US Perspective - 21.08.12
21/08/2012
www.themaxfieldreport.com
Last week for the most part was an uneventful week of trading in both the big packer and cowhide markets.
Sellers started the week with intentions of attempting to tack on some additional increases; however, these plans were met with some rather strong resistance from buyers who appeared as if they had grown tired of hide prices that were going up almost week-by-week. By the middle of the week, we were aware of a handful of sellers who were retracing their steps and attempting to rekindle interest from the week prior at steady levels they had passed on.
As mentioned above, buyers in general who had seen their patience wear thin from constantly rising prices, appeared to draw the line in the proverbial sand last week. In general, they refused the higher asking prices from sellers, while we are aware of several buyers who began to lower their bids in an effort to try to send a strong message to sellers.
At the end of the day, there were not a lot of hides changing hands last week and although the vast majority of business reported was at steady levels, there is no question there appears to be a slight undertone to the market and it will certainly be interesting to see how things sort themselves out this week.
As to what we look for this week, we tend to suspect we will see very limited offers again, if any. We look for the vast majority of producers who have people travelling in Asia to refrain from offering, preferring to let those travelling share offers with the customers they are meeting. In the meantime, we tend to suspect those few who might publish an offer list this week will more than likely keep prices unchanged and we would be shocked if any offer lists were populated with volumes of hides to sell. In the meantime, the timeframe leading up to the All China Leather Exhibition in Shanghai (September 4-6) in our opinion will be very interesting and we should get a very good perspective of the exact sold forward positions of producers, while we should also learn a lot more about the inventories of tanners and their overall leather orders.
One concern for us as we move forward is increasing number of reports of slow letters of credit openings by some tanners. This problem according to sources appears to be a bit more widespread than a couple of weeks ago, as it appears high raw material costs, slow payment from shoemakers and tighter lending requirements are definitely impacting cash flows for many tanners. This is certainly worth keeping an eye on.
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