28 January, 2022 - 30 January, 2022
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08 February, 2022 - 10 February, 2022
21 February, 2022 - 24 February, 2022
22 February, 2022 - 24 February, 2022
There is a decreasing direct correlation between abattoir prices and finished leather prices. Today, there are too many variables and many unexpected things that can happen in the leather supply chain.
I give an example of a small skin trader that I am in contact with. Many traders like him have come to the conclusion that the many newcomers in leather supply chain, such as leather product makers who want to run their own tanneries instead of working with third parties and the greater involvement of OEM/tier-1 automotive companies and luxury brands that demand very specific quality and finishing demands now ask for long term contracts to secure supply. This makes it more difficult to calculate overall market trends and gauge the true value of raw materials.
The small skin trader mentioned above recently told me that in his opinion the brands look too much at the abattoir prices but not closely enough at the quality of the skins or hides they buy. With ever more stringent quality demands, the number of skins or hides in an originally satisfactory raw parcel, but no longer acceptable once processed into finished leather, is rapidly growing. And this causes big problems in terms of physical storage and, above all, financial down grading.
In short, there has never been more rejected leather at the lower grades than we see today. What should we do about this problem? A lack of experience by the new generation of buyers is often mentioned as a cause.
As an example, the trader in question mentions his own lambskins where he says the problem is not the price of the raw skins but far more the number of top quality skins you have left after processing and grading. Finished lambskin leather buyers must forget about the price paid at the abattoirs and at auctions. The job required between the abattoir and the finished leather is to achieve the top quality they want. However, this job is enormous and treacherous and the amount of rejected skins in the end of the process can be shocking. Some 20+ years ago entrefino lambs were pure bred and in the right season it was possible to get 60% or more top quality grades out of every parcel. During the wrong season that number could fall down to 20% and the abattoir price moved accordingly. Over the past twenty years however, for several reasons, i.e. cross breeding to produce more milk for cheese, not disinfecting the stables as before, giving poor food because of the price, pulling skins the wrong way at the abattoirs, we are now only getting 20-25% top quality lambskins at the best of times.
Five years ago top quality French 12-18kg hides were worth between €40-60 per piece salted. Since then they have gone up as much as €130 per piece at the abattoir but the quality yield always remained the same at about 25% of really top quality. What do you do with the other 75% of these very expensive skins? It is clear that the price of the finished leather not only depends on the raw material price and the cost of tanning but also on the devaluation of the rejected skins.
This latter figure has become more important because of the increasingly complicated demands of the final users, the finished product makers. When the real value of the finished leather is correctly calculated, the industry will realise that many abattoir quoted prices are too high when looking at the returns they get.
This is a subject up for discussion, your opinion is most welcome.