A LOT OF RAW MATERIAL. MINOR ADDED VALUE!

 

Hide exports during the first five months of 2006 have reached a total of 15 million units (+33%), and US$ 703,3 millions in value (+27%).

 

In spite of the exchange rate, the expressive increase in the presence of the Wet Blue hide and the drop in average exported value, the hide export presents an important performance as a generating source of foreign currency in 2006. During the first five months of the year, approximately 15 million units were exported of which 14,5 millions in bovine hide In value, the total of chap. 41 of the NCM (hides and leather - table 5) reached US$ 703,3 millions. In the productive chain it is the item with best presence in 2006.

The analysis, similarly to the previous ones, cannot, however ignore punctual approaches, because if all together the result is expressive, in detail, there are aspects that should be considered as items of reflection and positioning.

Table 1 shows the bovine hide export as a whole – 96,5% of the total – more ovine and caprine. The export growth of the Trimmed hide, the one with the highest added value, approximately 23.7% as compared to the first five months of 2005, is highly positive and reveals that a trading policy directed to this purpose would make it a predominating item in the Brazilian export. However, its positive behavior is contrasted by the extraordinary growth in export of the Wet Blue hide, of insignificant added value in the economic context - approximately 42.8% during the period. Even if this percentage is contaminated by an undue export of Crust, there is no doubt that it is harmful to conclude that the Wet Blue export is reaching the same thresholds recorded prior to the first governmental act that imposed on it the Export Tax in an attempt, that now is considered unsuccessful, to reduce its exit from the country.

COUROBUSINESS does not defend the imposition of restrictions even more drastic to the export of the Web Blue, because it understands that the availability of raw material is largely supplying the internal demand and the main alternative for the excess is the export. What COUROBUSINESS incorporates in its understanding, and gives its support to the businessmen of the segment, is the grievance, almost disappointment due to the lack of governmental policies that stimulate export of added value. When omitting itself, the government washes its hands and allows the local low value raw-material to be industrialized in Asia and in Europe, transforming it in footwear and articles that compete with our industrial production. The omission means the option for the export of raw-material, which is disappointing for a segment that has already surpassed the barrier of US$ 1,5 billion/year in export.

 

Table 1 - Leather Exporation / By Nº of Hides January to May – 2006 x 2005
Kind of leather	Jan/Mai 2006	Jan/Mai 2005	2006/2005 (%)
Salted	72.730	69.312	4,93%
Wet-Blue	8.872.720	6.213.894	42,79%
Crust	1.278.258	1.245.908	2,60%
Finished	4.267.585	3.449.908	23,70%
Sub-Total	14.491.293	10.979.022	31,99%
Soles	70.466	43.872	60,62%
Sheep	290.187	148.074	95,97%
Goats	152.287	83.640	82,07%
Total Geral	15.004.233	11.254.608	33,32%

Fonte básica: SECEX

 

 

Table 2 – Leather Exportation/ By Value – US$ 1.00 January to May – 2006 x 2005
Kind of leather	Jan/Mai 2006	Jan/Mai 2005	2006/2005 (%)
Salted	804.839	1.811.355	-55,57%
Wet-Blue	247.162.757	171.591.215	44,04%
Crust	78.553.172	83.528.576	-5,96%
Finished	334.273.051	268.681.326	24,41%
Sub-Total	660.793.819	525.612.472	25,72%
Soles	5.424.028	3.663.048	48,07%
Sheep	3.928.088	2.433.765	61,40%
Goats	1.309.491	859.950	52,28%
Total Geral	671.455.426	532.569.235	26,08%

Fonte básica: SECEX

 

And even from the same font of analysis, table 3 shows that 2006 is repeating 2005 as related to low value of the local hides, reflecting a worldwide behavior. The average export values of Wet Blue and Trimmed hides continue practically the same as those of 2005, while the CRUST is presenting a reasonable reduction. To the outsider, with just a look at table 5 it is possible to see that if it is possible to export Trimmed hide at US$ 78,33 a unit, what is the reason for the hide export growth of US$ 27,86 a unit, as is the case of the Wet Blue? Even the Crust hide (semi-trimmed) which average value is approximately US$ 61,45, should be given special attention. The country's export trading policy should focus on Crust and Trimmed, leaving export of Wet Blue as a third option, for example as a tool for introduction in specific marketplaces, and then after seducing it offer the added value. The price differential between Wet Blue and Crust takes us to another analysis, that even with the imposition of the export tax, it is possible that Crust hide is being exported under the Wet Blue brand.

 

Table 3 – Leather Exportation / Average exporting value January to May – 2006 x 2005
Kind of leather	Jan/Mai 2006	Jan/Mai 2005	2006/2005 (%)
Salted	11,07	26,13	-57,66%
Wet-Blue	27,86	27,61	0,88%
Crust	61,45	67,04	-8,34%
Finished	78,33	77,88	0,57%
Sub-Total	45,60	47,87	-4,75%
Soles	76,97	83,49	-7,81%
Sheep	13,54	16,44	-17,64%
Goats	8,60	10,28	-16,37%
Total Geral	144,71	158,09	-8,46%

These comments take us to table 4. It is this table that reveals the figure of the Brazilian hide export in its most dramatic dimension. Export of Wet Blue already represents 61,23% of the total export, which represents nothing else than the simple export of raw material to the Chinese and Italian industries (see table 6). Percentages above 60% were obsolete however nowadays due to this huge omission, are present again. See the participation of the Crust hide in export. In 2006, through May, it was of approximately 8,8% Checking its history, this percentage was always approximately 12% to 15% One of the following two is happening, or the Crust production is falling and as a result its export, or there are reasons to believe in the insinuation provided at the end of the previous paragraph.

The only type of hide that maintains a position close to the one conquered in recent years is the Trimmed From the total export from January through May 2006, approximately 30% is Trimmed hide. As compared to the historical level, it represents a gain. But through when? This is the question being presented. In not so many years ago, when this debate started and also reached the governmental environment, a point to be reached was established in which the public or private actions should result, in a specific given period in time, in the predominance of the added value hide export. At that time, the export percentages indicated between 70% and 80% of hide with no added value (Salgado and Wet Blue) and 20% to 30% of Crust and Trimmed hide. In synthesis, the goal was to invert these positions.

And now we are reaching the end of the five first months of 2006 with e disappointing result. When we look at the four types of bovine hides being exported (table 4 below) we can see that 61,73% of the exported Brazilian hide is of a very low added value, remaining on the other end 38,27% with relevance to 29,45% that are exported at the maximum degree of added value. The ideal would be that all the hide raw material leaving Brazil would be industrialized as footwear, clothes or items for furniture. As this is impossible, it is expected that the excess of hide to be exported would leave the country as Trimmed hide. However, this is not what is happening. Even in the traditional tanning environment, there is consensus. What is close to a consensus is the confirmation, not always accurate and conclusive, that something has to be done to stop export of Wet Blue, and this idea does not include prohibition, imposition of quotas and other heterodoxies. Something should be done, but what?

To aggravate the situation, these last years, the slaughterhouses “discovered” that it is financially advantageous for them to export the hide as Wet Blue than to hand it to tanneries as natural hide. Giving a quick look to the year 2005 list of exporters, published in the last edition of the COUROBUSINESS magazine, we can see that a large part mentioned therein are slaughterhouses.

The absence of a more consistent policy, fruit of inertia, as a matter of fact, results in expansion of the problem. And this is what is happening in the hide industry. Brazil, the major producer of leather raw material - an important competitive advantage - accepts to be a mere supplier of the material that will compete with its own finished products, here and abroad. There is a trading promotion policy that validates this, when you look at the three macro indicators: Value and exported quantity, and new actors of the foreign trade. Numbers, mere numbers, with low degree of qualitative assessment Something has to be done, urgently.

 

Table 4 - % participation in Quantity exported January to May (2006 and 2005)
Kind of leather	Jan/Mai 2006	Jan/Mai 2005
Salted	0,50%	0,63%
Wet Blue	61,23%	56,60%
Crust	8,82%	11,35%
Finished	29,45%	31,42%
Total Geral	100,00%	100,00%

 

 

Table 5 - BRAZILIAN EXPORTS OF HIDES AND SKINS (CHAP 41) – Jan/May 2006/05
VALUE (US$)			GROWTH (%)			QUANTITY (KG)		GROWTH (%)
MONTH	ANO 2006	ANO 2005	VAR06	MÊS	ACUM.	ANO 2006	ANO 2005	VAR06	MONTH	ACUM.
Jan	112.481.705	97.449.804	-15%	15%	15%	30.483.749	22.644.786	-6%	35%	35%
Fev / Feb	128.958.715	101.471.017	15%	27%	21%	31.997.736	23.377.850	5%	37%	36%
Mar	161.725.650	122.187.437	25%	32%	26%	39.680.467	29.800.210	24%	33%	35%
Abr / Apr	140.157.676	113.099.501	-13%	24%	25%	33.111.749	26.087.296	-17%	27%	33%
Mai / May	160.020.644	120.655.231	14%	33%	27%	36.391.707	29.390.983	10%	24%	31%
Jun		120.653.255					28.988.239
Jul		106.650.291					24.891.944
Ago / Aug		135.312.293					32.577.877
Set / Sep		121.855.923					29.604.619
Out / Oct		110.926.696					27.746.306
Nov		118.918.700					29.488.381
Dez / Dec		131.948.845					32.259.912
Total	703.344.390	1.401.128.993				171.665.408	336.858.403

 

 

EXPORT DESTINATIONS

 

Italy continues as main destination of the Brazilian hide exports. US$ 186 millions were exported to that coutry. Hong Kong is the second major importer with approximately US$ 131 millions. The two destination if added represent 60% of the quantity of hides that goes out of Brazil. Also highlighted is the position of Chine, which bought during the first five months of this year approximately US$ 110 millions. In a polarization of destinations between Italy and the main Asiatic countries, 45,13% of the hides are in the hands of orientals, and 32,62% of the hide quantity in Italian hands. In addition to the expressive figures already achieved by these three countries, the growth in values as compared to the same period of 2005 also shows that the Brazilian hides is also directed to markets in expansion. Hong Kong increased in 44% the quantity of hides bought from Brazil and following Italy imported 37% more hides and china brought 17% more in quantity as compared to the first five months of last year. The United States in spite of shown in the fourth position, lead the increase of imported quantity of Brazilian hides (if taking into consideration only the four major destinations), 56% as compared to the same period in 2005. In value USA bought US$ 83.4 millions. The reason for this forth position is that it is the major purchaser of added value hides . Still in table 6, Portugal's position calls the attention not due to the imported quantity of Brazilian hides, nor due to the value, but due to the growth of approximately 1000% of its interest in our hide. It is astonishing to see the behavior of a country that during the first five months of 2055 bought US$ 1.4 million and the first five months of this year, reached a total of US$ 15.5 million. In spite of its tremendous growth, Portugal does not reach 1% of the quantity of hides exported by Brazil and its position is almost in parallel with the other six out of 10 major destinations of the Brazilian hide exports.

 

Table 6 - DESTINATION OF HIDES AND SKINS EXPORTS BY COUNTRIES (CHAP 41) 2006/05 - BRAZIL
COUNTRIES	VALUE (US$)		PERCENTAGE		QUANTITY		PERCENTAGE
Jan/Mai 06	Jan/Mai 05	PART06	CR.05/06 GROWTH	Jan/Mai 06	Jan/Mai 05	PART06	CR.05/06 GROWTH
Itália / Italy	186.086.034	147.870.327	26,46%	26%	55.991.830	40.972.604	32,62%	37%
Hong Kong	131.846.478	87.303.333	18,75%	51%	48.556.105	33.786.581	28,29%	44%
China	110.630.411	87.505.804	15,73%	26%	28.915.487	24.627.200	16,84%	17%
Estados Unidos / USA	83.465.689	55.486.782	11,87%	50%	5.744.537	3.674.748	3,35%	56%
Taiwan	15.927.652	12.513.457	2,26%	27%	3.218.396	2.637.297	1,87%	22%
Portugal	15.563.183	1.405.856	2,21%	1007%	1.329.328	120.726	0,77%	1001%
Canadá	14.379.465	14.154.860	2,04%	2%	1.351.037	1.146.141	0,79%	18%
Malásia / Malaysia	14.286.532	12.671.634	2,03%	13%	5.224.335	4.972.801	3,04%	5%
África do Sul / South Africa	13.124.425	3.330.793	1,87%	294%	2.421.602	468.074	1,41%	417%
Japão / Japan	12.919.054	12.174.190	1,84%	6%	884.280	836.970	0,52%	6%
SUB-TOTAL	598.228.923	434.417.036	85,05%	38%	153.636.937	113.243.142	89,50%	36%
Demais Países Other countries	105.115.467	120.445.954	14,95%	-13%	18.028.471	18.057.983	10,50%	0%
TOTAL	703.344.390	554.862.990	100%	27%	171.665.408	131.301.125	100%	31%

LEATHER GOODS

 

Up to the present date, the important market of leather goods, which represents the sale of cut and sown hide, is facing a very difficult year. The analysis performed covering five months, four have presented values below those recorded in 2005, as shown in table 7. Up to date the cumulated loss totals approximately 6% In value, exports reached a total of US$ 31.5 millions during the period January through May 2006, against US$ 33,4 millions covering the period January through May 2005. Last year, this NCM recorded a mere 3% growth and if we analyze the data made available up to the present date, the year should close with a drop as compared to 2005. If the figures could reach approximately US$ 100 millions, this segment would continue close to the results of 2004 when a huge jump was felt in the leather goods.

 

Table 7 - Exportation by NCM 42050000(Leathergoods) January to April 2006 and 2005 Values in US$ 1,00
MONTH	IN VALUE (US$)		GROWTH (%)			QUANTITY (KG)		GROWTH (%)
ANO 2006	ANO 2005	VAR06	MONTH	ACCUM	ANO 2006	ANO 2005	VAR06	MONTH	ACUM.
Jan	7.068.408	8.352.289	-27%	-15%	-15%	1.573.811	1.847.244	-22%	-15%	-15%
Fev / Feb	6.574.583	8.131.028	-7%	-19%	-17%	1.471.272	1.782.420	-7%	-17%	-16%
Mar	10.298.356	9.232.076	57%	12%	-7%	2.234.033	1.947.092	52%	15%	-5%
Abr / Apr	7.585.457	7.686.120	-26%	-1%	-6%	1.554.276	1.476.225	-30%	5%	-3%
Mai / May	9.642.529	9.444.935	27%	2%	-4%	2.192.978	2.220.118	41%	-1%	-3%
Jun		8.804.410					1.936.775
Jul		8.128.572					1.853.332
Ago / Aug		9.286.181					1.951.748
Set / Sep		9.846.328					2.100.460
Out / Oct		10.075.640					1.987.483
Nov		10.285.090					1.992.106
Dez / Dec		9.622.925					2.008.292
Total	41.169.333	108.895.594				9.026.370	23.103.295

 

 

Table 8 – BRAZILIAN LEATHER EXPORTATION BY NCM CLASSIFICATION January to May 2006
NCM CLASSIFICATION	(KG) WEIGHT	PART (%)	US$ FOB	PART (%)	Nº OF HIDES	AVERAGE PRICE
BY LEATHER	BY KILO
1. Salted/Pickled bovine skins up to 14 kg (ave. 14 kg)	452.668	0,26%	284.798	0,04%	32.333	8,81	0,63
2. Salted Bovine hides above 14 kg (ave. 25 kg)	1.009.917	0,59%	520.041	0,07%	40.397	12,87	0,51
3. Bovine Wet Blue hides up to 2.6m (ave. 9 kg)	23.841.415	13,89%	50.419.433	7,17%	2.649.046	19,03	2,11
4. Bovine Wet Blue hides, incl. Scrappings (ave. 16 kg)	99.578.785	58,01%	196.743.324	27,97%	6.223.674	31,61	1,98
5. Bovine hide soles (ave. 18 kg)	1.268.389	0,74%	5.424.028	0,77%	70.466	76,97	4,28
6. Bovine hides,without finishing, incl. Vegetable (ave. 6 kg)	7.246.749	4,22%	73.129.144	10,40%	1.207.792	60,55	10,09
7. Bovine hides with finishing (ave. 6 kg)	25.605.507	14,92%	334.273.051	47,53%	4.267.585	78,33	13,05
Subtotal - Bovine Hides	159.003.430	92,62%	660.793.819	93,95%	14.491.292	45,60	4,16
Other hides
Horse hides	9.433.574	5,50%	34.257.985	4,87%
Sheep hides	290.187	0,17%	3.928.088	0,56%
Goat hides	152.287	0,09%	1.309.491	0,19%
Pig hides	1.550	0,00%	23.768	0,00%
Reptile hides	3.950	0,00%	95.011	0,01%
Other animal skins	10.322	0,01%	598.663	0,09%
Chippings and reconstructed leather	2.770.108	1,61%	2.337.565	0,33%
Subtotal – Other Hides	12.661.978	7,38%	42.550.571	6,05%
TOTAL OF CHAP 41 – HIDES	171.665.408	100,00%	703.344.390	100,00%

 

Tables 9 through 13 covering export of Salgado, Wet Blue, Crust Trimmed hide were prepared by AICSUL. Table 7, covering “leather goods”, too.  

Tabela 9 – EXPORTAÇÃO BRASILEIRA DE COUROS BOVINOS Table 9 – BRAZILIAN EXPORTATION OF BOVINE HIDES
MÊS MONTH	NÚMERO DE COUROS NUMBER OF HIDES		CRESC. (%) GROWTH			VALOR (US$) VALUE		CRESC. (%) GROWTH
ANO 2006	ANO 2005	VAR 06	MÊS MONTH	ACUM ACCUM	ANO 2006	ANO 2005	VAR 06	MÊS MONTH	ACUM ACCUM
Jan	2.496.148	1.861.106	-6%	34%	34%	106.576.829	91.855.137	-13%	16%	16%
Fev / Feb	2.703.911	1.975.760	8%	37%	36%	120.293.382	95.862.382	13%	25%	21%
Mar	3.341.470	2.475.943	24%	35%	35%	150.838.173	116.647.469	25%	29%	24%
Abr / Apr	2.835.117	2.217.721	-15%	28%	33%	132.180.249	106.434.065	-12%	24%	24%
Mai / May	3.114.647	2.448.492	10%	27%	32%	150.905.186	114.813.419	14%	31%	26%
Jun		2.407.971					114.581.633
Jul		2.173.273					101.715.798
Ago / Aug		2.727.926					126.007.955
Set / Sep		2.455.386					113.459.866
Out / Oct		2.340.439					104.430.612
Nov		2.480.874					112.230.221
Dez / Dec		2.662.060					122.745.364
Total	14.491.293	28.226.951				660.793.819	1.320.783.921

 

 

Tabela 10 – EXPORTAÇÃO BRASILEIRA DE COUROS BOVINOS SALGADOS Table 10 – BRAZILIAN EXPORTATION OF SALTED BOVINE LEATHER
	FÍSICOS (Nº COUROS) QUANTITY (Nº OF HIDES)		CRESC. (%) GROWTH(%)			MONETÁRIOS (US$) VALUE (US$)		CRESC. (%) GROWTH
MÊS MONTH	ANO 2006	ANO 2005	VAR06	MÊS MONTH	ACUM. ACCUM.	ANO 2006	ANO 2005	VAR06	MÊS MONTH	ACUM. ACCUM
Jan	8.451	12.841	-41%	-34%	-34%	106.980	328.361	-27%	-67%	-67%
Fev / Feb	0.914	10.592	-89%	-91%	-60%	62.751	270.287	-41%	-77%	-72%
Mar	9.743	18.271	966%	-47%	-54%	101.743	555.609	62%	-82%	-76%
Abr / Apr	14.478	15.029	49%	-4%	-41%	294.701	351.757	190%	-16%	-62%
Mai / May	39.144	12.580	170%	211%	5%	238.664	305.341	-19%	-22%	-56%
Jun		18.718					275.988
Jul		24.035					356.490
Ago / Aug		27.079					517.378
Set / Sep		33.622					673.968
Out / Oct		33.608					588.799
Nov		60.258					879.583
Dez / Dec		14.230					147.157
Total	72.730	280.863				804.839	5.250.718

   

 

 

Tabela 11 – EXPORTAÇÃO BRASILEIRA DE COUROS BOVINOS WET BLUE Table 11 – BRAZILIAN EXPORTATION OF WET BLUE BOVINE HIDES
	FÍSICOS (Nº COUROS) QUANTITY (Nº OF HIDES)		CRESC. (%) GROWTH			MONETÁRIOS (US$) VALUE (US$)		CRESC. (%) GROWTH (%)
MÊS MONTH	ANO 2006	ANO 2005	VAR06	MÊS MONTH	ACUM. ACCUM.	ANO 2006	ANO 2005	VAR06	MÊS MONTH	ACUM. ACCUM
Jan	1.664.641	1.028.805	6%	62%	62%	44.890.976	28.846.252	8%	56%	56%
Fev / Feb	1.672.005	1.043.598	0%	60%	61%	44.802.970	29.411.472	0%	52%	54%
Mar	2.031.830	1.436.956	22%	41%	53%	55.105.722	39.875.533	23%	38%	48%
Abr / Apr	1.731.282	1.252.401	-15%	38%	49%	50.648.981	34.525.642	-8%	47%	47%
Mai / May	1.772.962	1.452.135	2%	22%	43%	51.714.108	38.932.316	2%	33%	44%
Jun		1.390.250					39.107.620
Jul		1.190.887					30.137.870
Ago / Aug		1.563.819					40.532.991
Set / Sep		1.379.856					36.483.350
Out / Oct		1.340.614					33.909.810
Nov		1.357.450					33.585.082
Dez / Dec		1.563.715					41.735.077
Total	8.872.720	16.000.486				247.162.757	427.083.015

 

Tabela 12 – EXPORTAÇÃO BRASILEIRA DE COUROS BOVINOS CRUST+VEGETAIS Table 12 – BRAZILIAN EXPORTATION OF CRUST AND VEGETABLE
	FÍSICOS (Nº COUROS) QUANTITY (Nº OF HIDES)		CRESC. (%) GROWTH (%)			MONETÁRIOS (US$) VALUE (US$)		CRESC. (%) GROWTH (%)
MÊS MONTH	ANO 2006	ANO 2005	VAR06	MÊS MONTH	ACUM. ACCUM.	ANO 2006	ANO 2005	VAR06	MÊS MONTH	ACUM. ACCUM
Jan	255.795	231.087	-31%	11%	11%	15.945.255	15.160.512	-34%	5%	5%
Fev / Feb	211.656	279.857	-17%	-24%	-9%	11.688.549	18.487.815	-27%	-37%	-18%
Mar	287.007	240.593	36%	19%	0%	16.255.661	16.822.089	39%	-3%	-13%
Abr / Apr	224.461	225.764	-22%	-1%	0%	14.234.811	14.963.452	-12%	-5%	-11%
Mai / May	299.339	268.607	33%	11%	3%	20.428.896	18.094.708	44%	13%	-6%
Jun		279.136					19.293.439
Jul		337.773					22.226.116
Ago / Aug		398.395					26.541.251
Set / Sep		328.184					21.648.344
Out / Oct		330.514					20.497.582
Nov		342.334					21.523.580
Dez / Dec		370.427					24.154.950
Total	1.278.258	3.632.671				78.553.172	239.413.838

 

 

Tabela 13 – EXPORTAÇÃO BRASILEIRA DE COUROS BOVINOS ACABADOS Table 13 – BRAZILIAN EXPORTATION OF FINISHED BOVINE LEATHER
	FÍSICOS (Nº COUROS) QUANTITY (Nº HIDES)		CRESC. (%) GROWTH (%)			MONETÁRIOS (US$) VALUE (US $)		CRESC. (%) GROWTH (%)
MÊS MONTH	ANO 2006	ANO 2005	VAR06	MÊS MONTH	ACUM. ACCUM.	ANO 2006	ANO 2005	VAR06	MÊS MONTH	ACUM. ACCUM
Jan	567.261	588.374	-21%	-4%	-4%	45.633.618	47.520.012	-20%	-4%	-4%
Fev / Feb	819.336	641.714	44%	28%	13%	63.739.112	47.692.808	40%	34%	15%
Mar	1.012.890	780.123	24%	30%	19%	79.375.047	59.394.238	25%	34%	22%
Abr / Apr	864.895	724.527	-15%	19%	19%	67.001.756	56.593.214	-16%	18%	21%
Mai / May	1.003.202	715.171	16%	40%	24%	78.523.518	57.481.054	17%	37%	24%
Jun		719.868					55.904.586
Jul		620.578					48.995.322
Ago / Aug		738.633					58.416.335
Set / Sep		713.724					54.654.204
Out / Oct		635.703					49.434.421
Nov		720.832					56.241.976
Dez/ Dec		713.688					56.708.180
Total	4.267.584	8.312.935				334.273.051	649.036.350