Thursday, February 25, 2021

Corona prices drop 50% in leather and exports

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Mahran: Natural leather is cheaper than synthetic, and a foot is 12-25 pounds

Prices of raw materials and leather exports have declined sharply during 2020, and the decline continues until now due to “Corona”, as the pandemic has negatively affected global trade, especially the activity of natural leather and its products; This created an abundance of crude in the local market, and thus there was a noticeable decline in prices, reaching 50%.

Abdel-Rahman Al-Gabas, a member of the board of directors of the Leather Tanning Chamber of the Federation of Egyptian Industries, said that years before the Corona pandemic, the sector’s exports accounted for 80% of production, referring to the reasons for the weak local demand for natural leather, because commercial stores rely on imported products at rates of up to 80 %.

He added that the market continued in this way, until the trade war between the United States of America and China began, when China refrained from purchasing American leather, which created an abundance of supply in the global market, which negatively affected Egyptian leather exports, until the leather price reached its lowest level. .

Al-Jabbas continued: “When the world was swept by the Corona crisis, the global trade movement was negatively affected, and the consumer culture of individuals changed as a result of the economic changes imposed by the pandemic, there was a severe contraction in demand in general, and exports decreased to a level of 30%, which created a crisis for manufacturers.

He explained that the decline in exports had a negative impact on the liquidity of the manufacturers, since after the tanning of leather and the completion of its production stages, production accumulated in the warehouses.

Also, the presence of imports of smuggled leather goods in the markets had a negative impact on the whole system, as the shops were reluctant to offer local products and were content with imports due to their high profit margin, and accordingly the industry did not benefit from the abundance of raw leather at reasonable prices in the local market.

El-Gabas: The pandemic has changed the culture of consumerism and has crowded warehouse production

Al-Gabas pointed out that the prices of natural leather in its raw state have greatly decreased, but the cost of preparing it for industrial consumption is still expensive due to the high prices of chemicals used in the tanning process, as it is imported and difficult to manufacture locally due to the weak demand in the Egyptian market compared to demand in other countries, including Italy. And the United States of America.

Mohamed Mahran, head of the tanneries division of the Cairo Chamber of Commerce, said that natural leather is currently cheaper than artificial leather, given that the export movement has declined sharply during the year 2020 affected by the global Corona pandemic.

He added that the raw material required for the manufacture of leather products is stacked in the markets, given that most of the production is pumped into the local market instead of exporting, which is an opportunity that manufacturers should seize.

Mahran explained that leather prices currently range between 12-25 pounds per foot, compared to 50 pounds per foot before the Corona pandemic, stressing that the quality is the same despite the difference in price.

Ahmed Faris, Chairman of the Board of Directors of the Al-Fursan Tanning, said that local leather suffers from a decline in domestic demand as well as export, as the random importation of shoes and the import of “Fondi” shoes from China makes the local leather not benefit from the volume of real demand in the market.

He added to “Al-Borsa” that the sector suffers from flooding the market with imported products, saying: “The imported fondant and the kuchi specifically, they pull the rug from the tanneries to supply the leather to the market.”

Fares explained that the local market is currently the only outlet for the sector, and it is also almost stalled in light of the invasion of the imported product into the market at the expense of the local industry.

He pointed out that synthetic leather is currently included in lower customs duties, because it falls under the item “production inputs”. In contrast, there are local natural hides at low prices that have become close to industrial.

He continued: “There is a decline in domestic demand, as well as difficulty in collecting receivables, and the current trend towards relying more on credit sales is causing the liquidity deficit for the tanneries.”

The article “Corona”, crude “leather” prices fall by 50% … and the contraction of exports was written in the Al-Borsa newspaper.

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Corona prices drop 50% in leather and exports