoe manufacturers using alternative materials and less leather. A process already underway but to speed up in a big way if tanners will indeed insist on higher prices again (and it is said they are looking for 20 cents per foot.). And tanners might very well be forced to if the raw hide prices stay at record high levels.
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