Bags / Shoes & Accessories

Sources in the raw hide trade told the Beef Central reporter:

The market fell to its lowest point last year when the coronavirus epidemic was at its worst. It will begin to recover from the trough later in 2020, and it will pick up faster this year. Currently, the market price is three to four times the lowest point last year.

The price surge started around the Spring Festival in February this year and lasted until May. There was a brief adjustment a few weeks ago.

Just a month or two ago, the demand from China became "quite huge", but then it was attributed to reason. The reasons are as follows:

Many factors seem to be at play, the most important of which is that the global economy has begun to recover after the new crown pneumonia epidemic.

As Beef Central reported earlier, the value of cowhide has continued to decline in the past 7 years, and the outbreak of the new crown epidemic last year brought the market to a new low.

Leather traders say:

Last year, the price of some cow hides in Australia fell to US$8 to US$10 each. Low-grade cowhide is sent to landfills instead of being sold on the market. Some beef processing companies lose money to pay the freight for salted cowhide, just to dispose of them. Despite this, prices are still falling, and by the outbreak of the new crown last year, the situation has become even worse. During the 2020 epidemic, many Chinese and European tanneries and leather product manufacturers were forced to close.

Due to the new crown pneumonia epidemic, the governments of many countries in the world have adopted economic stimulus measures, which have had a significant impact on the growth of the leather market. Governments around the world are encouraging the addition of new production capacity and stimulating consumption. Part of it is directly used to purchase leather furniture, new cars with leather seats, bags and wallets, and other leather products.

Especially when large-scale vaccination started, the confidence of mass consumers in many countries has also been generally restored.

Since the price of raw leather fell to its lowest point last year, the market has "doubled and doubled again". After years of being almost "worthless", cowhide has once again become a valuable product in the slaughter industry.

According to our trade source:

"When China made stronger buying orders in February/March, its trading volume was unexpected and the price quickly doubled."

The price of Australian cowhide this week is between 1.10 and 1.25 US dollars per kilogram, and 40 kilograms of cowhide is worth more than 40 US dollars. Last year, the same weight of cowhide was only a dozen dollars. The lighter weight of 24 kilograms of cowhide is priced at about US$27 this week, but it is still much higher than a few months ago.

The price of Queensland steers this week is about 90 cents per kilogram, and the average weight is about US$30-32. This week, the price of cowhide in Queensland is between 22-23 US dollars.

The price of a blockbuster steer in Texas, USA is $50, the highest price in many years. Its lowest price has fallen to $16.

The average price of heavy-weight steers in Texas in the past 10 years has been around US$70. In 2014, its price reached a historical peak of US$128. The current market price is far from the historical high.

In March, April and May this year, cowhide prices rose too fast, and Chinese buyers (accounting for 90% of the Australian cowhide market) tried to stop the price increase. The quotations in mid-May were 2-5 dollars lower than before.

Due to rising market prices, Chinese buyers stopped trading last month, but suppliers were not so worried and did not accept lower offers.

Since May, transactions have been deadlocked and sales have slowed. Although some suppliers have accepted lower prices, due to the lower slaughter rates in South America, Australia and Europe, the deadlock between buyers and sellers is beneficial to suppliers. In this case, some buyers have returned to the market in recent weeks, and their purchases have been paid slightly higher.

Another explanation for Chinese buyers' attempts to lower prices in the cowhide market is that due to the inability to obtain enough chips for cars, a significant bottleneck has appeared in global car production, overall car production has slowed down, and demand for car leather has decreased.

The price of leather is unlikely to return to the level of the past few decades, but if the price of leather this year exceeds the affordability of leather product designers and final manufacturers, they will once again give up the use of leather materials to design products. Especially in the shoe industry, due to the high degree of automation of shoe material ‘cutting’ production, it is more efficient to cut synthetic leather materials with uniform shapes than irregular-shaped cowhides.