German Perspective - 23.09.14 - leatherbiz: Lea Leatherbiz

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German Perspective - 23.09.14

23/09/2014
What happened this week: The last fair of the busy fall season, Le Cuir A Paris (now to be called Première Vision Leather), has closed its doors and was again well attended. The Air France strikes were a worry and some struggled to get their trips organised, but it seemed only very few did not make it to Paris for the show. It seems fair to say that the luxury segment is still quite ambitious and the recent slow-down in Asia and the problems with the Russian market haven’t discouraged the luxury companies from targeting the wallets of the wealthy. However, it seems that the easy spending of the noveaux riches in Asia, particularly in China, is slowing down and only the seriously wealthy around the globe are buying high-end products.

These people are, however, not just attracted by brands and labels, but have to be convinced by the entire product and that means, outstanding materials, classy, classic designs, top-end manufacturing quality and exclusivity. If this is a trend for 2015 it could mean the good news for real, timeless luxury and may be less good news for those who have travelled more in the wake of the trend in recent years. For the leather industry it could mean that only those at the highest end of the quality and price range are well prepared for more uncertain times. Those for whom it was enough, in the time of easy spending, to have a showroom in an exclusive shopping mall to spread some glamour around could possibly expect a bit more difficulty in generating enough demand for products for which price and quality with exclusivity do not correlate enough.

For those who are not in this business, the current week was a bit of ‘back to normal’ after the excitement of the past weeks. Most have returned to normal work after the shows and meetings. Many are rubbing their eyes at simple numbers. The price structure of the market has changed and many realise now that demand from China, the firm US dollar and the record price levels raw material suppliers in the US are still asking for have pushed a lot of raw material demand into Europe and propelled several of the attractive sources back to levels of spring.

There is nothing cheap or economic around any more, or at least nothing that fits into present calculations. This is hitting quite a number of tanners hard with many having run their inventories low over the summer. Now is a bad time for this, with the start of the new production cycle; raw material prices are too high and leather buyers are not showing much readiness to raise leather prices. Quite the reverse: quite a few are asking for price reductions to maintain the volume of orders. The Europeans haven’t felt it yet, because we had a good start with a decent amount of business shifting in our direction. Now we are at the point of evaluating how sustainable this is with the higher price packers are looking for being and the enthusiasm of some hide sellers.

As far as activity and sales were concerned, last week was not really very active. There are always bits and pieces and a number of Asian buyers were still hoping for some bargains they thought they might have missed in Shanghai, but real and convincing follow-up business wasn’t seen, at least not this week. European buyers haven’t yet surrendered and are still fighting hard against any price increases, even though they understand that currency makes a difference. For those exporting leather in US dollars too it might be a bit easier to deal with the situation. In general, however, many are seriously worried and the biggest issue is cash-flow; the summer break is now showing its effects in late payments.

The kill: The kill took a bit of a break which might be related to excellent weather conditions. However, we are not too concerned and expect numbers to resume shortly.

What we expect: The next weeks could become tricky again. At the beginning of October there is a short holiday break in Asia again and it seems that everyone is now seriously trying to analyse what the general disparities in the markets and between the raw materials and leather mean for them. The coming week will not change much in the general market balance, but possibly into October we should finally see the market trend for the rest of year.

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

€ 2,30

 Steady

25/29,5 kg

27,5/28,5 kg

22/27 kg

25/26 kg

€ 1,90

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 € 2,15
 Steady
Thirds 15/+ kg 25,0/27,5 kg 13/+ kg 24/26 kg € 1,80
 Steady
Thirds bulls 30/+ kg 38,0/40,0 kg 24/+ kg 33/36 kg € 1,75
 Steady


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