What started out as a small problem just prior to the Hong Kong Fair has escalated into a serious problem for hide sellers. Allied to this is the situation with the Chinese banks where L/Cs (letters of credit) have been slow to be opened, if indeed opened at all.

In some quarters there is a belief that the current crackdown by the Chinese authorities on black market money lending and alleged bank support for moving black market money out of China is having a detrimental effect on the Chinese tanning industry.

Since the Hong Kong Fair in early April agents have been putting on a brave face as they reassure sellers that all is well in China and the flow of hides into the tanning regions will soon recommence. At the end of July this simply has not happened. As a consequence, large numbers of hides previously bound for China from the US and elsewhere have been redirected to Europe.

Market conditions have subsequently kicked into place and hide prices have fallen as a result.

Meanwhile, in the UK and Ireland a separate hide war that has been operating for more than a year has run out of steam. Some of the UK tanners are of the opinion that lambskin processors that have had a very profitable run have diverted some of these profits to put pressure on their hide market competitors in an effort to put them under serious financial pressure. This has made life very difficult for tanners and hide markets alike. However, a relatively mild winter worldwide has resulted in much lower sales of lambskin products, causing a glut in stocks of raw and processed stocks in China. As a result, lambskin business has become very difficult and the profits in this sector have evaporated. As a consequence, lambskin salters can no longer support inflated hide market raw prices.

Furthermore, we are now in the height of the holiday season and little to nothing is being shipped and stocks are building up rapidly all around the country.

Despite all this negativity there is a market in operation, albeit at lower levels. Leather is still in demand and this is evidenced in the decline in raw prices, primarily in Ireland and to a lesser extent in the UK.