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Understanding the Rise in Hide Prices: Causes, Trends, and Future Insights

The rising prices of hides can be attributed to the fundamental principles of supply and demand, where increased demand has outpaced supply in the automotive sector. With market fluctuations driven by factors such as the cattle population and increased leather usage in vehicles, understanding this "perfect storm" of economic conditions is crucial. As vehicle production surges, particularly in markets like North America and China, and with leather's continual appeal in automotive design, industry stakeholders must remain vigilant about future trends and potential price fluctuations.

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Understanding the Rise in Hide Prices: Causes, Trends, and Future Insights

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  1. How, When, and Why Hide Prices Have Increased …and what to expect in the future Don Ohsmanwww.hidenet.com

  2. How: • Supply and Demand • Demand increased; supply did not

  3. Supply and Demand: Cattle Slaughter

  4. Supply and Demand: Cattle Population

  5. Supply and Demand: 2013 Cattle Population

  6. Between 15% and 45% of cars have leather interiors • Leather upholstery, steering wheel, gear shift knob • Approximately 50 square feet of leather per vehicle • A hide will cut about 65% utilization—a 50 sq. ft. hide will yield 33 sq. ft. • About 1.5 hides per vehicle

  7. Tanner Sourcing for Automotive Leather • United States Charts from Hidenet.com

  8. Tanner Sourcing for Automotive Leather • Germany/EU Charts from Hidenet.com

  9. Tanner Sourcing for Automotive Leather • Brazil & Argentina Charts from Hidenet.com

  10. Why and When: A Perfect Storm • Confluence of events led to record high markets

  11. Auto production still increasing for N. America and China

  12. Vehicle sales exploded in China, surpassing US market

  13. Rapid Chinese economic growth means more disposable income

  14. Leather seating, trim, steering wheels most fashionable • Even in tough economy, leather seating helps maintain resale value • Leather seating is a popular option for those who lease cars (about 20% of American consumers) • US climbing out of recession

  15. Leather Usage Breakdown

  16. Tanners for automobile leather have adapted and adjusted • Utilization of previously inferior hides • Collagen and splitting

  17. US Outstanding Sales Chart from Hidenet.com

  18. What Next? • Markets don’t move in a straight line • Raw materials in US peaking

  19. What Next?

  20. And for the future? • How long can car sales keep this pace? • How long can leather remain in fashion for autos? • Where will the Chinese economy go? • The rest of the world?

  21. How do the Biggest Players in the Global Leather & Hide markets stay ahead of their competition?www.hidenet.com

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