German Perspective - 24.02.15
24/02/2015
The big challenge these days is shipping, because shipments have to be booked without letters of credit in hand, letters of credit that can only be opened after the Chinese New Year holiday. Also the times of shipping have changed by quite a bit; before it was sometimes possible to catch a shipping within a week or so, but today it requires booking and administration preparations to be done at least three or four weeks in advance. This can make things pretty difficult when there is nobody in the office in China to deal with questions or to supply requested information.
With most offices and banks being closed this coming week too, it means a lot of patience and improvisation. However, we should not complain too much because our colleagues in the United States have had to deal with far bigger problems as a consequence of the strike at the west coast ports, which appear to have ended on February 20.The strikes and the consequences for shipping and making judgements about the hide business have made things pretty difficult.
Hardly anyone knows what the congestion and delays will really mean for the raw material supply and production planning of the tanneries in Asia. Have they enough inventory to manage? Have they bought early enough and in sufficient volume from other origins to cover their orders? Will all payments and shipments that have been delayed be honoured when the ports are open again? Will the letters of credits and deposits for products that have been held up overstretch the cash resources of customers? Will the hides that are stuck now come through in an avalanche and block other business when the strike is finally over? What will be the consequences on finished product business, including imports into the US? Quite a number of questions that are waiting for answers and could have quite a strong effect on the raw material and finished product business in the second quarter of 2015.
Until then most people will try to operate as usual. After the strong kill here in Europe since November the numbers are now into their seasonal decline and many are trying to play the supply card again. However, this could be a pretty dangerous game, because only the very high end of the quality range could actually really see any impact from the supply side. The rest of the product range can find plenty of alternatives if things get too expensive, and many should be warned against playing too much with the option of higher prices and should not forget that all the business we have had in the last three months was a consequence of our pretty attractive price levels due to the currency situation. This has given us the upper hand in sales because we have been very competitive in price in the past three months.
Most markets are reporting that leather orders are falling far behind the normal levels for this time of the year and tanners are getting increasingly worried that it may now be too late to make up lost ground.
Sales this week have been pretty light with just some patchy sales in Europe and very few final deals in Asia. Prices have remained almost unchanged and anyone who has an idea of asking for more money will have to take the risk and wait until things are back in full swing in the first half of March.
The kill: The kill this week has been pretty slow although the numbers are not below what one would expect for this time of the year. From the end of Carnival week the kill should get moderately better again over the next few weeks.
What do we expect: This coming week, many in the trade are going to head to the Lineapelle leather fair in Milan. Such an event will give us a bit more feel for the situation in the leather industry. However, except in automotive, it seems that all other sectors are suffering from reduced demand for different reasons. This makes us believe that the prices and the markets will still not have too much variation and, despite all efforts, we would surprised to see prices changing much.
| 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 | € 2,35 |
Steady |
| 25/29,5 kg | 27,5/28,5 kg | 22/27 kg | 25/26 kg | € 2,10 |
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 | € 2,25 |
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 | € 2,05 |
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 | € 1,80 |
Steady |
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