Market Intelligence: advantage China
Leatherbiz Market Intelligence, our exclusive fortnightly industry newsletter, is back with another close-up look at the inner workings of the leather supply chain.
In the April 13 edition, the newsletter gives a clear explanation of the differences tanners in China are experiencing at the moment compared to their European counterparts.
A high demand for upholstery leather in 2020 coincided with Chinese tanners being able to return to work following covid-19 restrictions. These restrictions took longer to lift in Europe.
This coincided with what the report calls “a once-in-a-lifetime opportunity of buying raw material at record low prices” and tanners in China took full advantage. They are used to longer lead times and to holding higher levels of raw material stock and the situation has worked out well for them.
European tanners, in contrast, the report says, are used to lower inventories, more regular replenishment programmes and faster turnaround times. This has meant that a recent sharp rebound in hide prices is hurting them hard. Their preference for using European hides is also a factor: Market Intelligence has said the prices of many European hides has doubled, and in some cases even tripled, in a short period of time.
“It is not difficult to come to the conclusion that many tanners in China are sitting on a very comfortable average raw material price with still quite a number of hides on their way and under contract at reasonable price levels,” the report says.
