German Perspective - 07.08.12
07/08/2012
This means that strong hands consider the risk of higher raw material prices in the near future to be pretty limited. Consequently their decision is to own raw material instead of waiting and hoping for price reductions. This has generated a good round of demand and sales to Asia this week. Waiting a bit for the European Central Bank decision on interest rates and using the short correction of the value of the euro in the second half of the week made a number of bids attractive and led to a reasonable number of sales. What caught our interest was the increasing demand for males hides among Asian buyers, which seems to be a reaction to quality complaints from the US and possibly represent a test to see if EU male hides could eventually substitute the preferred origins for price or quality reasons. Only a handful of tanners have really done this in the past and can already evaluate the price-quality ratio; obviously more tanners are starting to experiment with EU bulls now. Some are even expressing the opinion that China is starting to prepare for the production of premium automotive leather, which requires more premium quality hides.
While so far most of the demand has been satisfied with wet blue, wet white and crust imports, more local content requirements and quality specifications could shift some additional demand for raw hides towards Europe. Since this is not a rapid process it should at least be monitored. For the rest, the situation was pretty much the same as before. Tanners report declining demand for leather and poor or non-existent margins. Most of the European tanners have departed for their holidays and are not bothered about raw material issues for the time being. On the supply side almost all bovine suppliers say they have low stock and decent forward sales, which continues to make them very comfortable as far as price risks are concerned. Serious negotiations are hardly seen and whoever wants to buy has to pay what is asked. At the same time, sellers are also pretty prudent in asking for much more money and so most trades are within a very narrow trading range with almost no downward adjustments and very limited upward correction. All this leaves the situation pretty unchanged and there are still no new serious and reliable indicators of how the market is going to proceed after the summer break.
The present market level is fully confirmed. Asian buyers are enough to absorb the small volume of slaughter and those who had not sold forward are able to clear now what European customers failed to take. When EU tanners come back from their holidays they will not find sellers desperate to dump hides from the holiday period. On the other hand the present situation is no guarantee that leather business will meet expectations for the winter production either. Sales were spread across the board and prices were steady and more influenced by the currency factor than by market movements. In the end we would call the market steady with a stronger undertone.
The kill: Not much to say about the kill. It is low due to the holidays but with the summer’s end in our region we should see a bit of a recovery in the coming weeks. Those regions that are still enjoying school holidays will stay low for the next three or four weeks.
What we expect: For the moment we are still missing any market driver. Sellers are comfortable, buyers are snapping up at steady money what they are offered and this is keeping the market in almost perfect balance. Almost all articles are moving and nothing is left out. The debt crisis continues to be the only serious threat to the market. Otherwise it seems we will continue to stay like this until September when everyone is back at work and meetings take place at the All China Leather Exhibition in Shanghai (September 4-6).
| Type | Weight range | Avg. green weight | Salted weight | Avg. weight salted | Price per kg green weight | Trend |
| Ox/heifers | 15/24,5 kg | 22,0/23,5 kg | 13/22 kg | 20/21 kg | € 2,10 |
Steady |
| 25/29,5 kg | 27,5/28,5 kg | 22/27 kg | 25/26 kg | € 1.75 |
Steady |
|
|
Dairy cows |
15/24,5 kg |
22,5/23,5 kg |
13/22 kg |
20/21 kg |
€ 1.95 |
Steady |
|
25/29,5 kg |
27,5/28,5 kg |
22/27 kg |
25/26 kg |
€ 1.65 |
Steady |
|
|
30/+ kg |
33,5/35,5 kg |
27/+ kg |
29/31 kg |
€ 1.55 |
Steady |
|
| Bulls | 25/29,5 kg | 27,5/28,5 kg | 22/ 27 kg | 25/26 kg | € 2.15 |
Steady |
| 30/39,5 kg | 36,0/37,0 kg | 24/34 kg | 31/33 kg | € 1.90 |
Steady |
|
| 40/+ kg | 45,0/48,0 kg | 34/+ kg | 38/40 kg | € 1.80 |
Steady |
|
| Thirds | 15/+ kg | 25,0/27,5 kg | 13/+ kg | 24/26 kg | € 1.35 |
Steady |
| Thirds bulls | 30/+ kg | 38,0/40,0 kg | 24/+ kg | 33/36 kg | € 1.40 |
Steady |
Share this story:
