Lamb skin prices fall due to weakening Chinese market

Lamb skin prices have fallen amid weakening Chinese demand, but experts are saying it’s not a surprise. See why.

Lamb skin prices have been devalued in the past week amid reports Chinese demand has weakened at a time when some processors are struggling to access shipping space.

Lamb buyers that were working on prices of $10 to $12 for the best clean skins off heavy trade and export suckers have now lowered expected returns to between $8 and $9 per skin.

Plainer lamb skins, showing dryness or seed, were being given a tentative value of just $6 to $8 at saleyard auctions in the past week.

Sources told The Weekly Times a backlog of skins awaiting shipment had given overseas buyers the chance to lower price offers amid reports some companies are facing storage issues.

“The market itself doesn’t appear to be the problem as it is not like the tanneries in China have collapsed or anything, it appears to be connected to shipping containers and freight,” said one buyer who manages the skin trading arm of a Victorian based processor, and who asked not to be named.

“At $10 and $12 lamb skins were probably a bit pricey for some Chinese customers and now they have seen a chance to drag prices back.”

Adrian Knox, from Knox International at Laverton, said buying patterns for sucker lamb skins had been unusual this spring as the market had been dominated by two major Chinese companies who had pushed prices beyond the threshold of many competing tanneries.

“This year we’ve seen two main Chinese buyers push prices way up to a level that no-one else was really willing to compete at,” Mr Knox said.

“It’s basically been a two-horse race and now they have realised there is plenty of skins around and they don’t need to be at that price level and demand has dropped.”

Mr Knox said while freight prices had become more expensive, his company hadn’t experienced any significant shipping delays and in his opinion the skin price correction was due to less buying demand from the two lead Chinese buyers combined with a drop in skin quality.

“It is getting towards the end of the sucker season, and with the (wet) weather we have started to see more wool rot and yellowing of wool.”

On the positive, Mr Knox believes prices for quality shorn skins could improve after Christmas as multiple Chinese importers who couldn’t compete for sucker pelts in the spring enter the market for product.

“There is a pool of unsatisfied buyers out there who couldn’t buy in the spring due to the high prices who will need product,” he said.

“I expect to see good demand for shorn lamb skins at much better price levels than a year ago.”