Market

Raw hides prices are very dependent on the dollar exchange rate, although we mainly sell in Euros. This may seem a little odd, but the reasons for this is that a large part of both the purchase and sale of the hides is carried out in Dollars.

The largest production of leather is now outside Europe, notably in Asia, where raw hides are purchased in Dollars. In addition, both Brazilian hides, the world's largest slaughterhouse with a slaughter over 40-million animals a year, and American hides, with a slaughter of more than 35-million a year, are traded in Dollars.

The above mentioned is resulting in, that with a falling dollar exchange rate and maintaining sales quantity in dollars f.e. the U.S. hides, will our prices fall undependently whether we are selling in Euros or Dollars. When a tanner in China will buy hides from Sweden, he will compare our Swedish with the U.S. hides prices. Hence, we can normally only sell our hides in Asia, f.e. to China, when the level between our and U.S. hides are in phase with each other. Is the price difference too big however, the customer – tannery – will buy the hides from eg USA instead from us. The dollar is forming our prices in the long run.

Currently, when the global financial crisis and the problems in the automotive industry resulted in reduced demand for hides, obviously have decreased the sales prices more than usual. Lower sales prices results in lower purchase price for hides and skins delivered by slaughters. Recent dollars rise helped to some extent reduce the price drop.

One must remember, that the raw hides are very volatile. Volatile in the sense that hides in the long run are sold on the market that pays best. It plays virtually no role if we ship a load of hides to China or Italy. The price of shipping is roughly the same. So in the end or in the long term, it is the one who pays the best price that can buy the hides.

This turn of course both ways around so that tanneries will choose to purchase hides from a country or a region in which they considers to receive the best quality hides at the lowest possible price. Hides are a commodity, a special raw material commodity, as it is an exclusive material especially as for the Scandinavian hides. Tanneries, which is our customers, has their largest expenses in the purchase of hides. Somewhere between 50 and 60% of the tannery's total cost are the purchase cost of the raw hides. It is, of course, extremely important that anyone who buys the hides do not buy them too expensive.

Hides, in the most cases, are excluded from customs duties, which makes it rather uncomplicated to move raw hides  between contries and markets.