German Perspective - 05.04.16
05/04/2016
It’s fair to say that APLF did not bring any really new information to clarify the direction of the market over the next three months or so. It was a bit of a strange fair because the usual pattern of a slow start, a very active second day and almost nothing happening on the third day did not take place. It started very slowly and it took quite a few hours on the first day for the attendance to reach expected levels. The second day was far less busy than it normally is, and day three was, in the end, significantly more busy than we normally see on the last day of the show; people were busy on their booths until well into the afternoon. So far so good, but actually when it comes to business we assume the majority of suppliers will have returned home quite disappointed.
It is not so much a question of lack of interest, but rather a problem of finding a common position on the price levels for hides. Sellers are not willing to surrender and continue to ask for steady levels, while buyers expect, in view of reducing leather orders and increasing pressure on leather prices, declines in the raw material values.
For the European suppliers it is a pretty difficult task because abattoir prices are not adjusting as they should and the US dollar has lost quite a bit of its value. This doesn’t make calculations any easier or leave any room for price reductions in Asia. EU hides for shoe leather production have been far too expensive for quite some time. For dairy cows the opinions of buyers and sellers are apart by $5 in most cases. Consequently very few buyers have come close to offering asking prices, and if they have it was only for selected premium weights and types. For the mainstream, decisions have been postponed because tanners were not willing to come close to asking levels.
It is still true, of course, that tanners need hides to fill their drums and the inventories they have built up are beginning to fade quickly. This is possibly also what most of the suppliers are betting on, that eventually the tanners will have to give way, simply because they need to purchase some kind of raw material. This might be true, but ignores the fact that there are other, more economical options available on the market than European dairy cows.
We believe that not many hides changed hands at APLF and it’s even possible there were more sales for Europe than for Asia.
It seems that quality tanners in Europe are dealing much more successful with the present problems in the leather market than their counterparts elsewhere. Most of them continue to be reasonably busy and they are just worried that price pressures might begin to come into their business eventually.
As far as Europe is concerned prices were steady or moderately lower, while sales during APLF, in combination with the weaker US dollar, will definitely have led to reasonable reductions in revenues in euro. Heavy male hides continue to be a different story; they continue to go their own way at steady levels. Also calf and kipskins are generating decent interest in various markets, thanks to reduced price levels versus a year ago.
The kill: The kill continues to be pretty steady, with females, and in particular dairy cows, still dominating the slaughter. Hide weights are beginning to fall and we are now entering the second quarter of the the year, which usually has lower numbers and lighter weights and is not really a favourite time of year for the hide processing industry.
What we expect: We believe that buyers and sellers are now going to get closer to each other. The regular buyers of European hides are going to have to make some decisions, and sellers will too in the end. The fundamentals point in the direction of ongoing pressure on prices and moderate declines.
| 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 | € 2,30 |
Weak |
| 25/29,5 kg | 27,5/28,5 kg | 22/27 kg | 25/26 kg | € 1.85 |
Weak |
|
|
Dairy cows |
15/24,5 kg |
22,5/23,5 kg |
13/22 kg |
20/21 kg |
€ 1.90 |
Weak |
|
25/29,5 kg |
27,5/28,5 kg |
22/27 kg |
25/26 kg |
€ 1,60 |
Soft | |
|
30/+ kg |
33,5/35,5 kg |
27/+ kg |
29/31 kg |
€ 1,55 |
Soft | |
| Bulls | 25/29,5 kg | 27,5/28,5 kg | 22/ 27 kg | 25/26 kg | € 1,95 |
Weak |
| 30/39,5 kg | 36,0/37,0 kg | 24/34 kg | 31/33 kg | € 1.95 |
Soft |
|
| 40/+ kg | 45,0/48,0 kg | 34/+ kg | 38/40 kg | € 1.85 |
Steady |
|
| Thirds | 15/+ kg | 25,0/27,5 kg | 13/+ kg | 24/26 kg | € 1,35 |
Weak |
| Thirds bulls | 30/+ kg | 38,0/40,0 kg | 24/+ kg | 33/36 kg | € 1.35 |
Soft |
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