Leather Related News Flash for the week (July 22 to 28, 2013)

Part I: General News
COMESA/LLPI Experts  Team Technical Advisory  Mission to Zambia and Zimbabwe
COMESA/LLPI Experts team composed of Mr. Nicholas Mudungwe, Cluster Expert, and Dr Mekonnen Hailemariam, Leather Value Chain Expert, conducted a one week technical advisory mission to Zambia and Zimbabwe.

 The mission is part of the Institute’s an ongoing activity to support SMEs in the leather sector, in COMESA Member States to improve their productivity, competitiveness and intra-regional market linkages.   It was, thus, a follow up mission to the Cluster Excellence management training workshop, which was held in Siyavonga, Zambia in May 2013.

The Mission accomplished its expected outcomes, as an agreement was reached with the two governments on the following issues:

1. Designing collaboration of work plans through a participatory process;
2. Hosting of machines, which are in the process of being procured;
3. The need to unlock other sources of finance, such as NGOs and funds allocated by Government of SMES development;
4. Identification and acquisition of premises to host the clusters.

To this end official letters, outlining the agreed positions will be send to the PS and Directors of the respective Ministries and organizations, which were met during the mission.

WORLD SHOE PRODUCTION
A new report by IBISWorld says global footwear production advanced by an average of 4.2% in the period 2008-2013 to reach a value of 113.6 billion USD. During this period the US and Europe lost some of their importance but emerging countries put the total up.

For the coming five years the figures should improve since the economies of the US and Europe are expected to come out of their recessions while the emerging countries will grow further.

The biggest footwear companies in the world today are all in Asia:

• Yue Yuen International Holdings Ltd.
• Belle International Holdings Ltd.
• Li Ning Company Ltd.
• FengTay Enterprises.

Regional Cluster Management Excellency Workshop Helped to Strengthen Intra-Regional Market Linkage

The Siyavonga, Zambia, Regional Cluster Management Excellency Workshop (held from 27 – 29 May 2013) allowed the Ethio International Footwear Cluster to effect; its first of its kind export consignment to Kenya footwear worth of USD 90,000.00. Kenyan importers have concluded contracts with their Ethiopian counterparts to strengthen market linkages. We look forward such businesslinkages to be extended to other COMESA countries.

The Brazilian Hides Exports Reaches a Surplus of US$ 1,180 billion from January to June 2013

 The performance of the Brazilian leather sector during the first six months of 2013 resulted in a surplus of US$ 1.180.611.592. The numbers indicate that the Brazilian leather exports was determinant to prevent a more negative result in the national trade balance from January to June this year (US$ 3 bi deficit).

 Considering only June 2013, sales to the external market reached US$ 197.891 million, a high of 9.4% in relation to the same period last year, according to presented data by the Foreign Trade Secretariat  (Secex), with analysis of the Centre for the Brazilian Tanning Industries (CICB).
 Considering the current scenario, the president executive of the CICB, José Fernando Bello, evaluates that along the coming months the leather industry has to act with caution. According to him, it has to be considered, the continuing problems in the global economic sphere, such as the issues faced by the euro zone, and the growing concern with the slowdown of the Chinese economy, among other difficulties for the expansion of international trade.

 The main destination of Brazilian hides between January to June 2013 were: China / Hong Kong with 35.0 %, Italy with 23.1 %, and the United States with 10.1% (monetary participation).

 A matter relating to the Brazilian exclusion in the European Union Generalized Scheme of Preferences (SGP) planned to January of next year is also a concern. "This implies in the increase of rates on Brazilian exports of hides to Europe in the order of 3,5 %, consequently risking the leather exports to the EU", Bello adds. Currently about 35% of Brazilian hide exports are destined to the European continent. The executive emphasizes that CICB is articulating bilateral agreements to lessen this issue.
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Double Digit Raw Material Price Increase Created Critical Situation for European Tanners

The Confederation of National Associations of Tanners and Dressers of the European Community (COTANCE) annual meeting’s (held in Venice on 21, June 2013) main part of the discussions was the availability and prices of raw hides and skins. It was indicated that the European tanners, notably the SMEs in the sector have experienced double digit raw material price increases over the last few years while leather prices have remained well below those. The situation was qualified as critical and the European tanners said to have no alternative than to transferring the price increases of hides and skins to their leather prices.

Certain hide or skin categories, notably those required by the European and global high end industries in the luxury, fashion and automotive sectors, are even hard to find and fiercely disputed driving prices to levels that have become unsustainable.

COTANCE delegates call for more incisive political will of national and European trade authorities for understanding the current momentum, and for more political vision for designing a roadmap for Europes Leather industry sustainable development.

The market for Kenyan wet salted cow hides said good

There is good demand for Kenyan wet salted cow hides. Because of the 80% Export duty, the asking price for Kenyan wet salted hides must now be 1.70 USD/kg. Surprisingly, this price is accepted in the market. The demand for Wetblue hides is also getting stronger.
While the market for goat skins remains strong, the market for sheep skins fell back again.

Part II: Some Indicative Prices of Leather and Leather Products  

Source: Compiled from Sauer Report and other sources
Abbreviations
a/b/c; Private quality indication by supplier; 'a' is not necessarily 1st grade, etc
Av: Average
c: cash payment
cif: Cost, Insurance & Freight
fob: Free On Board
off: Offered
ori: Price payable to supplier in country of origin of the goods
pce:Piece
sqft: Square Feet
t: Price Payable to Traders outside the country of origin of the goods