How many times has a hide salesman visited a tanner in China, or any other of the world’s tanning centers, where the buyer/owner says their business is good and they want more hides?  Conversely the owner will typically lament that his business is poor and hides are too expensive and the quality is not good enough. Similar lamentations can typically be heard from the tanners’ customers as well.

Therefore, it is difficult to get an honest feel of how the tanning business is in China. Sales agents visit and speak with their customers all the time, and always hear the same thing that they relay back to those they represent. So with this caveat, we must say that after canvassing our sources in China this week, nearly everything we heard was discouraging about most tanners’ business.

The only positive news we obtained was that the furniture upholstery business was ok (exemplified by the firmness in the branded cow market) and that business for those tanners who sell leather to the world’s major brands is satisfactory as well, albeit still between seasons. However, more prevalent are reports that the domestic Chinese leather and footwear business is “dead” in the terms of one observer, and the women’s handbag business both domestically and for export is slow. Automotive sales in China are slowing (as they are in the U.S.) and therefore tanners who cater to that market are buying fewer hides. There is little optimism for any near-term improvement.

We hear stories from raw hide and wet blue importers that their customers are full of lower grade hide and blue inventory, and of course the split business remains in the doldrums after a little pick up earlier in the year. One person we spoke with said that tanners, in general, have little incentive to buy due to adequate inventory, poorer cash flow and most importantly, not enough leather orders to operate at previous levels.

So do we think that hide prices are about to fall out of bed and sink to new lows?  No. Even as weekly export volume — with a brief exception  — has been below production so far this year, the U.S. is still selling sizable numbers of hides each week to China, Korea, and elsewhere.  Retail footwear sales in North America are decent, as is the economy, and lower leather prices typically increase brand demand to add some leather “sizzle” in their new product lines.

Therefore, we think while we will see some price declines ahead, the leather business should seasonally pick up as summer gets closer to fall, and with it, better hide demand and prices.

More expert analysis and accurate market reports about the leather and hide industry? Visit Hidenet on Total Shoe Concept here, or visit their website: http://hidenet.com/

*Photo by Annie Spratt on Unsplash