German Perspective - 04.02.14
04/02/2014
Consumers in our society are spending more on holidays and electronic gadgets than anything else. Normal consumers are price-conscious about products related to leather and are not really big spenders. This means that the winter sales came early and with massive discounts. We will know at a later stage if retailers are happy about the final clearance.
The first trade shows in 2014 produced pretty mixed results. Yes, there are always a few that are successful, but the general situation is different. The top and luxury end of the market is off-limits, but the rest has become so price-conscious that split prices remain at record levels, all cheaper origins are very firm and prices are going higher, but the middle segment is suffering. Looking at the finished products in the shows one can clearly see the trend towards lower-quality leather. However, the good news is that more natural defects are being allowed and even used to set new trends. One can see brands and scars, scratches and parasite defects openly used in designs to tell a story about nature and life.
Where this is not possible, vintage and retro fashion helps a lot because these leather types and finishes permit defects too, and when all this is not allowed metallic finishes, PU coats and prints are back too, which is the usual market reaction when prices for raw materials have gone too high. Too many medium and lower selections are piling up and the economics do not allow the regular use of raw materials in quality selections. It will now be interesting to see how the consumer responds and how quickly this is going to filter through the pipeline. It is good to see that the leather industry has realised that solutions have to be found to market the entire range of selections.
The week in general was very, very quiet. Not really a surprise, because of the new year holiday in many parts of Asia. This year it seems that tanners are really taking a break and not many people can be contacted. They are really closed and so was business activity limited to Europe and the other markets which are not related to the Chinese calender. This has limited demand by quite a bit and there were more hides offered than tanners looking to buy them. It was a bit strange to see a number of contacts searching for sales options. It seems that the supply card has been played for so long that many were willing just to sit on hides that couldn’t be moved in November and December.
Supply has for long been the justification for rising prices and as long as production was cleared it worked. Now we would need a strong wave of buying to clean all the grades and origins up. Sales this past week were very limited. A few low grades and a handful of regular contacts who needed a top-up were all there was. A firmer US dollar towards the end of the week made calculations a bit easier, but without the customers who are on holiday it will be another week or ten days before we know the full effect. Many tanners are in negotiation with their clients for next season and a lot will depend on the final results for leather sales and orders. For this week everything has been pretty much at a standstill.
The kill: The kill this week was again reduced. The numbers are about 20% down compared to the high levels we saw in the middle of January. Packers report enough cattle around at prices that are too high but that beef sales are not good enough for it to work out. It is mainly exports and sales of prime cuts that are missing. Weights are moderately down and we don’t expect any change in the coming weeks.
What we expect: It requires a lot of imagination and creativity to believe that there will be any change in the situation this coming week. The Asians are still on holiday and do not give the impression that they are so desperate for hides that they need to spoil their holiday. In Europe most attention will be paid to the next round of abattoir buyings and far less on the sales of hides. Currencies will be a factor for the market in the coming weeks too.
| 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 | € 2,50 |
Steady |
| 25/29,5 kg | 27,5/28,5 kg | 22/27 kg | 25/26 kg | € 2,15 |
Steady |
|
|
Dairy cows |
15/24,5 kg |
22,5/23,5 kg |
13/22 kg |
20/21 kg |
€ 2,25 |
Steady |
|
25/29,5 kg |
27,5/28,5 kg |
22/27 kg |
25/26 kg |
€ 1,95 |
Steady |
|
|
30/+ kg |
33,5/35,5 kg |
27/+ kg |
29/31 kg |
€ 1,80 |
Steady |
|
| Bulls | 25/29,5 kg | 27,5/28,5 kg | 22/ 27 kg | 25/26 kg | € 2,30 |
Steady |
| 30/39,5 kg | 36,0/37,0 kg | 24/34 kg | 31/33 kg | € 2,30 |
Steady |
|
| 40/+ kg | 45,0/48,0 kg | 34/+ kg | 38/40 kg | € 2,20 |
Steady |
|
| Thirds | 15/+ kg | 25,0/27,5 kg | 13/+ kg | 24/26 kg | € 1,70 |
Firmer |
| Thirds bulls | 30/+ kg | 38,0/40,0 kg | 24/+ kg | 33/36 kg | € 1,75 |
Firmer |
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