US Perspective—28.04.15
28/04/2015
www.themaxfieldreport.com
Last week in the big packer trade the decline in prices slowed considerably. We did not see as many hides changing hands as in the week prior. There are still numerous reports claiming a wide range of trading; we tend to believe that reports claiming prices went down by more than $0.50-$1.50 are greatly exaggerated.
Packers did not appear nearly as keen to conclude new business, especially at the initial ideas of buyers, who had ideas $2-$4 lower than the last established trading levels. Overall, sources share packers were pleasantly surprised when some buyers, upon finding their ideas refuted by packers, improved their ideas immediately. However, we should also share that many of these buyers reduced the number of containers they were willing to buy at higher prices.
Some packers shared they were pleased with the amount of interest they saw last week, claiming interest was broad based, while they were also encouraged by the amount of business not concluded as they believe this demonstrated there was some decent underlying demand.
Members of the cowhide trade report that last week was not nearly as busy as the week prior. Sources reported buyers started the week with aggressive ideas, looking to take prices down $2-$3, while producers had ideas on trying to hold prices steady with their levels from the week prior.
At the end of the day, it appears producers did succumb to lower trading levels; however, the discounts taken were not as severe as the past two or three weeks, with prices down roughly a dollar across the board on most selections, while sellers are likely to argue that HNDC held their value last week. Slaughter levels are slowly rising and we could see offer lists a bit more populated this week.
In the meantime, we continue to hear reports of sellers struggling to obtain timely letters of credit openings from customers who have older outstanding contracts; many of these contracts are now several dollars higher than current trading levels. This in turn is leading to numerous unconfirmed rumours of buyers asking to renegotiate prices on these outstanding contracts. Several sources have shared they are currently dealing with more “problems” like this than actually selling hides.
Meanwhile, problems in northern China continue. Some sources claim that the repercussions of anti-pollution policies are minimal, but others say several tanners have forced to close and larger tanners have been instructed to reduce soaking levels as the central wastewater treatment facility was running higher effluent levels than permissible. That said, we encourage readers to make their own investigation.
We suspect producers are feeling as if they have amply discounted hide prices and although we can empathise, unfortunately, for those selling hides, there are still plenty of negative variables surrounding the market. We are likely to see buyers and sellers not on the same page to start this week and it will be interesting to see which side blinks first.
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