An overview of the raw materials market trends following the ACLE in Shanghai, September 3-5 and the outlook over the coming weeks as the industry prepares for Lineapelle in Milan and the next buying season. Overview written by a Market Analyst at theSauerReport.com
Putting together all the reports read and the interviews made during and after the recent Shanghai fair, the hide market seems poised to continue along the trajectory that has emerged in recent weeks.
As for the “Good” in the market, the high-quality hides, especially from well-established origins and reputable suppliers, have shown resilience against lower bids, and recent sales were made at or near previous levels. It would probably be premature to call their prices firm, at the outset of the busiest season of the year, but they remain steady for the time being, and will be the last for which sellers will accept a reduction going forward, if at all. For many traders in Europe, the Americas and Australasia these remain the (only) bread-winners, on which an increased share of the overhead costs and business viability hinges.
No place for low grades
The “Bad” is still anything in the medium-to-lower quality range. With so many alternatives available, good grades selling for historically cheap prices and weak leather demand, these factors remain the Achilles heel of the sector. Struggling to find a home, it is in this vast segment, making up the larger share of the world hide throughput, that the “buyer’s market” is most prevalent. It is here where supply and demand appear to be the most unbalanced, with all the consequences on prices that one can imagine. Part of the production is already being destroyed (in landfill) or in part used for other rendering purposes, and without a market turnaround, the situation is only going to get worse.
In this context, U.S. hides stand out as an exception, insofar as they have managed a small recovery over July and August, after bottoming out in June. All steer/heifer selections on offer (but notably not cows), increased in the region of US$4-6/hide over the period. But if the current prices will remain steadfast after the mixed results of the Shanghai fair is anybody’s guess.
The “Ugly”, in the end, continues to remain the widespread acceptance of fossil-fuel based derivatives as a substitute for leather, as the main cause of the sector’s ailments. The critically important footwear destination was hit particularly hard by the increasing use of leather alternatives. And until the final consumer starts once again to appreciate the many virtues of leather, and is ready to pay a little premium for them, the leather market fundamentals will remain weak at best.
Courtesy of theSauerReport.com republished from ILM