US Perspective—21.07.15
21/07/2015
www.themaxfieldreport.com
The rapid price decline in hide prices slowed considerably last week, leading to thoughts by several members of the trade that perhaps we were finally approaching the bottom of the market. Overall, it appeared that those selling hides were not as anxious to chase the lower ideas of buyers who were looking to buy hides. It was also refreshing to hear that several sellers were laying claims to refusing to acknowledge the requests of buyers to have sellers consider renegotiating prices of their outstanding sales.
We are not confident that most would call last week a particularly busy week of trading for sellers. What is more important is the fact that we did not see sellers chasing the lower ideas of buyers, while appearing not to have nearly as much tolerance for those looking to “average-down” their outstanding sales. Of course, there will be those who will dispute any claims of prices finally reaching a trading plateau, citing that the fundamentals of the business have not changed. That said, an argument can be made that with Europe close to being out for its annual summer holiday that it will be difficult for sellers, who will only be able to sell hides to Asia.
Slaughter levels continue to run 4%-5% lower than levels of a year ago so the lack of sales in Europe may at least offer the sellers a bit of breathing space. In addition, there are only two weeks left in the month of July and it will not be too long before we see members of the US trade travelling in Asia prior to the start of the All China Leather Exhibition in Shanghai (August 31-September 2). Considering recent trading levels and the fact many people selling hides will be looking to recapture some of the money they have lost in the decline in the market, we may see traders who are looking to create some long positions.
We look for this week to be an interesting week of trading, if not for anything else because those selling hides may finally be able to take a breath, with the market at least appearing as if it is close to stabilising.
Should the stabilisation of the market come about, we suspect that this would allow sellers to bring a resolve to any of their problems still pending. That said, it will be interesting to see sellers offer lists this week. We are well aware of numerous sellers who have experienced some substantial financial losses in the past three or four months and suspect they are anxious to try to position themselves to collect some of these lost funds. As to the possibility of sellers able to raise prices in the interim, we are not as confident of this possibility; however, we are of the opinion that the downward pressure in the market place appears to be easing.
Share this story:
