German perspective – 16.04.13
17/04/2013
This might be easier for some items and less for others, but it is definitely a situation people have to take into account. There is hardly any tannery we speak to who is not dealing with this subject with the change into the next season, i.e. after the summer holidays we assume that we will see the consequences of the process. For the moment there are still a number of tanners struggling to fill the drums with the necessary raw material. It seems also that a number of the wet blue suppliers are trying to take advantage of the raw material market prices by trying to unload their accumulated stocks, not take them through the summer. That was possibly the idea and the strategy for quite some time. It is also true that the struggle for payments continues to rise.
No question that the good and strong hands are still pretty well afloat, but most of the others have to count every single cent to keep their businesses running. There is no question that higher split revenues and, in some cases, higher leather prices supported some of the price increases which we have seen over the past months. It is also true that the high-end automotive demand and the luxury accessories which are demanding high quality but also high-price leathers are the locomotive for the high raw material prices, but the almost linear price increase for raw material prices of most origins cannot match the realities on the mass production markets.
What tanners may need to follow and to accept within a running season can be corrected in the following one and it seems that not many tanneries had anticipated the extended price rise and got badly caught this season. They will definitely not do this again, whatever decision they take to avoid this for the future. Some will shift to more economical hides, others will try to reduce production and stick to high margin products, or whatever else people think suits them best. In any case it is not to stay on track and to pay whatever the raw material market is asking or what packers believe they can value the raw materials at. Traditionally it always needs some time until all this filters through the pipeline, but the indications towards the summer are pretty clear. Obviously, sellers are trying to protect their prices and positions, and it might still take a hard wrestle until the new fundamentals take over.
For this week and possibly next there was nobody taking such thoughts into consideration and consequently prices were not easing and prices had to be paid as they were quoted. A number of our colleagues seem very impressed by the situation and were willing to pay even higher prices for Aprils at the abattoir door, despite the fact that the USD has lost 2% since March and prices were already high then.
The present abattoir prices cry for higher asking prices again and this will find even more resistance, we guess. Sales this week were just about steady. Heavy bulls and dairy cows were again the grades in focus. Prices were higher for the bulls, but just about steady for cows, considering the weaker USD. Most other grades did not find so much attraction and some offers were turned down.
The kill: Finally, it seems that the long and cold winter is coming to an end. This should normally bring slaughter numbers down. The media is pushing for more 'horse meat scandals' with the latest one coming out of Holland. The kill is just steady and there is no indication for any short-term change.
What we expect: Well, this market is not yet at the end of its course and at the moment of retreat. However, we all know how it is. It takes, week by week, more effort to push it and to beat the gravity. At the stage of this season there might be power enough for another push, but we all know there is an end to all trends and the defence lines are getting stronger and higher just because the tanning industry in the main cannot afford this level anymore.
| 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 | € 2,40 |
Steady |
| 25/29,5 kg | 27,5/28,5 kg | 22/27 kg | 25/26 kg | € 2.20 |
Steady |
|
|
Dairy cows |
15/24,5 kg |
22,5/23,5 kg |
13/22 kg |
20/21 kg |
€ 2.30 |
Steady |
|
25/29,5 kg |
27,5/28,5 kg |
22/27 kg |
25/26 kg |
€ 2.00 |
Steady |
|
|
30/+ kg |
33,5/35,5 kg |
27/+ kg |
29/31 kg |
€ 1.90 |
Steady |
|
| Bulls | 25/29,5 kg | 27,5/28,5 kg | 22/ 27 kg | 25/26 kg | € 2.40 |
Steady |
| 30/39,5 kg | 36,0/37,0 kg | 24/34 kg | 31/33 kg | € 2.20 |
Steady |
|
| 40/+ kg | 45,0/48,0 kg | 34/+ kg | 38/40 kg | € 2.00 |
Steady |
|
| Thirds | 15/+ kg | 25,0/27,5 kg | 13/+ kg | 24/26 kg | € 1.60 |
Steady |
| Thirds bulls | 30/+ kg | 38,0/40,0 kg | 24/+ kg | 33/36 kg | € 1.60 |
Steady |
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