Tanners in Australia are reported as struggling to clear inventory of cattle hides as footwear manufacturers and the automotive sector increasingly switch to non-leather alternatives.
Cattle hides are reported to be piling up at warehouses across Australia, with tanners expecting little improvement both in demand and prices in the medium term. According to local media reports, beef market analysts estimate producers are making a AU$50/head loss due to hide prices halving in the past 18 months. Lower grade hides are said to be impacted the most, while the top-end has a small margin for movement.
Hide and leather exporter, A I Topper, told local media that improving the bottom line would be a major incentive for footwear companies that source cheaper materials. According to Topper, the switch to synthetic materials such as plastics and microfibres in the footwear and automotive segments are the major reasons for the Hide prices are reported to have declined AU$1-2 a piece across the categories month-on-month, including high grade Victorian hides. Victorian hides are priced at AU$19, down almost -60% on a year ago, while Ticky Queensland hides in the same weight category are making as little as AU$8.50/hide. Some processors are said to be exploring new market possibilities such as India, away from the traditional markets of China and Italy. “As dramatic as it is, we are viewing this price slump as a cycle”, Simon Stahl, CEO, Northern Co-operative Meat Company, told local media. “We believe in the business long term. Because leather is such a sustainable and high-quality product, it will be back in high demand. Having said, we are watching costs closely and working with customers internationally to ensure that the quality is there”, he added. So far, the Company says it has been able to clear all inventory but some have been sold under the cost of production.
From Queensland Country Life