German Perspective - 17.2.15
17/02/2015
The holiday season is covering up the main issue that would normally concern the hide market. For some weeks, people have been talking about the strikes along the West Coast ports in the US and so far the influence on the hide business has been played down. However, those who are directly influenced are beginning to feel the consequences.
We, as European suppliers, must be quite grateful, because we have taken advantage of the situation. Asian buyers began to double-cover their raw material needs a few weeks ago, using European supply as a safety net. This explains why letter of credits and payments had been so slow until about two weeks ago and have become significantly better in the past 10 days.
Even with the extended voyage from Europe, hides which are shipped within the next three to four weeks could fill the possible holes created by interrupted shipments from the US.
Those who are getting a bit too excited about this over here might be reminded that one day the situation in the US will be resolved and a large backlog of shipments will be released, which might make our lives comparatively difficult.
Leather demand is independent of all this, and for the time being there is no indication that any tanner is concerned he will not get the raw material he needs in the coming months.
During this week the media was a bit more relaxed about the problems in the Ukraine and Greece, and we saw a decent recovery of several commodity prices. The euro has stopped its descent and this has created a bit more confidence on the markets.
The Paris leather show [Premiere Vision Leather, February 10 to 12] featured a number of disappointed faces, but this might just be the result of expectations running too high, rather than anything else. The luxury market has been overheated for some time and with a number of the luxury brands becoming tanners themselves, a few bad decisions have been taken over the past year or so.
Trading this week was pretty light and we were only able to trace limited interest for some dairy cows in Asia. Bits and pieces were concluded, but the total volume of sales was way down on the previous weeks. Prices were barely steady, with some very ambitious bids being seen. We don't think this is a real reflection of the market, but just the result of the holidays in Asia and the carnival season in Europe. However, we think one has to be realistic and consider that the majority of tanners feel sufficiently covered in view of the leather business they have or they expect for the near future. We must also not forget that the ‘hot season’ of leather production is going to end in eight to 10 weeks.
The kill: There’s nothing spectacular to say about the kill, which is well down and will be down during the next week, before recovering into March.
What we expect: We should be prepared for at least one or two very quiet weeks, owed to the absence of the buyers rather than the market itself. Prices can be expected to remain reasonably steady.
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