German Perspective - 26.08.14
26/08/2014
The tanning industry, except for large industrial tanners, is still missing clear indications about leather demand and even more about the prices they will eventually be able to squeeze out of their customers. Tanners need to buy raw material or they have to close their factories. However, with the raw material prices at today’s levels and the reduced credits for splits in many regions the calculation is a new challenge for the coming season for the ‘normal’ producer of leather.
This makes it difficult for the majority in the tanning industry to decide on purchasing; most of the hide options seem to be far too expensive these days. This leads to hand-to-mouth buying, and mainly of the cheapest options around.
European tanners are slowly beginning to return to work after the holidays and many will be disappointed next week when they realise that very little has happened since they left their desks. Whatever the real situation, sellers are not queuing up and desperately asking for sales and quick shipments of summer hides. On the other hand it is also true that most suppliers admit that sales of low grades and cows have been decent, supported by a stronger US dollar. Extra-heavy males and high-quality grades are still finding a home in Europe and the fresh hide programmes need renewal on a regular basis. Salted males, which had seen a bit of attraction for trials in the past weeks, are again difficult to move and the extra quantities are competitive on paper, but without much response from the traditional markets this week.
With the holiday season coming to an end this Friday and many people already back at their desks the uncertainty persists and everyone is hoping for more clarity in the coming weeks when the trade meets in China and a lot of information about the leather business, stocks, prices and opinions will become available. After that everyone will have to make their own minds up and the price trends will be set for the weeks to come.
For European suppliers the stronger US dollar is most welcome; a strong rise at the end of last week brought it close to the level of $1.32 to the euro. This makes our hides competitive again, and compared to the situation in the spring we have gained 4%-5%, which has helped with abattoir prices. Abattoir prices never really adjusted to the correction we have had to digest after the shut down of the tanning industry in Hebei province in China. We are now getting back to the levels for the euro that we saw last year around this time. Also split prices are not too far away from last year’s levels, before the great bonanza of prices.
So, the situation is comparable to that of a year ago and it is going to be very interesting to see what consequences this has. From our perspective, conditions are pretty much the same but it is important to watch the volume of leather orders and prices, considering this went wrong in the last season.
Sales last week were satisfactory with the first European sales after the holidays. With the weekly sales for cows and low grades in Asia one cannot complain about the total number. The good news is that letters of credit openings are getting back to normal and we would say it is fair to declare the holiday season for 2014 over.
The kill: After the fantastic weather in July, August has been disappointing. Cold, wet and windy and this is good for beef demand. Add in the end of the school holidays and the kill was pretty good, with forecasts the same for this week.
What we expect: The market is now steady and a lot of the price pressure in euro has now been wiped away, so we can take it easy until ACLE. Everyone will have an opinion by then and this will then determine the next trend for prices. We can’t see any tanner taking serious decisions until they have seen all their suppliers and formed their own impressions about the market and sales.
| 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 | € 2,45 |
Steady |
| 25/29,5 kg | 27,5/28,5 kg | 22/27 kg | 25/26 kg | € 2,05 |
Steady |
|
|
Dairy cows |
15/24,5 kg |
22,5/23,5 kg |
13/22 kg |
20/21 kg |
€ 2,20 |
Steady |
|
25/29,5 kg |
27,5/28,5 kg |
22/27 kg |
25/26 kg |
€ 1,80 |
Steady |
|
|
30/+ kg |
33,5/35,5 kg |
27/+ kg |
29/31 kg |
€ 1,70 |
Steady | |
| Bulls | 25/29,5 kg | 27,5/28,5 kg | 22/ 27 kg | 25/26 kg | € 2,20 |
Weakish |
| 30/39,5 kg | 36,0/37,0 kg | 24/34 kg | 31/33 kg | € 2,25 |
Pressure |
|
| 40/+ kg | 45,0/48,0 kg | 34/+ kg | 38/40 kg | € 2,15 |
Steady |
|
| Thirds | 15/+ kg | 25,0/27,5 kg | 13/+ kg | 24/26 kg | € 1,75 |
Steady |
| Thirds bulls | 30/+ kg | 38,0/40,0 kg | 24/+ kg | 33/36 kg | € 1,70 |
Steady |
Share this story:
