LEATHER MARKET AND DUBAI CRISIS

LEATHER MARKET AND DUBAI CRISIS

V.M. KHALEELUR RAHMAN

LEATHER MARKET

Leather market in Chennai is somewhat active now as there is some demand for items like E.I. tanned goat skins, wetblue goat and sheep skins, sheep nappa for garments etc. Leather goods, garment and shoe manufacturers are in the market covering their requirements. While tanned goat skins are sold at slightly higher prices due to its limited availability, other items are sold at almost unchanged prices.

It is learnt that while tanned goat upper, suede and lining are sold at around Rs.50, 45 and 30 per sq. ft., wetblue goat suede and lining are sold at around Rs.40 and 25 per sq. ft. respectively. Some business is also taking place in goat crust garment suede at around Rs.46 per sq.ft. Tanned goat skins heel grip and Rejection are sold at around Rs.20 and 18 per sq.ft.

Wetblue cowhides are slow in movements even in popular centres like Erode, Ambur and Ranipet. Many shoe units are interested mostly in higher selections in this item which are not easily available and there are only a few takers at reasonable prices for lower selections available in plenty.

Many overseas tanners and agents are more interested in selling their hides and skins to India. A recent offer in wetblue goat skins is given below to indicate the state of affairs in the present market.

Wetblue ivory coast goat skins, tanned with Italian supervision,
Abour 30,000 skins, average size about 7 sq.ft. per skin and
About 10,000 skins, average size about 8 sq.ft. per skin
Thickness 0.8/+ mm - Lining / partial shoe upper selection.
Price : US$0.65 per sq.ft.

As far as export of finished leather is concerned, only a small volume of business is taking place as regular customers in Europe, Far East and other countries are not in full swing in their purchases. Exporters are quoting at around US$1.50 and 1.40 for goat upper and suede leathers and US$1.10 /1.00 / 0.90 for goat lining leathers TR1 /TR2 /TR3. Goat garment suede leathers are quoted at around US$1.60 (All prices are per sq.ft. C&F by sea).

The shoe and garment units are trying their best to increase their production and export as much as possible in the present difficult situation which has to be appreciated very much. Their service is great in keeping thousands of skilled and unskilled employees particularly in rural areas in their units without much retrenchment.

Many analysts and industrialists say that the leather and leather products industry deserve more and more support from the government to enable it to march forward and reach the targets in growth and export at the present difficult time when there is stiff competition from different countries like China in the world market.


“ DUBAI CRISIS ”

The Dubai crisis has shaken the world including of course our country India at the time when according to many reports it is recovering from the global recession and improving its economy. The Dubai crisis is that a government owned flagship firm Dubai World is in the doldrums with a debt of US $59 billion for which it has sought time till the middle of 2010 for payment. It only proves that all glitterings are not gold and we should be careful while dealing with other countries. Nobody expected that a Dubai based and government owned company like Dubai World would face the sort of crisis we are witnessing today.

Many economists and analysts have taken a serious note of the Dubai crisis. A Saudi economist says that it is a very serious and severe problem that is likely to shake up the Gulf financial system as a whole and analysts from the Bank of America caution that if the Dubai crisis spread to other emerging markets, the world economic recovery could see a major setback. The lesson we must learn is that a very big company in an advanced or oil rich country need not necessarily be a sound one.

The hon'ble finance minister Mr. Pranab Mukherjee has said that “ it will not affect India much as our stake is so small and the amount involved compared to the world economy is miniscule “. It is also noteworthy that 40% of Dubai’s population is of Indians even though our country’s financial exposure is not much. The assurance of the hon’ble minister to the country that “the government is keeping a close watch and will act to prevent any fallout” speaks a volume. It means that we cannot rule out its adverse effect at least to some extent on our country.

(Indian Leather, December 2009)
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