US Perspective—09.10.18
09/10/2018
Much of the conversation with tanners in China continues to remain focused on the trade war with the US and the fact it costs 5% more to import US hides into China. We have heard from reliable sources that the Chinese government has sent out questionnaires to tanners, inquiring as to the percentage of US hides they use, while also inquiring about suitable alternative sources. This is increasing speculation that we will see tariffs increase at the start of next year.
Members of the trade who attended the recent shows in Shanghai and Milan have reconfirmed that high-end luxury business continues at full steam ahead. Most automotive tanners also continue to enjoy decent orders. However, it is worth noting that automotive tanners in China are utilising less material from the US and increasing their use of material from South America.
Business for furniture tanners does not appear nearly as robust as in the first half of 2018. Orders for many tanners have decreased substantially and we are also hearing reports that a number of tanners are facing stricter pollution control issues, as well as dealing with tariffs on furniture of 25% tariff.
In the largest segment of the market (the shoe trade) tanners are struggling to secure as much business as a year ago. Several tanners continue to complain about losing business to synthetics (which many believe is a direct result of $100 plus hides a couple of years ago). In the meantime, orders for many handbag tanners are also running below levels of a year ago with no appreciable signs of improving.
Reports from the cowhide trade claim offer lists did not reflect much of a change from the week prior. Producers had a difficult time concluding business this week and the consensus of most pundits is that it is highly unlikely that we saw producers clear their production.
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