Latin American tanner says industry is facing a perfect storm
04/04/2011
Director of PMP in Mexico, Carlo Magno Oropeza, told news agency AFP at the Hong Kong event that the industry was facing a severe increase in the price of raw materials, which he said was the result of a downturn in profits in the meat industry in the last ten years, and a corresponding decline in production and, as a direct result, of hides becoming scarcer.
It was Gerry Lievendag, president of Argentinean group Surpiel, who used the “perfect storm” phrase in comments he gave to AFP at the event. He went on to say: “The kill is down everywhere. In Argentina, we’ve gone from a kill of 14 million head of cattle a year to barely 10 million.” He drew parallels with Brazil, which he said had gone from 46 million head of cattle in 2007 to a likely total this year of 38 million.
Another Argentinean business leader, Gabriel Barmaimón of the Arlei tanning company, agreed and said the numbers in Australia and the US are also down. And as a result, hide prices have risen from around $28 at the end of March 2009 to $87 two years later.
Meanwhile, demand for finished leather has been increasing, especially in the world’s fastest developing economies. “This leaves us between a rock and a hard place,” said Carlos Salazar, finance director of Colombian company Americana de Curtidos, “because passing on increases in price quickly enough to our customers is very difficult.” Jorge Bejarano, chief executive of J.P. Leather in Panama, commented that his information is that these price increases are likely to continue, at least over the next quarter.
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