German Perspective - 17.07.12
17/07/2012
News of a slow-down in Chinese growth is making little impression, and producers who focus on export markets remain pretty optimistic about their business for the rest of 2012. So, it doesn’t really matter that the situation in Europe is far from good and recent reports from shoe and upholstery retail are pretty grim. Shoe sales are lagging and some retailers still have unsold stock from last winter season. Summer sales are aggressively discounting prices in shops and have started earlier than ever before. Retail organisations have been reporting very sluggish sales, although the poor weather in many parts of Europe in the early part of this summer would normally drive people from the beach to the shops. However, this year even a second round of discounts and weather conditions seem unable to support sales. That leaves retail consumption to the luxury shoppers from overseas who are travelling in Europe and brands and luxury retailers are quite happy; local EU prices are becoming more and more attractive thanks to the falling value of the euro. This is good news for the leather market, at least when it comes to the strong performers like accessories and brands. For the rest in Europe, things remain difficult; the mood is better in emerging markets with rising spending power all over.
The hide market is still driven by this situation and month by month prices refuse to correct themselves and decline. This means the conviction of producers and suppliers of hides is growing that this correction is never going to happen again. So, everybody is leaning back and waiting for the next buyer to come round the corner to buy what the last one refused. In the case of the EU market one should not ignore that we gained massively from the currency market. It is not long ago, that the euro was 10% higher against the dollar than it is at the moment and the firming trend has actually cushioned the decline and put more pressure on the raw material market. Nobody knows how the EU debt crisis is going to end, but the chances are that the currency fluctuation could become pretty wild in 2012, on either side.
Playing the currency market 2012 has been more effective so far than focusing on the raw material market, which hasn’t been very flexible in the second quarter. Trading this week has been a bit of lacklustre, but even saying that there was still activity and sales. To our surprise we saw for the first time in the past three months serious interest and business for salted males of the lighter categories. With the better exchange rate and reasonable bids, a good number of sales were achieved, which we did not expect. Clients were explaining that with low selections from from their regular US suppliers, they have to blend better hides in to get the selection results planned. Interest for diary cows was subdued, which might slowly become a consequence of the low prices for skins.
The kill: The kill continues to be pretty low and weights are light. However, production is still a little better than one would expect at this time of the year. We still have to go for another three or four weeks until things improve again.
What we expect: It seems the market is still in pretty steady mode. EU hides have had support from the currency market and that has lifted the moderate pressure seen in recent weeks. The low kill will prevent excessive and unsold inventories, so it seems that we have a good chance of getting through the summer with limited price variations.
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Share this story:
