German perspective – 23.4.13
23/04/2013
Both sides know about the situation and try to take as many protective measures as possible. The situation is different in the main markets in Europe and Asia. In Asia, at least for the majority of our clients, the pipeline is well filled and the demand for shipments is falling week by week. Tanners in Europe are still calculating their stocks sharp – if not too sharp – and every week there is the one around who needs to cover a small production gap the following week.
Another reason for some short-term demand for heavy hides lies certainly in the shift of the production of automotive leather from a specific account to a number of others who need to cover the calculated and immediate needs to fulfill new requests. This short-term demand makes some people believe there is still more 'need to buy'.
However, this is the story which is told in other markets around the globe: that tanneries are under-bought and a week or two of reduced purchasing activity is just a break, but no change of the trend; many believe tanners will still continue to buy and need to do so.
We see more people starting to seriously slow down and the stories about reduced credit lines in various regions of China are worrying. This would confirm some of our concerns that this market is possibly not going to be sorted out by just declining demand, but in the first instance by cash-flow problems. A lot of money is tied up in the supply chain and any kind of congestion – for whatever reason – could become quickly an issue. We are watching the situation with great care and interest.
Hardly anyone speaks about the leather business any more. It seems everyone is taking it for granted that leather demand is unbroken and strong as before. Asking around the globe, including China, it seems that the heat is off a bit and one is questioning if this is just the seasonal decline or if it is the first indicator that leather consumption could be also in retreat, because less leather is used due to reduced consumption or due to increased substitution. Many different opinions are around and it is possibly still a bit too early for any final judgment. However, this also needs to be monitored and we are again excluding the high end of the market in this observation. For the more standard hides it seems that a number of concerns which we had stated already start to get into play now week by week.
Trading and sales are become more and more of an issue and hard work. Many buyers had to be reminded that serving regularly on the way up means also to stay with the supply when the market is turning. Interest this week was again pretty minimal, with the only exception heavy males, which still find a taker if needed. For the rest, interest and bids were low and not accepting the bid meant in several cases that the buyer walked silently away.
Sales which finally had been done were for reduced volumes than initially discussed and for every sale in Asia one had to fight even harder this week than in the weeks before. Looking at the slowdown and delays in L/C openings one can hardly believe that many tanners are so desperate for hides and even less when buyers start to believe that the rally comes to an end.
The kill: The kill is just about to be steady at normal numbers for the time of the year. Butchers find it hard to buy cattle and to sell premium cuts of beef. The first cattle is now seen in the fields and weights start to decline gradually now. For the next week, we don’t think that number will change much.
What we expect: The general market has certainly come to a halt and tanners, in particular in Asia, seem to sense it too. There might be still some short-term need in Europe, but that will hardly be enough to clear production. There are not yet any unsold hides burdening suppliers and so they will continue to be stiff on prices, but as mentioned last week the defence lines will most likely start to weaken in the coming weeks.
| 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 |
Share this story:
