16 March 2018
The 21st edition of the All China Leather Exhibition (ACLE) will be held from 29 – 31 August in Shanghai.
Sales of exhibition space continue well in the 8 halls we use at the New International Expo Centre in Pudong, Shanghai with major international tanneries and chemical producers participating once again this year.
This year’s event should attract around 23,000 visitors in total with some 19,000 coming from the main manufacturing and tanning provinces of China and more buyers from ASEAN. We expect around 1,000+ exhibitors – both international and domestic – who will display the usual wide range of leathers of all types, specialist chemicals, components, machinery and services.
By covering the whole supply chain of the industry, including the latest technological developments and new products, ACLE continues to fulfil its role as opening the doors for the China leather industry to have access to the latest technology for making leather both efficiently and sustainably.
This encourages the presence and investment of national pavilions at the fair of which there should be 20 as there were last year.
After APLF finished last year at the end of March, there was a further erosion in leather and raw material prices as the supply of raw hides exerted pressure on the market. At present, raw hide and wet blue prices are at their lowest levels since the financial crisis of 2008 / 2009 as more cattle are slaughtered and hides become available. This time last year Texas steer prices were at US$80 and now have fallen to approximately US$55 – a decline of 32%.
At the end of February this year there was an overhang of some 3.8 million hides sold but not yet shipped in US warehouses and cattle-on-feed rose by 8% indicating that from the US this year, there will be no shortage of hides and supply side dynamics could hinder any price increases.
This, however, is not bad news for the leather product manufacturing industry. Manufacturers will be aware that leather prices are lower and could in fact benefit their profit margins, especially if the crude oil price, which is the rawstock of competing synthetic materials, continues rising this year. The missing piece in this “leather demand jigsaw” are the designers and stylists who appear to be more committed to synthetics for footwear as the sneaker and casual footwear wave continues to dominate footwear sales in the context of booming tends of street chic and athleisure.
Nevertheless, footwear leather suppliers should not forget that China is still producing around 4.5 billion pairs of leather shoes in 2017 and hence still needs substantial footwear leather supplies.
The leather industry requires more demand from the footwear sector to absorb the existing and future backlog of supplies so, in the meantime, steady and increasing demand from the furniture and upholstery sector is crucial in keeping tanneries busy and producing.
A survey conducted by the magazine Furniture Today indicated that 29% of residential upholstery now contains leather and the auto industry, on a global level, completed a record sales year in 2017 with almost 90 million new vehicles sold with China accounting for 28.88 million of cars and commercial vehicles. Car sales in both China and the US are expected to consolidate this year but with so many millions of vehicles being sold, there should be ample demand for automotive leather in 2018.
The environmental clean-up undertaken three years ago by Chinese authorities is now virtually complete. Its results will be felt in an improvement in the quality of life for its citizens that live and work in the industrial areas as well as in the production of more sustainable and environmentally friendly leather that will be more marketable, especially for exporters.
China’s main competition for footwear comes from its South East Asian neighbour, Vietnam, that also has to import at least 75% of its leather to manufacture footwear. This year, the organisers are continuing to promote ACLE not only to buyers from China’s tanneries and manufacturing industry, but is also aiming to attract more buyers from the ASEAN countries that are manufacturing more shoes and leather goods as the countries in that grouping are lower wage economies as China’s major transition phase aims to transform it from an export-driven economy to a consumer-driven one as will be outlined by Mr. Chen Zhanguang, Secretary General of China Leather Industry Association in his report.
The only clouds on the macroeconomic horizon at present are the possible disruption of trade policies. The cornerstone of such policies are to levy punitive import taxes on raw materials and finished goods into the US economy and in this way protect its internal production. This has already happened as we have seen with solar panels, steel and aluminium from China and at the time of writing, the BBC is reporting that similar levies could be imposed on Europe. This could reverberate throughout world trade and slowdown the interchange of goods and services that grease the wheels of the global economy.