Tanners wrong to want late hide price adjustments following currency turmoil
27/01/2015
The report makes it clear that the raw material business is usually very quick to reflect currency market adjustments in the price. Therefore, it says that if rumours are true and some tanners are asking to pay lower-than-agreed prices, in an effort to secure for themselves a share of the benefit they believe traders are currently gleaning, it is a short-termist approach.
According to the report, these requests to change to lower prices are now reaching European tanners especially, if rumours are true. This is because the euro has been losing value against the dollar since the summer of 2014. European traders typically buy in euro and sell in dollars and are, therefore, more able than before to quote competitive prices in dollars and still make a worthwhile margin when converting the price back to euro.
Leather Pipeline points out that asking for discounts after agreeing the price could make life difficult for these tanners in the future. By the same logic, it suggests they might expect to be asked to pay a surcharge next time the currency rates adjust again or immediately if they are buying from traders in North America.
The report says it would much prefer to see improvements in trading figures for everyone because of an increase in demand for leather, but it insists there is no sign of one.
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