Barring unforeseen circumstances, genuine and synthetic leather processors, and finished goods makers have no plans to raise prices in the months ahead.
After climbing 10 percent in October 2010, leather costs in China stabilized in March 2011. The rise in quotes last year, coupled with increases in other manufacturing inputs, led makers of finished leather goods such as shoes, apparel, bags, accessories and furniture to raise export prices 10 to 20 percent during the latter half of 2010.
But quotes are likely to remain at the same level for the rest of the year due mainly to an oversupply of the processed material.
Suppliers of finished goods have no intention of increasing export quotes this year as well. But wary of any sudden developments that may affect manufacturing costs, many of them now prefer to accept short-term orders so price adjustments will be faster and easier.
The cost of synthetic and genuine leather, for instance, may climb back up should the tumultuous situation in the Middle East intensify and pull up crude oil prices.
Current genuine leather prices are 5 percent higher than they were in Q4 2010. Grade A cowhide presently costs $4 per square foot, while grade B versions are $0.23 to $0.30 less expensive. Grades A and B pigskin are $3 and $2.90 per square foot, respectively.
PU leather with a 0.7mm-thick nonwoven base and a 1.45m width was priced at $1.27 to $1.46 per meter in October 2010. Quotes rose to $1.55 per meter by year-end before dropping to $1.39 per meter in March. These prices include the 17 percent VAT, of which 13 percent is refunded to makers.
PU leather is generally 100 percent more expensive than PVC versions. But there are some types of PU that may cost up to 300 times higher, including those that require special finishes and treatments.
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