There is a feeling among suppliers from various parts of the world that the bottom of the price market for hides may have been found or is very close, writes The Sauer Report.

The volumes purchased in recent weeks by Chinese tanners would certainly follow this thought process, but there are also those that think tanners are only buying now to avoid the Winter type hides from the Northern hemisphere. Italian tanners have made the bulk of their required purchases for the year and have booked hides for delivery in January at stand on price levels.

So, on the face of it, it would appear that the assumption that the bottom on the current market is close could be true, but there are a number of factors to consider: the uncertainty over the automotive leather industry demand, and how long it will take to get back to normal production; how long the current high U.S. slaughter will continue for; and whether the furniture industry will start to return to lower levels, as is the normal pattern when we enter a New Year.

One thing that is certain about the market is the luxury leather sector, where currently some goods cannot be manufactured fast enough to meet demand, though some of the high-end brands have been able to raise their prices by alarming percentages without losing customers. Supplying this industry, calfskins have remained in high demand throughout the year, with smaller production numbers meaning demand often outstrips supply, keeping prices high.

If U.S. slaughter numbers do remain high going into the New Year, and there is every likelihood that this will be the case, then demand for leather will need to remain constant; any drop off in finished leather demand will have a detrimental outcome upon hide prices, such is the current fine balance between the U.S. hide supply and Chinese tanners’ demand.