German Perspective - 19.04.16
19/04/2016
The situation in the volume, consumer and mainstream sectors is a bit different. Price is the driving factor here and the reshaping of the Chinese tanning industry with all related consequences is leaving serious footprints in the market.
For suppliers in our region, business is now separated into two worlds. One is the premium EU business where an almost total equilibrium between supply and demand has been in place for months. The other is the commodity market in Asia, where price and the restructuring of mass production and material consumption dominate the scene. The feel of the general market situation depends very much on which of these sectors dominates the business of a supplier of hides.
While heavy and better-quality hides have never had a particularly difficult time and price corrections since last spring have been quite limited, the market for lighter, female hides has been destroyed by the mainstream markets in Asia. After a major price correction last summer, lighter weights and dairy cows had a pretty stable period owing to a three-month rise in demand from northern China, a mixture of replenishment and recovery speculation. This dried up before the Chinese New Year and has never really recovered.
Now it is time to replenish and the community out there knows well about the importance of this market section. Since the APLF exhibition in Hong Kong at the end of March, pressure on suppliers of cow hides around the globe has begun to increase. This pressure has already created the first cracks in suppliers’ walls of defence, with occasional sales from various EU origins at lower levels. A lot will now depend on the results of upholstery fairs such as Salone del Mobile in Milan and High Point in North Carolina, which will then help decide on the the next moves in the cow market. Initial feedback suggests that higher-quality furniture leather is performing well in the market.
Sales volumes this week were again below average. There were plenty of bids for cows, but far below any workable levels. Bids were $5-$7 below asking prices, but we doubt that anyone was taking them at this stage. Bulls were able to find their regular buyers. It is getting increasingly difficult to explain to the packers why there is such a big difference between the two markets.
The kill: The kill is reasonably steady. The good news is the fact that there is a shift towards more males and fewer dairy cows in the mix. The cattle is just about to return to the fields, which could bring a final wave of cow slaughter before the traditional decline for the summer season.
What we expect: The market is still waiting to sort itself out and still needs to find a real balance. We continue to believe that the second quarter is always problematic and there are many negative influences: holidays, low season for leather, weather and so on. Since the stocks tanners hold are not high, market activity in the coming weeks will tell us a lot about the real volume of leather business around the globe. Generally we believe that males will remain steady while cows need to find a new basis.
| 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 |
Weak | |
|
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 |
Share this story:
