German Perspective - 30.06.15
30/06/2015
We are in a classic downward trend and this comes at a time of the year when usually the leather industry takes a break and the change in the seasons leaves quite a number of uncertainties that need to be cleared up before tanners can really think about market activity and raw material needs for the second half of the year.
With almost everyone overseas being on hold at the moment it is pretty difficult to make a fair judgement of where the market actually is. Everything is wide open to any kind of rumours and horror stories. Most of the trade was happy with the situation until the end of the first quarter but now people are falling over each other to say how terrible it is at the moment. Some are even making comparisons with the situation in 2008 but if people are realistic they should see and understand that we are far away from that. Hide prices in Europe are still at the upper end of the historical range and we just have to deal with the consequence that leather demand for various reasons has significantly reduced and that tanning capacity has been cut by quite some volume. However, if the leather demand were there, rest assured that there is still enough tanning capacity to fulfil all the consumer demand around the globe today.
The problem is just that the demand isn’t there and hasn’t been for a long time. All the other dramas that we are experiencing presently are simply side-effects of what happened about a year ago. It might be adequate to say that most of the money sellers made on the way up is now being paid back. One interesting point is the volume of complaints about contracts not being honoured. We don’t see that much of this and some of the complaints we do see sometimes seem exaggerated; possibly there is another story behind this.
For the moment this means business has come almost to a total standstill. Only the premium tanners in Europe continue at normal levels and this does not just apply to automotive tanners, but also to several premium upholstery and shoe upper producers. Other tanneries, in particular in Asia, have decided almost completely to disappear from the market. The trend is your friend and everyone can throw new prices and ideas around, quoted here and there and used as an indication of what people then call the market. We would simply say there is no market, because there is not enough trading that could be called a reflection of compromise between buyer and seller. This makes it difficult or even impossible to quote a market level for a great number of different hide types.
Trading last week was consequently pretty light and almost completely focused on the European customer base and again on heavy males. From overseas a lot of prices were thrown around, but never as a serious bid, only really as an attempt to copy what others were doing. Only a few sales were established and they were mostly for low grades and some heifers. For the hides sold, prices were fractionally lower, but as already mentioned above we are not in the position to declare any reliable level as being the market today.
The kill: The kill remains at the low levels typical of the season and with the beginning of the holiday period, beef demand here is not supposed to increase, which suggests that for the next eight or 10 weeks slaughter numbers will be low. This might, in a market like this, be the best of all options. With low prices for milk, cow slaughter will have to be monitored carefully in the second half of the year and one would not be surprised if the numbers increased significantly after the summer break.
What we expect: We continue to expect very little and the day when the market will revitalise itself seems still to be far away. Leather business is never zero and not all tanneries are ceasing production. We don’t think the trend will be broken yet, but a bit more activity in July would not surprise us.
| 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 |
Soft |
| 25/29,5 kg | 27,5/28,5 kg | 22/27 kg | 25/26 kg | € 2,05 |
Soft |
|
|
Dairy cows |
15/24,5 kg |
22,5/23,5 kg |
13/22 kg |
20/21 kg |
€ 2,10 |
Weaker |
|
25/29,5 kg |
27,5/28,5 kg |
22/27 kg |
25/26 kg |
€ 1.80 |
Weaker | |
|
30/+ kg |
33,5/35,5 kg |
27/+ kg |
29/31 kg |
€ 1,75 |
Weaker | |
| Bulls | 25/29,5 kg | 27,5/28,5 kg | 22/ 27 kg | 25/26 kg | € 2,20 |
Weaker |
| 30/39,5 kg | 36,0/37,0 kg | 24/34 kg | 31/33 kg | € 2,20 |
Soft |
|
| 40/+ kg | 45,0/48,0 kg | 34/+ kg | 38/40 kg | € 2,00 |
Steady |
|
| Thirds | 15/+ kg | 25,0/27,5 kg | 13/+ kg | 24/26 kg | € 1,60 |
Stable |
| Thirds bulls | 30/+ kg | 38,0/40,0 kg | 24/+ kg | 33/36 kg | € 1,75 |
Stable |
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