The latest issue of Leatherbiz Market Intelligence went live on the site on September 14.

In this issue of the fortnightly newsletter, there is in-depth analysis not just of the delicate balance between supply and demand in the leather value chain, but also of the stark differences that exist in the raw material markets in the US and in Europe.

It suggests that, after a period of stability, raw material prices gradually became “disconnected from reality” in the first quarter of this year. This was accompanied by sharply rising prices for transport and increasing production costs.

Slaughter levels and exports have remained high in the US, the report says. Packers, traders and wet blue tanners have had a plentiful supply of hides and have shipped them to China, Vietnam, Italy and other overseas markets at rates that are 60% above last year’s.

Meanwhile, in Europe the situation has been completely different, with low slaughter rates and weaker demand for meat, meaning little build-up of raw material inventory, even during tannery closures for the summer holiday. This has meant little pressure on hide suppliers to lower their prices, with European hides remaining unattractively expensive in the eyes of Asian buyers.

“A price delta has now developed between the markets,” Leatherbiz Market Intelligence says, “which will have to be closed sooner or later.”