Influences of Hide Price Decline in Recent Years
Over the past 5 years, there has been a gradual decline in bovine hide prices in several countries around the world.
However, the 2019 decline appears far more significant, for example, an average US heavy native steer hide (brined) retailed in June 2014 for $105 USD per piece whereas in June 2019 the same hide retailed for just $33 USD per piece, measuring in at a 68.6% decrease. The same can be said for European hides, for example, an average North German bull hide (salted) retailed in June 2014 for €2.15 EUR per kilo but in 2019 the retail price per kilo reduced to just €1.25 EUR which is equivalent to a decrease of 41.9%.
This alarming rate of decline is significantly impacting on hide producers for the leather industry who are under more pressure than ever to maintain profitability. Lower quality hides have had their profit margins squeezed and, in some cases, hide producers have had to recoup missing margins through the sale of higher quality product or simply dispose of hides with little to no value. Product that is destined for the luxury market is easier to retail with bigger margins, signifying little change in demand, however, the main areas for concern surround lower quality product.
Why are hide prices dropping?
There are several factors at play, each of which has a different level of influence on the decline in hide prices around the world:
Increasing Demand for Meat
Due to continued population growth and dietary changes, we have seen an increase in the demand for meat around the world. In 1961 the per capita meat consumption was 23.09kgs however in 2013, this increased to 43.22kgs (87%), and looks set to steadily increase for the foreseeable future.
As hides are a by-product of the meat industry, this increase in meat consumption creates excess hides which flood the market and contribute towards a reduction in price.
Increasing Demand for Alternatives to Leather
At Eurofins | BLC, we have seen an upward trend in the demand for alternatives to leather for use in the manufacture of consumer products, which is largely driven by fashion and the trend towards casual athletic footwear such as ‘athleisure’. The rise in veganism and animal-free lifestyles also has an influence on the fashion and apparel sectors, with Google Trends showing a 90% increase in vegan searches for the US, UK, and Australia.
Global brands and retailers have made investments in research and development of alternatives to leather including material made from plant-based materials such as mushroom, pineapple, leaves, cork, etc. Although many of these are not yet commercially available, the trend is present.
Economic Influences on Global Export
There are a number of economic and political factors which have influenced hide prices around the world. Tariffs have generally caused declines in imports of hides to China and the ongoing trade war between the US leaves much uncertainty around the future of imports, although there has been a delay in applying the higher tiers of US tariffs on imported goods. The political uncertainty surrounding Brexit also appears to be impacting on hide prices with the UK experiencing one of the most significant declines in recent years.
Emerging Future Trends: Are there any signs of growth?
While the tariff war between the US and China may be showing signs of stagnating, there have been reports of a slight increase in the number of US hides imported to China in recent months. Could this be a sign that the two superpowers can work things out with a positive benefit for both economies?
Despite a general global consensus of a sluggish and diminishing market for hides, in May 2019, Brazil announced a 5.6% increase in exports, even though this powerhouse for hide and leather production was still affected by an uncertain global market. It may be too early to gauge however could Brazil’s fortunes be on the rise?
Countries in Scandinavia, Africa, and the Middle East did report some market stability however this varies across the types of hides and skins.
Plan Your Purchasing: Access the Latest Hide Report as a Member
Eurofins | BLC Members can access monthly hide prices information which provides current and historical data on changes in hide prices and market movements. If you source hides from the UK, France, Germany, Italy, United States, and Brazil then this easy-to-digest report is worth a read.
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19 August 2019