United States

The present higher prices do not result in lots of business but we do note that for the best types, Heavy Native Steers and Butt Branded Steers, better prices could again be realized. These hides are most probably for the car leather industry and this shows again that the limits in that sector have not yet been reached. The huge sales figure for China as reported by USDA yesterday could be a factor convincing producers they can still increase their asking prices. Cow hide prices are still stable at best. The cow kill is still below 100,000 weekly but a couple of thousand more every week since 2 August. The prices of the major hide types in the male and female sections growing further apart reminds us of our theory of some years ago when we stated there will be a shortage of hides in the best qualities, that for these types there were basically no alternatives and that thus prices could go sky high. All the other hide types for which there are different alternatives and even non leather alternatives would lead to much lower maximum prices.

China

Car sales in China are slowing down (following the economy) and the total for this year which was predicted in January has been downgraded to 23.8 million cars. Please note sales are still going up but the growth is not as fast anymore as earlier in the year.

UK/Ireland

Confusion all over the place. Some exporters increased their asking prices at the Lineapelle in Milan by up to 0.15 per kilo while others still bought this week without such increase (a few cents/pence only) and wonder on which the strong increases are based. Abattoir prices remain basically unchanged at about 55 GBP in the UK and 58-60 EUR in Ireland.

Car sales

The BMW Group (BMW, Mini, Rolls Royce) reports record high salesof 1.3 million vehicles for the January/August 2014 period. This is up 6.7% up from last year. Let us say about 5% more hides needed.

Brazil

At a very important furniture fair this week in Shanghai where a good number of leather sellers were present, it showed that the big bulk furniture makers in China will select lower qualities of Brazilian leather if necessary to avoid higher leather prices. It proves this is a typical price article where the product will be adapted to the price, not the other way around. For a very basis Madras type printed leather the price is 1.75-2.00 USD/sqft fully finished.

Russian sanctions

Till today wet-blue hides and some crust keep arriving in Italy from Russia and from Ukraine. This is not surprising since the Russian announcement to stop exports would only become effective on 1st October. Wait and see if it will happen (or if another routing can be found if necessary). The import ban on footwear from the European Union (unknown if confirmed or not) will cause problems of course but tanners in Italy are not yet worried about possible effects on the raw hide market. It seems some exports have already been arranged via third countries to circumvent an import ban. It is believed the political measure is also meant to boost domestic Russian production and consumption. But quality and fashion are not yet keywords in the Russian industry and the Italians believe that for the high end of footwear and accessories the trade will find a way to keep the business going. The problem is there however and already showed a lack of Russian visitors at MICAM/MIPEL. We have to see if European sellers of footwear and accessories will attend the important OBUV MIR KOSI leather and shoe fair in Moscow end this month (30 September- 3 October).

Mexico

After BMW, Nissan, Daimler and KIA now also Toyota announced it will build a plant in Mexico. A lot of car leather will be needed there! At the recent SAPICA fair in Leon less players attended than last year. According to the Chamber of Footwear Industry this was due to the problems in the shoe industry caused by cheap imports from Asia. However these problems are being dealt with by the government through a number of measures among which a 25-30% import tax on footwear. The new laws and regulations have already been signed by the President (see our previous reports). The automotive and automotive leather industry continues to flourish and develop. Car production is set to grow to 4.5 million annually (see also the entry of Toyota mentioned above). The strong demand for car leather suitable hides keeps domestic hide prices firm (this is less so for lower quality hides). Also because of the higher prices in the USA. Tanners keep looking for cheaper alternatives abroad but in nr1 candidate country Brazil, prices increased also.

Lineapelle

The fair is about finished now but we have not received much news about actual business there. All participants are going home now and we will hear more next week. Those who came from China before going to Milan will be happy with a weekend rest at home. And then again a number will travel to Paris next week for the Cuir A Paris fair there. What a month! The good news about the fair as a fair did not change and is 100% positive. The complaints about the dates however did not change either. And it seems there will be pressure from the industry to to do something about it. It is not hard to imagine that 3 fairs in one month is just too complicated, too time consuming and too expensive for most company budgets. Add the closeness to the MICAM and MIPEL and there sure is something for the organizers to think about. And a new and again positive remark was made about the visitors. Higher quality, they came for business not for window shopping! Of the latter there were always plenty in Bologna. Many raw material sellers increased their prices for this fair. And some increased them a lot. Many people wonder why. Business was not great at the Shanghai fair to justify it. Maybe it was because the Americans did so. Maybe it was just the classic move as for most leather fairs but this office has no proof that it worked. As a matter of fact we heard of very little business done and where so, not at higher prices. But of course we dont hear everything so who knows. Nice grain hides remain in good demand in Italy and there is work plenty in that sector. But paying more is something else. Big calfskin contracts with 3 major Italian tanners were made this summer at a price of 7 EUR per kilo for September, October and November deliveries. Splits for China (gloves) dont sell. The Chinese say they still have plenty stocks. Good quality drop splits find some demand in the car industry but prices are still said to be too high.