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With hide prices at record levels and with some tanneries now trying to operate with little or even no stock what will happen in the raw material market over the coming months?
COTANCE is commenting that Europe remains one of the few places with unrestricted access to raw material while other countries such as Indonesia are considering how to protect their market and raw materials. There is clearly a difference of macro-economic opinion on how to manage the key issue in the tannery – where will the raw material come from? The debate between free access and market protection is a long running sore in our industry.
The scramble for raw materials will grow and with it will comes the opportunity for unsavoury activities. Split prices are soaring to uncompetitive regions and long-term agreements are being reneged upon to increase the selling price. In other areas export restrictions are being flaunted, eg bans on exports of raw material are being circumnavigated by the labelling of containers of raw material (banned) as wet-blue (allowed). Probably a generous donation to the port authorities and some incorrect statements will ensure that the material heads on its way to one of the large leather producing areas hungry for raw materials.
Many tanners are held to prices on delivery of leather for long periods, instability in the raw material prices and availability are both major headaches in trying to match supply with delivery. The current situation in both pricing and availability – mixed with some dubious activities are going to mean tough times for raw material sourcing during the early part of 2014.
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