What happened this week: The week after Hong Kong must have been quite sobering for many. It has been a market classic again as the trade gathered in Asia at the end of the first quarter to excite itself, but as soon as the fair closed realities returned quickly. These realities haven’t changed at all since the period before the fair. Many of the enthusiasts and market pushers were forced to realise that plenty of the activity seen had, to a large extent, been based on speculative buying. Many of the tanners and traders in Asia bought stock because of the low price levels and on the back of good demand in China as well as the return of export business later this year.

However, while we are still seeing reasonably steady business in side leathers, the situation for upholstery and automotive remains pretty bleak. Many Chinese traders are already complaining about activity and are claiming that payments from clients are not coming in in the way they should. As a result, their courage is slowly fading, as is their optimism about the material they have already bought. Tanners have been less aggressive in buying so their position is now a bit better providing they are not still holding on to old stocks from 2008. Because of this, there were fewer bids for cows this week and bids were a lot more aggressive.

Although nobody can argue with the fact that hides are already pretty cheap, buyers for female hides feel that there is still a chance to test the market and the position of sellers. They have not been shy about bidding a couple of dollars below the purchases during the last two weeks, contrary to the expectations of many sellers.

If it is not cheaper to buy standard hides, the trend is to try to get better quality material at a similar price. Inquiries for better quality material has also risen sharply and sellers from Scandinavia, south Germany and other superior quality origins will view this trend with pleasure and will be in a position to sell their product. However, tanners are being very ambitious with their price ideas even for this type of material.

This situation has opened the door to all kinds of mixing activities. Many suppliers are still finding that there are enough victims to listen to their stories and they will be surprised when material arrives and comes out of tanning. Travelling in Asia, one has a lot of opportunities to see raw and wet blue materials and to compare them with their supplier descriptions. We thought that most of the old market tricks were forgotten, but it is still amazing what can be, and is, still done these days. However, if tanners do not get what have paid for, it leaves deep and long-lasting tracks in their memories.

Sales for the week were below par. There were enough bids for cows to choose from, but the problem was that prices were mostly below the bottom line, so they couldn’t be accepted. Only a few were really enough to reach a certain sales number. There was little to make anyone happy and even the modest recovery of the US$ towards the end of the week did not help much.

The kill:  The kill was quite low, which is not surprising considering we are in the Easter weeks. We are not expecting much for next week either; numbers are likely to be on the low side for some time to come.

What we expect: Our forecast last week was pretty accurate and we have not found much reason to alter our market view. We believe that we are now entering a typical post-Hong Kong market with very moderate demand and that buyers could have the upper hand in the market for some time until the lower kill leaves its tracks and, potentially, stabilises the situation. Until then, selling could be difficult.

Share this story: