Sheepskin prices down on lower Chinese and Russian demand

Australia - New Zealand
Published:  07 January, 2015

Australian and New Zealand farmers are having a tough time selling lambskins as China’s tanneries face slowing demand for the products, particularly from Russia, and as Beijing cracks down on some chemical-intensive processing plants according to a report on the Wall Street Journal website.

In Australia, lambskin prices were down by close to 85% last year. Sheep farmers are also being hit in New Zealand, where prices have fallen by as much as 40%.

China’s government is under rising pressure from a rapidly emerging middle class to address the country’s air, soil and water quality. In May, as reported on ILM China began regulating tanneries and other factories in Xinji and Wuji believed to be contributing to pollution, targeting smaller outfits in particular.

Mark Mei, Chief Executive at Mengzhou Senlong Fur Co. in eastern Henan province, said sales of his company’s lambskin products to shoe factories in southern Guangzhou province fell between 50% and 60% last year as a result of slower demand from Russia. “Russia was our biggest market for shoes,” he said.

He said the environment-related closings of some tanneries in Hebei province, where Xinji is located, have meant more lambskin is being processed in nearby Henan. Also, demand for lambskin clothes on Chinese e-commerce sites such as Alibaba’s Taobao surged last year, he said, though for his business, these factors haven’t been enough to offset the decline in sales to Guangzhou.

The effects of the slowdown reach as far as New Zealand and Australia, two of the five largest exporters of sheepskins globally, alongside Turkey, Spain and the UK.

Carl Alsweiler, manager of marketing at Alliance Group, a meat processor based in Invercargill, on New Zealand’s southern end, said the price falls were linked to China’s environmental policies, but that a soft global economy was also a factor.

China is the biggest importer of sheep and lambskins, receiving about 74% of all skins exported worldwide, while remaining one of the top five sheep and lambskin producers, according to FAO data.

The full article can be found at www.wsj.com

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