Sheep skins remain in poor demand

Skin prices have seen significant falls this month, the result of easing wool prices and global demand.

The increased popularity of synthetic leathers continues to impact the sheep skin market, with many manufacturers transitioning to the cheaper alternative instead of genuine leather for shoes, clothing and car seat covers. The inherently changing nature of the fashion industry adds another degree of uncertainty to the sheep skin and leather industry.

Sheep skin prices have been under further pressure this month due to declining wool prices. With lower demand for sheep skins, a large portion of skins are fellmongered and the wool is sold separately. For the week ending 7 June, the Eastern Market Indicator (the primary wool market indicator produced by AWI) was 1864¢/kg, down 5% month on month.

This decline impacted heavily on the lamb skin market as prices declined 200¢ to 400¢/skin across most classes. The best quality lamb skins are trading at 700¢/skin, while small, short or damaged lamb skins have no value in the current market, with most being discarded. Sheep skins have held their value better than lambs. Merino skins trading at a premium grade are still making over 2000¢, while those in the second and third grades are generally making from 200¢ to 1300¢/skin.

As very few sheep skins are processed domestically, the market relies heavily on demand from overseas markets, primarily China, Russia and Turkey. However, the dominant exporters of sheep skins are relatively limited, principally Australia and New Zealand. Despite falling demand, prices have some support, due to the limited numbers of major suppliers.

Find the June skin report here

© Meat & Livestock Australia Limited, 2019