WEEK IN REVIEW

Our General News this week tells of emissions controls by the CLIA in China and the effort by the PTA in Pakistan to set government help in exports.

Economic News has several stories about conditions in the U.S.

Footwear has several detailed stories on not only the largest firms in the US, but in China and elsewhere as well.

Upholstery this week has an interesting story about car sales along with a discouraging report on Chinese furniture manufacturers business.

Several old established brands are expanding into the leather accessories business as can be seen in our Garment & Accessory section below.

Raw Material prices are generally steady, but to the dismay of tanners, at levels that are too high. Details and prices, as usual, can be seen in this section below.

GENERAL NEWS

1,000 Chinese tanners to close within 5 yrs

According to the secretary general of China Leather Industry Association Su Chaoying, during the twelfth five-year plan around 1,000 tanneries will be forced to shut down in order to achieve a reduction of 10% of COD and ammonia nitrogen compounds emissions.

Energy saving and emission reduction are the top concerns for China's leather industry as the drafted plan of the government's twelfth five-year plan will be announced next year.

By the end of this year the Ministry of Environment Protection will reveal the list of tanneries, which comply with the environmental protection standards, while the preparatory for survey conducted by the tanning self-regulation group is under way. The aim of announcing qualified tanneries is to promote cleaner production and update the technology in terms of pollution control.

Pakistan Tanners Assn asks govt for drawbacks

The Pakistani Tanners Association (PTA) asked the government to provide 6.3 percent duty drawback on export of finished leather in order to compete India, China and Bangladesh. Chairman PTA Gulzar Firoz, talking to Daily Times on Thursday said the government should also notify upward revision of duty drawback rates on export of finished leather for goat and sheep skins and cow and buffalo hides to make it realistic.

Firoz said the downward revision of such rates under SRO 210(1)/2009 of March 5, 2009 in supersession of its notification SRO 01(1)/2008 of January 1, 2008 has hit the leather industry hard. “First assess the implementation of the previous Trade Policy announced in July 2009 and particularly the Strategic Trade Policy Framework (STPF 2009-12) for three years”, he suggested.

PTA suggests formation of a joint committee of leather and articles thereof, textile and textile articles, carpets, sports goods and surgical goods to prepare a relief package and recommend to the Commerce Ministry for some basic and common incentives, that may be given to the five sectors, particularly in view of VAT being levied after 3 months. “The incentives announced for leather sector in the STPF have not been implemented besides proposals and suggestions of PTA discussed in the 61st meeting of the advisory council of the Ministry of Commerce on June 22, 2010 at Islamabad should also be considered.

Former chairman PTA, Agha Saiddain said present zero rating policy with reference to sales tax may be continued to save export industry from serious damage and to avoid further liquidity crunch.

“If VAT is levied on raw hides and skins it will be impossible to document the VAT because the suppliers of raw hides and skins are mostly butchers, traders and commission agents who are usually, neither educated nor are they affiliated with organized sectors and even they are not registered with the sales tax department”, Agha added. Duty free import of 5 percent of the FOB export value may be allowed for import of spare parts and accessories for leather and leather products. The authority to release fund from Ministry of Finance for the Export Investment Support Fund under STPF-2009-12 for matching grant for setting-up of effluent treatment plants and setting-up of labs in individual tanneries, he maintained.

ECONOMIC NEWS

American GDP down

U.S. real gross domestic product for the first quarter was revised down to an increase of 2.7% annualized from the earlier estimate of a 3.0% rise, the Commerce Department said Friday. Economists surveyed by MarketWatch expected first-quarter growth to be unrevised at up 3.0%. The revision to first-quarter GDP was largely due to weaker consumer spending and a widening trade deficit. A key measure of inflation was revised slightly higher but remained subdued. Core prices increased 0.7% in the first quarter, up from 0.6% reported earlier. Corporate profits increased a revised 8.0% quarter-to-quarter, compared with a 5.5% rise previously estimated.

The savings rate for U.S. households rose to the highest level in eight months in May, as incomes grew faster than spending, the Commerce Department estimated Monday.

Real (inflation-adjusted) spending increased a seasonally adjusted 0.3% in May after no gain in April, led by sizable increases in purchases of durable goods and services.

Real after-tax incomes rose 0.5% in May, compared with an upwardly revised 0.6% gain in disposable incomes in April. Compared with a year ago when tax cuts boosted household incomes, real disposable incomes are off 0.2%.

In nominal terms (not adjusted for price changes), incomes rose 0.4% in May while spending increased 0.2%. Read the full report on the Bureau of Economic Analysis website.

The report was mixed in terms of market expectations. Incomes rose less than the 0.5% expected, while spending was stronger than the 0.1% gain expected by economists surveyed by MarketWatch. See our complete economic calendar.

The savings rate rose to 4% from 3.8%. Households are saving three times as much out of their disposable incomes as they did just before the recession began in late 2007.

Consumer prices were unchanged in May, as measured by the personal consumption expenditure price index. Prices are up 1.9% compared with a year ago.

Core consumer prices -- which exclude volatile food and energy prices -- rose 0.2% in May and are up 1.3% in the past year.

The report shows Americans are slowly rebuilding their finances after the worst downturn in generations. Consumer spending is growing modestly, while inflation rates are very low.

April home prices higher than March

Home prices rose 0.8% in April compared with March in 20 major U.S. cities, according to the Case-Shiller home price index released Tuesday by Standard & Poor's. This is the first increase after six straight monthly declines. Prices have moved up 3.8% in the past year. Prices rose in 18 of the 20 metropolitan areas tracked by Case-Shiller in April compared with March. The data are not seasonally adjusted.

FOOTWEAR

Adidas planned ahead for increase costs in China

Sporting goods firm Adidas Group has enough diversity in its supply chain to withstand cost increases in China, the company's boss has told just-style.

Chief executive Herbert Hainer says Adidas has limited its reliance on China to less than 40% of products sourced, so it can withstand higher production costs and currency effects.

He told just-style in an interview: "We have brought some apparel production back into Europe and our suppliers are emerging into other countries like Vietnam and Cambodia. Therefore, we try to balance the risk of rising prices and salaries within the different countries. "If the prices are rising then we have to tackle it and become more efficient."

His comments follow news last week that China would allow its currency to move more freely against the dollar. This, together with rising wage demands and a weaker Euro, is expected to hike sourcing costs for European firms like Adidas.

He added: "You have a lot of different opportunities, you can raise prices but only if the consumers are able to buy it and only if you have innovative products. "On the other hand you have to work on the efficiency in your own company and on the efficiency of your supply partners."

Hainers comments were geared more towards garments than footwear but not doubt it is applicable for their leather goods as well.

Yue Yuen results

Yue Yuen, probably the world's largest manufacturer of athletic footwear, says it expects to see a boost in its footwear manufacturing activities on the back of the World Cup tournament currently taking place in South Africa. The company, which makes shoes for brands like Nike and Adidas, said turnover has already risen 17.6% year-on-year to US$1.01bn in April and May.

The outlook came as the firm posted a 3.2% drop in first-half profit to US$210.8m as higher tax expenses offset as increase in sales. Revenue in the six months to 31 March was up 4.3% to US$2.65bn, helped by orders from its brand name footwear customers who are increasingly consolidating their sourcing needs with fewer manufacturers.

Footwear manufacturing accounted for 69.3% of total sales, with soles and components contributing 8.5%. The total volume of shoes produced rose by 4.7% year-on-year to 136.1m pairs, and the number of production lines grew by 5.2% to 445 lines by the end of March.

Yue Yuen also saw 25.4% sales growth for its Greater China wholesale and retail operations - which include 2,272 directly, operated retail stores/counters. This unit generated revenues of US$590.0m and now accounts for about 22.2% of the group's total turnover.

Looking ahead, the company said it is optimistic in its outlook for the China retail operations, citing the strength of the PRC economy and rising consumer incomes. It also intends to offset rising input costs by tactically using its production facilities spread across China, Vietnam and Indonesia. (Just-Style.com)

Finish Line sales up

The Finish Line, Inc. reported sale climbed 9.0% in its first quarter ended May 29, to $282.4 million from $259.1 million a year ago. Comps climbed 10.9% compared to a 3.9% decline for the same period a year ago. Income from continuing operations significantly improved to $13.7 million, from $1.8 million a year ago.

Consolidated merchandise inventories decreased by 18.1% to $197.8 million at the end of the quarter compared to $241.6 million a year ago. Finish Line inventory declined 15.6% overall and 12.8% on a per-square-foot basis.

As of May 29, 2010, the company had no interest-bearing debt and $248 million in cash and cash equivalents, up from $119 million at the end of the first quarter a year ago.

"We are off to a strong start this fiscal year," said Finish Line Chief Executive Officer Glenn Lyon. "We posted a solid same-store sales increase and continued to make progress on effectively managing expenses as well as improving product margin and inventory efficiency. While customer traffic continues to be inconsistent, we will remain focused on our premium position in the marketplace and invest appropriately for continued growth."

Comparable store net sales on a month-to-date basis for the period of May 30 to June 22, increased 7.0% compared to a 12.5% decline for the same period one year ago.

Nike posts sales increased

Nike Inc. reported sales grew 8% in the fourth quarter ended May 31, to $5.1 billion from $4.7 billion for the same period last year. Excluding changes in currency exchange rates, net revenues were up 4% compared to the same period last year.

For the full year, revenues declined 1% to $19.0 billion, compared to $19.2 billion last year. Excluding currency changes, net revenues were down 2% for the year. Fourth quarter net income increased 53% to $522 million and diluted earnings per share increased 51% to $1.06. Fiscal 2010 net income increased 28% to $1.9 billion and diluted earnings per share increased 27% to $3.86.

In fiscal 2009, NIKE, Inc. Incurred a $145 million after-tax restructuring charge in the fourth quarter, and third quarter results included a $241 million, after-tax non-cash charge related to the impairment of goodwill, intangible and other assets of the Company's Umbro subsidiary. Excluding these charges, fourth quarter net income and diluted earnings per share both increased 7%. For the full-year, comparable net income increased 2% and diluted earnings per share increased 1%.

"We finished strong with a great quarter and accelerating momentum across the business," said Mark Parker, President and Chief Executive Officer of NIKE, Inc. "During tough economic times our goal is to deliver solid financial performance and create competitive separation in the marketplace. We did that in 2010."

"Nike is at its best when we focus on our two core values: innovation and inspiration," Parker continued, 'Going forward you can expect to see more game-changing products, more compelling experiences wherever consumers touch our brands, and a laser focus on operational and financial excellence. These are the things that allow us to accelerate first and faster than everybody else."

Futures Orders

The Company reported worldwide futures orders for NIKE Brand athletic footwear and apparel, scheduled for delivery from June through November 2010, totaling $8.8 billion, 7% higher than orders reported for the same period last year. Excluding currency changes, orders would have increased 10%. *

By geography and in total for the NIKE Brand, futures orders were as follows:

Geography	Reported Futures Orders	Excluding Currency Changes
North America	8%	7%
Western Europe	-2%	11%
Central and Eastern Europe	-2%	3%
Greater China	19%	16%
Japan	-17%	-16%
Emerging Markets	30%	30%
Total NIKE Brand	7%	10%

Geography Highlights

North America

During the fourth quarter, revenue for North America increased 4% to $1.8 billion. Footwear revenue was up 1% to $1.2 billion, apparel revenue increased 13% to $447 million and equipment revenue was essentially flat at $90 million. Earnings before interest and taxes (EBIT) for North America improved 8% to $435 million.

North America revenue for the full fiscal year was down 1% to $6.7 billion. Footwear revenue decreased 2% to $4.6 billion, apparel revenue was flat at $1.7 billion and equipment revenue increased 1% to $346 million. North America EBIT grew 8% to $1.5 billion for the fiscal year.

Western Europe

During the fourth quarter, revenue for Western Europe increased 2% to $956 million. Footwear revenue increased 1% to $593 million, apparel revenue was up 8% to $309 million and equipment declined 12% to $54 million. EBIT for Western Europe decreased 17% to $193 million.

For the full fiscal year, revenue for Western Europe was down 6% to $3.9 billion. Footwear revenue decreased 3% to $2.3 billion, apparel revenue declined 9% to $1.3 billion and equipment revenue dropped 15% to $247 million. Compared to last year, EBIT decreased 9% to $856 million.

Central and Eastern Europe

In the fourth quarter, revenue for Central and Eastern Europe was 9% better than the same period last year at $332 million. Footwear increased 9% to $199 million, apparel revenue grew 10% to $109 million and equipment improved 2% to $25 million. EBIT for Central and Eastern Europe decreased 9% to $84 million.

Revenue for Central and Eastern Europe declined 16% for the fiscal year to $1.1 billion. Footwear revenue decreased 12% to $660 million, apparel revenue dropped 21% to $399 million and equipment revenue declined 20% to $91 million. Compared to last year, EBIT decreased 32% to $281 million.

Greater China

Fourth quarter revenue for Greater China grew 12% to $464 million. Footwear revenue increased 14% to $246 million, apparel was up 10% to $193 million and equipment improved 17% to $25 million. EBIT for Greater China increased 20% to $187 million.

For fiscal 2010 Greater China revenue was essentially flat to the prior year at $1.7 billion. Footwear revenue grew 1% to $953 million, apparel revenue declined 2% to $684 million and equipment revenue improved 1% to $105 million. Fiscal 2010 EBIT for Greater China grew 11% to $637 million.

Japan

Japan's fourth quarter revenue declined 8% to $261 million. Compared to the prior year, footwear revenue was basically flat at $129 million, apparel revenue was down 13% at $105 million and equipment revenue dropped 17% to $27 million. EBIT declined 6% in the fourth quarter to $61 million.

Fiscal 2010 revenue for Japan declined 5% to $882 million. Compared to last year, footwear revenue increased 1% while apparel and equipment revenue declined 10% and 7% respectively. EBIT for Japan was down 12% for the year at $180 million.

Emerging Markets

In the Emerging Markets, revenue was up 47% to $556 million for the fourth quarter. Footwear revenue increased 42% to $355 million, apparel revenue rose 70% to $162 million and equipment revenue increased 19% to $39 million. EBIT for the Emerging Markets in the fourth quarter improved 46% to $114 million.

Full fiscal year revenue for the Emerging Markets was up 20% to $2.0 billion. Footwear revenue was up 23% to $1.4 billion, apparel revenue increased 22% to $532 million and equipment revenue declined 3% to $154 million. EBIT for the Emerging Markets improved 44% to $493 million for the year.

Other Businesses

Revenue in the fourth quarter for Other Businesses, which includes Cole Haan, Converse Inc., Hurley International LLC, NIKE Golf, and Umbro Ltd., increased 9% to $714 million while EBIT improved 71% to $73 million.

For the full fiscal year Other Businesses revenue increased 5% to $2.5 billion. EBIT for the fiscal year was $299 million versus a loss of $193 million last year. Last year's results included a $401 million pre-tax non-cash impairment charge to reduce the carrying value of Umbro's goodwill, intangible and other assets. Excluding this charge, EBIT increased 43% compared to the same period last year. India's Euro zone debt crisis is posing harm to the domestic leather industry due to the currency fluctuation.

Rupee/Euro hurting Indian leather mfg

Industry sources said the appreciation of Rupee against Euro would bring down margins for small leather manufacturers making it difficult for them to survive.

Although the leather industry was just picking up pace, it was hit again due to the debt crisis in the Euro zone. The euro zone crisis impact would be huge as the EU is the largest importer of the products. EU accounts for nearly 62-65% of the overall leather exports from the country.

According to the provisional figures published by a leading industry organizations, overall leather exports registered a negative growth of 8.99% to $3,289.94 million from April 2009 to March 2010 compared to the corresponding period previous year. However, leather garments rose from $426.74 million to $429.85 million for the year ended March 31, 2010.

Finished leather exports witnessed a fall by 11.56% to $605.66 million during the period under review. Leather footwear declined by 6.20% to $11,63.12 million; footwear components plunged by 17.34% to $206.71 million and leather goods stood at $760.56 million, down 13.22%.

Chinese footwear mfg see gains in domestic rural mkts

As national policies intensify consumption in rural areas and competition is getting more intense in urban areas, an increasing number of Chinese footwear companies have been shifting their business focus onto the rural markets, according to the China Leather Industry Association.

While the Ministry of Commerce encourages foreign footwear companies to sell their products in the domestic market, industry experts point out that it is good way to expand the market into the countryside, stated the Association.

Products selling to overseas markets need to be superior in terms of quality, appearances and package, and much more competitive on prices than the same products sold domestically. A new focus on the domestic market can boost local footwear products to improve their quality, and thus enhance their competitiveness.

Turkish report says Chinese/Indian footwear imports up

According to a Turkey official media report on June 28, 2010, Adana, as an important economic province in Turkey, saw a sharp rising in footwear imports, whichmainly source from China and India.

Leather, textile and tobacco are the mainforeign trade sectors in Adana province, footwear exports had been greater than that of imports from 2004 to 2008, but dropped nearly three times in 2009, in contrast imports expanded significantly. India and China havereplaced Italyand become largest footwear suppliers for the province. India provided 47% of total footwear imports for Adana province, while China shared 17%.

UPHOLSTERY

Upholstery tanners saying business too quiet

In discussions with several upholstery tanners in China this pas week, they all noted that the market is still not moving, and they are waiting for some improvement in the sofa market.

Tanners/manufacturers say that while their raw material prices are easing, they prefer to wait to buy as they think/hope it willdrop down again.

US upholstery firms say floating Yuan no concern - yet

News of China's recent decision to ease its currency's peg to the U.S. dollar hasn't caused immediate concern from furniture industry executives that import finished goods from Chinese producers.

However, many industry leaders told Furniture/Today that they will continue to monitor the currency situation closely, since what happens with China's yuan will help them determine how to adjust pricing.

Should the currency strengthen against the dollar, it would make imports from China more expensive.

China's decision comes after a recent onslaught of cost increases that were already expected to send furniture prices higher this year, on expenses ranging from raw materials and container rates to rising labor costs in China.

A strengthening of the yuan would add to that pricing pressure.

"Obviously it would eventually cause us an increase in the price we pay for furniture, and there is that concern," said Phil Haney, president and CEO of case goods and upholstery resource Lexington Home Brands. He said his company already plans to implement a modest price increase in early August due to factors such as increased materials and finishing costs.

"There are definitely a lot of inflationary actions taking place at the same time right now," Haney said. Still, it's not clear how much the currency will change by year-end. Chinese officials have maintained that any change will be gradual and haven't said how much of a change they'll allow.

For that reason, Furniture today said that Haney and others aren't overly worried about a big spike in the cost of finished goods. "It's not giving us concern at this point," said Fred Henjes, president of case goods source Riverside Furniture, which imports nearly 100% of its product from China. "Right now we have a wait and see attitude."

"It's not like it will take off tomorrow," he added, referring to the yuan's value. "You might see a little effect in the upcoming months, but I don't think you will see a dramatic increase."

Jeff Young, CEO of case goods and upholstery resource Schnadig International, agreed that any increases in the value of the yuan will cause costs to rise. However, he noted that a stronger Chinese yuan would actually reduce the cost that Schnadig's Chinese parent company, Markor, pays for imported lumber and finishing materials. That factor could blunt the effect of a stronger yuan, he said.

Young added that the Chinese government's "obvious intention is to allow their currency to become more ‘flexible' over time, which means its purchasing power will vary amongst China's many trading partners depending on the strength or weakness of each country's currency. The bottom line is while we do anticipate some increase in the cost of our products going forward, we knew this was coming eventually and have been doing everything we can to offset and minimize the impact to our customers."

A strengthening of the yuan could benefit U.S. furniture exporters because that would make their goods less expensive to Chinese consumers. But here too, officials believe the effects will be minimal, especially if the change in value is between 2% and 5% over the course of 2010 as some economists predict.

"I don't think it's going to do a whole lot," said Mike Padjen, director of the North Carolina Furniture Export Office. He said a price decline of a few percentage points on popular goods in the upper-medium to higher-end price range won't affect the buying decisions of affluent Chinese consumers. "To me that's not enough to make any significant difference."

Keith Koenig, president of Fort Lauderdale, Fla.-based Top 100 store City Furniture, said he is comfortable with China's proposed currency shift.

"It is going to cause retail prices to go up, and I am not certain that is a bad thing," he said. "We have experienced so much price deflation over the years. While cars have probably tripled and everything else is up, the values we keep offering the American consumer are better and better. If prices go up for everybody, I don't know if that is the end of the world."

U.S. car sales lower in June

When it comes to car shopping, Americans are tapping the brakes. "The two big issues with consumers right now are employment growth and income growth, and they're not seeing much of either," said George Pipas, Ford Motor Co.'s top sales analyst.

Three firms that track auto sales predict automakers will report a sales decline of anywhere from 9.5 to 12 percent from May to June when they turn in their figures on Thursday. A double-digit decline would be the biggest monthly drop since January.

"People are just nervous about signing up for a three-year loan, so I think people who normally would've cycled out of a car a little sooner are deciding, 'Hey, I'll just drive this car for another year,'" said Tom Folliard, CEO of used-car dealership chain CarMax Inc.

Automakers sold 1.1 million vehicles in May, the best month so far this year. J.D. Power and Associates, Truecar.com and Edmunds.com are predicting that June sales will drop below 1 million.

At that number, sales would be well below a typical June over the past five years, which is 1.3 million, and far below the peak during that period of almost 1.7 million in 2005, according to Ward's AutoInfoBank.

If the weakness continues into summer, automakers will have to sell more to rental car companies and other fleet buyers. Otherwise, sales won't be too much better than last year's dismal 10.4 million, the lowest since 1982.

"With the recovery not progressing as expected, it's gut-check time for the automotive industry," said Jeff Schuster, executive director of global forecasting for J.D. Power.

J.D. Power expects a decline in sales to individuals. If that happens, automakers will be tempted to lower prices with big sales promotions — good for drivers but bad for the industry's bottom line.

One big change from a year ago could help automakers: They generally have kept inventories low after going through the trauma of restructuring in bankruptcy court. Recently, though, they have raised factory production.

GARMENTS & ACCESSORIES

Cavallai plans expansion

Italian fashion house Cavalli is planning to expand its accessories and menswear businesses in the next two to three years to help expansion in Asia and the US.

Company chief executive Gianluca Brozzetti said, "Our brand has traditionally focused more on womenswear and less on accessories. Our project in the next two to three years is to expand categories of products we have not developed well yet, like handbags and shoes."

He also said a stronger menswear business would yield good results for the company, whose Just Cavelli line is manufactured by Italy's Ittierre, a unit of fashion group IT Holding.

Brozzetti said the group's retail sales were growing double-digit, as in the first quarter of the year, helped by new store openings, including a fourth shop in Japan.

According to US consultancy Bain and Co., global luxury sales are expected to grow by more than 4% in 2010.

Tiffany does Wallets and other leather accessories

Luxury retailer Tiffany not only plans to open 16 new stores within the year, but also will launch a leather goods collection to expand their merchandise offerings.

The collection will be developed by designers Richard Lambertson and John Truex and will feature wallets, key holders, business card holders, and luggage tags to sell for US$100 or US$120. Tiffany’s CEO Jim Fernandez anticipates the leather goods collection will boost sales by 6-7%.

"We have to see how they sell on our major market stores, and then we can talk about further distribution around the world or through Europe," Fernandez said.

RAW MATERIAL

U.S.

Wet blue heavy native steers were offered at $82.00 c&f and wet blue heavy native cows at $$60.00, all without result

Wet blue whole hide branded splits 15/kg and up sold at $1.37 with additional quantities offered at $1.40 c&F

Australia

Despite a steep price decrease in early 2009, Australian hide prices are starting to recover as the global demand for leather has been picking up.

Wet blue hide prices were reportedly up 56% compared with May 2009 prices, while raw hide prices have risen by more than 400%, having been particularly badly impacted last year.

Figures show that cattle hide prices rose 19% to $60.8 million between January and March compared with the same period in 2009, although this is still relatively low compared with prices prior to the global economic downturn.

Hide exports fell 53% in volume during the first three months of the year to 1.9 million pieces. Adult cattle slaughter fell 6% to 1.8 million head.

Brazil

Wet blue, whole hides, machine flayed, full substance, average 48/52 ft, average 23 kg

Selection TR1 at around $ 1.25-1.30/ft CFR.

Selection TR2 at around $ 1.15/ft CFR.

In sides, we can say that prices are about these:

	substance 2.4/+ mm

selection B	$ 1.40
selection C	$ 1.20
selection D	$ 1.00
selection E	$ 0.90

The crust leather for upholstery, in substance 0.9/1.1 mm, in sizes varying from 48 to 56 ft:

$ 1.25-1.28/ft CFR for selection TR1

$ 1.15-1.18/ft CFR for selection TR2

The automotive upholstery leather, in substances 1.1/1.3 to 1.2/1.4 mm, stucco and buffed, at:

$ 1.35-1.40/ft CFR for selection TR1 (Asking price)

$ 1.25-1.30/ft CFR for selection TR2 (Asking price)

Argentina

The crust leather for automotive upholstery, in substance 1.1/1.3 to 1.2/1.4 mm, has been sold at levels like:

$ 1.35-1.45/ft CFR for material that can either be stucco and buffed for the most requiring customers, but usually sold for full grain type of leather.

And at $ 1.25-1.30/ft CFR for a medium grade, stucco and buffed.

For upholstery crust leather, we can find prices from $ 1.15 up to 1.50/ft CFR, depending on selection, grain, region, substance, etc.

For shoes, in substance 1.2/1.4 mm, natural/not dyed, prices have been:

TR1 - $ 2.20/ft CFR

TR2 - $ 1.80

TR3 - $ 1.40-1.50

LOOKING AHEAD

The squeeze between US hide prices and what tanners can sell leather for in the Far East continues. Can shoe manufacturers induce brands to increase their prices, or the brands contract shoe factories to pay more for leather to their tanneries who supply them? This may not be known for at least another 30 days.

Meanwhile, for US material, substitution remains the order of the day. Tanners who used to rely on American hides now source in Australia/New Zealand, Europe, and most importantly Brazil.

Is the hide or wet blue or crust leather the same? No, but with the chemical and machinery available, they have a chance to meet their customers specifications.

However, this is not universal and since many US brands insist on US raw material, tanners are still squeezed almost to the breaking point.

Leather Table

Shoe Upper Leather	This Week	Last Week
Full Grain aniline, cowhide 2.0 mm and down	2.45-2.50	2.45-2.50
Full Grain aniline, cowhide 2.0/2.4 mm	2.45-2.50	2.45-2.50
Full Grain aniline, cowhide 2.4 mm and up	2.45-2.50	2.45-2.50
Corrected leather, cowhide 2.0 mm and down	1.70-1.80	1.70-1.80
Corrected leather, cowhide 2.0/2.4 mm	1.70-1.80	1.70-1.80
Corrected leather, cowhide 2.4 mm and up	1.70-1.80	1.70-1.80
Upholstery Leather	This Week	Last Week
Full Grain aniline, cowhide 1.0/1.4 mm	2.80	2.80
Full Grain aniline, cowhide 1.4 mm and up	3.20	3.20
Corrected leather, cowhide 1.0/1.4 mm	2.60	2.60
Corrected leather, cowhide 1.4 mm and up	3.01	3.01
Split Leather	This Week	Last Week
Embossed, smooth 1.4/1.6 mm	.90-.95	.90-.95
Embossed haircell 1.4/1.6 mm	.90-.95	.90-.95