COPENHAGEN, Feb 14 (Reuters) - The price of mink fur has dropped almost 40 percent at auction in Denmark this year after hosts of new breeders piled into the business, attracted by the record sums China’s middle class had been willing to pay for the luxury item.
The price had tripled over five years to reach an average of 570 Danish crowns ($100) per skin, a record high, last year at Kopenhagen Fur, the world’s largest fur auction house.
But at this week’s auction, which began on Sunday and is the second of five this season, the average price for the 7.1 million skins under the hammer is set to fall to around 350-360 crowns per skin, Kopenhagen Fur said.
“The price last year was crazy because the world demand has been rising explosively in some years and the production has lagged behind,” its chairman, Tage Pedersen, said.
“Now the production is getting in to gear, and so we are experiencing more normal prices”.
Pedersen said global output of mink skins has doubled in five years as farmers got into the lucrative business.
“The demand in China had a slow start this season due to mild weather. But now there is a lot of cold and snow and so more products will be sold again,” Pedersen said, adding that he could not predict future price.
The latest drop could mean that mink is catching up with a wider trend. A survey by the Hurun Report showed last month that wealthy Chinese are set to buy fewer luxury goods again this year, after their overall spending fell by 15 percent in 2013, the third consecutive year of decline.
This pattern may be changing the game for high-end Western retailers of goods like shoes, bags and watches that have staked their growth on China.
Mink are typically reared for fur in cages and around 60 of the mammals are used to make one fur coat.
Denmark produces about a quarter of the world’s mink and mink accounted for around 40 percent of the country’s exports to China last year, according to Kopenhagen Fur.
While China is as big a producer as Denmark, mink fur produced in Europe is of a higher quality, according to European and Chinese buyers, because of clean water supplies, better feed and higher veterinary standards.
Knud J. Vest, vice chairman of the European Fur Breeders’ Association, said he now expected some mink breeders, mainly in China but also in Europe and North America, to quit the sector.
“As the prices are lower, the weakest producers will leave the market again,” Vest said.
He said that he did not anticipate a crisis like the one faced by the mink industry from 1989 to 1996, when around half of the breeders in Europe and North America left the business.
$1 = 5.4603 Danish crowns Reporting by Teis Jensen; Additional reporting by Clare Baldwin in Hong Kong; Editing by Anthony Barker