Cuir A Paris
Today is the opening of the Paris leather fair Le Cuir. It could be a difficult start because of the Air France strike. We already hear of people who cancelled their visit. Let us hope there will not be too many who are forced to do so. First echo from the fair received late this afternoon: Paris fair quieter than last year but still busy enough. Some who went to Milan are not here. Quality of the visitors and exhibitors remains high.
Prices for Texas steers and heifers kept rising while many other steer selections and all cow hides remain unchanged. It is estimated that the higher prices are paid by a rather small percentage when compared to many more other tanners who are reportedly not buying at all at todays record high prices. We do not know about the direct business between big packers and their regular big customers. However, it is hard to know the truth. This story about only a few paying the high prices becomes rather shaky when looking at the sales volume to China of just 2 weeks ago as reported by USDA! Better to just deal with the facts and accept that these are the prices. Anyway, nobody is offering at lower prices. Clear is also that the higher prices combined with the stronger US dollar do not look very attractive to European buyers who have to sell their leather in Euros. But Asia is the main market and less interest from Europe is unlikely to change the market. A first kill estimate for this week at 592,000 still remains below the 600,000 and historically should start its seasonal descend now. A major reason for hide sellers to keep prices high.
New abattoir prices are still under discussion and thus prices remain unchanged till this matter is clear. At the same time the kill is good and increasing as is normal this time of the year.
Hide prices are a bit of a mess in both the UK and in Ireland. Important is the destination. Hides for Italy need to be good and exactly as contracted. No jokes with the Italians. These hides cost money and the prices are usually paid accordingly. For Asia the story is different. It is a well known fact that there are possibilities in calculations with weights and franchise. Hence suppliers can have totally different prices for Asia and for Italy as the above ranges clearly show. The more since different prices for the same description can come from the same supplier. Suppliers are not necessarily or always to blame. If you don’t want to pay the price you cannot expect to get a seat on the front row they say. Still it remains confusing.
The French see the prices for the best, better and standard hides growing ever further apart. For the best there is always more demand than supply. We have been writing about this a couple of times already. The luxury good makers and the car leather industry want, need and take the best and pay the prices. All other qualities are another story. The abattoirs/meat packers continue to say that what Mr A can pay Mr B must pay as well and it is right there that the problem starts. Because Mr B cannot. This is not a French problem but a European and maybe even becoming a global problem. But many of the best hides and skins come from France and it is here that the confrontation with this phenomenon is probably most visible. For this reason we cannot change the prices in this report since they are all based on the same abattoir price and calculation (same counts for Germany and some other European countries). But we must keep in mind that they may be (or even stronger, they can be) acceptable for certain buyers while out of the question for others. It is the task of the traders to sort out this problem. The very best hides and skins may even bring a premium. But we are already mentioning standard and top quality prices for France. The ongoing Paris fair and last weeks Lineapelle are the right places to fix the right prices for European hides so let us see what will happen in Paris this week.
The CICB national raw hide index remains unchanged for week 37 after the recent increases anticipating the three major leather fairs this month. The industry organization APEX reports the tanners concluded very good business at the Shanghai fair and mentions a huge amount of business realized. All respect for APEX and their efforts but to our knowledge there have been no fantastic sales of wetblue at the raised prices. Checking again with sources tells us that there were some deals closed there, but not many and it was not as expected. It was maybe because of their being 3 fairs in the same month but anyway prices were not helping. Market prices for wet blue are around 2.05 with some new deals closed at 2.08 and 2.10 . Raw hide prices are still going up, with BRL 3.50/kg last week and now some industries are at BRL 3.60/kg, despite some deals at BRL 3.40/kg (all depending on exact origin). However, the US dollar went up and is now being traded at 2.35/BRL for October and 2.37/BRL for November, while slaughtering is almost 10% below this year average, so there is no room for any drop in prices this source reports.
Spanish hide prices are not expected to come down. There are just too many buyers for too few hides it is said. The enthusiasm on the sales to tanners side is different. There are no problems for good hides over 30 kilos which find their way into the automotive leather business. Good hides/skins under 20 kilos have the luxury handbag sector as destination. The problem is in the 20/30 kilo range where buyers are hard to find. At least buyers who pay decent prices. In this category there is nothing to be earned for traders and they are happy if they can sell them without losing money. There are lots of worries in the Spanish skin trade. Good nappa skins still find buyers in Italy but the two main customers China and Turkey are not buying double face for garments. The Chinese economy is partly to blame and the Russia/Ukraine political problems strongly reduced that market for the Turkish tanners. The recent increase in Merino prices is now called a manipulation which does not work. One lamb abattoir in Central Spain has already closed and it is said there is another one coming. Stocks are plenty everywhere. All together it does not look good. The only thing to change the situation for the better would be sudden very strong winter.
Dutch calfskin prices have dropped one Euro per kilo. This seems in line with the latest theory that only the very best calf still find buyers at a good price. And the best dont come from Holland but from France. Italian traders told us some weeks ago already that it is not the best, there is simply no demand.
Certain European sellers who feel the US dollar will rise further are not very interested to sell now. The longer they wait, they think, the more Euros they will get for the dollar the Asians are ready to pay. This may even make it difficult for European tanners to get hides at good prices for them. On the other hand and as seen before the abattoirs are usually the first to tell traders to pay more since they are getting more Euros for the dollars they receive (very bad news for European tanners). And also the Chinese are no fools and may decide to drop their dollar bids for the same reason. For the Americans who even increase their hide prices, Europe is becoming a stronger competitor these days.