Brazil's leather industry has experienced significant growth, driven by growing international demand, especially from China. Durli Leathers , which is committed to excellence and sustainability in leather production, has followed these trends closely and is pleased to be part of this movement that is strengthening the national economy and promoting responsible practices in the sector.
In addition, we announced our expansion with the opening of a new plant in Mexico. This new venture reinforces our commitment to meeting global demand with quality and efficiency, as well as strategically positioning us in a growing market.
Recently, important publications such as Valor Econômico and Globo Rural have highlighted this increase in Brazilian leather exports, reflecting the positive impact this demand is having on our industry. Below, we share with you the full article published by Nayara Figueiredo on 10/07/2024, which offers a detailed look at how Chinese demand is heating up Brazilian leather shipments. Read the article in Globo Rural.
Advances in the automotive industry, especially with Chinese electric cars, have boosted demand for the product for vehicle upholstery.
An expanding automotive industry in China is fueling demand for leather and favoring Brazilian leather. In the first half of this year alone, the Asian country was the destination for 40% of the hides and skins
exported by Brazilian tanneries. The raw material is used to make upholstery for electric
cars, for example. In view of this heated demand, the sector expects to end the year with growth compared to 2023, even if the high supply puts pressure on sales values abroad.
From January to June, China bought 39.17 million square meters of hides and skins, an increase of 33.3% compared to the same period in 2023. With these purchases, the Chinese accounted for 29.9% of the turnover from Brazilian leather exports.
"China, during the Covid-19 pandemic, had greatly reduced production of cars and shoes. Now, the market has almost returned to normal, they are producing and consuming again," José Fernando Bello, president of the Center for the Brazilian Tanning Industry (CICB), told Valor.
Brazilian leather is not one of the best in the world in terms of quality, due to the practice of branding cattle with iron for identification. Even so, it serves the furniture, automotive and footwear sectors well on the international market - around 80% of the leather produced here goes abroad.
Particularly this year, when cattle slaughtering is at a record high, the supply of beef by-products, such as leather and tallow, has also grown. The most recent figures from the Brazilian Institute of Geography and Statistics (IBGE) show that in the first quarter of 2024, tanneries reported receiving 9.32 million whole pieces of raw leather, an increase of 19.9% year-on-year.
"With more raw materials available, we have intensified our search for buyers in foreign markets," said Bello. In addition to China, Vietnam was among the highlights, doubling its imports of leather from Brazil.
More Markets
There were also significant advances in sales to Italy, Mexico and Tunisia. Although they reduced their purchases in the first half of the year, the United States continues to be a relevant market, accounting for 13.4% of export revenue. They are behind the Chinese in the ranking of importers.
In total, the sector ended the first half of the year with a 15.4% increase in export sales, which totaled US$ 650.076 million, driven by growth in the area and volume shipped, according to the CICB.
In Bello's opinion, the exchange rate should be an important factor in making Brazilian leather more competitive this semester. But, he notes, the high dollar also increases costs, since the local industry imports chemical inputs and machinery.
Even with higher expenses, the CICB expects revenue from foreign sales to grow by 15% this year, and volumes by 25%. Last year, revenues reached US$ 1.117 billion, with shipments of 430,63 thousand tons of hides and skins.
Brazilian Leather Prices
A source from slaughterhouse, which supplies leather to tanneries for processing, has a less optimistic view. She believes that there is a shortage of leather due to high production. "The selling price for slaughterhouse is very bad, for green and wet blue leather too."
According to the director of Scot Consultoria, Alcides Torres, prices for the by-product are practically stable this month, with an advance only in Rio Grande do Sul. "First-line green leather is priced at R$0.80 per kilo. In Rio Grande do Sul, the price is R$1.30 per kilo, up R$0.10 week-on-week. But leather isn't just about price, it has to have quality," he said.
For next year, the sector is concerned about the new European Union law, which demands total traceability of the chain and will not accept imports of products linked to deforestation from January. "We're not against this regulation, we just need more time," said the president of the CICB.
Expansion
Specializing in the tanning of wet blue, crust and finished leathers, the Durli Leathers has taken another step towards expanding into the foreign market and acquired a production unit in León, Mexico. The group's aim is to expand its supply to the automotive industry in North America.
"We were already monitoring the North American market. We started activities in Mexico in May and doubled [our] semi-finished leather capacity," the CFO of Durli Leathers, Christiano Frizzo, told Valor. The amount involved in the transaction was not disclosed due to the confidentiality of the contract.
The Mexican plant processes 4,500 hides a day, and more than 85% of production is destined for the US automotive sector. "In northern Mexico, many animals raised in the United States are slaughtered," said Frizzo. The leather from US cattle is considered to be of high quality.
Since 2018, Durli Leathers has been operating outside Brazil, with a plant built from scratch in Paraguay, where around US$15 million was invested.
Even with the advances made abroad, Brazilian leather continues to be Durli Leathers's big bet. According to the company, the national product has become an increasingly natural choice for automakers, with some returning to natural leather after experimenting with synthetic alternatives.
In line with market growth, Durli's expectation this year is for an increase in volume and turnover of around 20% over 2023. "It's a positive year for us," said the executive.