German Perspective - 02.08.16
02/08/2016
A few contract tanners remain open and are running at full available capacity to take as much advantage from the holidays as they can with whatever staff are willing to be present during the school holidays. This keeps the flow of fresh hides at least for the key categories relatively intact and anything that cannot be soaked in the drums has to be salted by the suppliers. Fortunately the kill is also very low and consequently it is not a big burden for the trade at the moment.
The temperatures remain quite reasonable so the next three or four weeks will not be an extreme challenge as far as production and storage are concerned. However, most of the European hide suppliers are quietly complaining about the serious reduction in sales and shipments to Asia. While sales were already pretty slow, many are suffering also from the fact that letters of credit are delayed (with plenty of excuses). Most of them are said just to be administration difficulties, but knowing the business, we believe that it is something different. In some cases it might be money, but we tend to believe that the pollution controls that are now in place in several Chinese provinces are the main reason. People don’t want to receive much raw material when they are not 100% sure that they can also soak the material quickly enough. It is however also a demonstration that in many sections of the Chinese leather pipeline business cannot be too good at the moment.
General opinion is the same as we see in Europe. Good-quality and well established manufacturers are still enjoying a reasonable level of demand from their customers. When it comes to the commodity business and standard articles, however, the situation is totally different and many leather producers are reporting that they can only sell at very low prices and with very long credit terms, which many people are not very comfortable with.
All of this is also generally not a demonstration of good and steady leather demand. It might still be a bit early and a lot of leather orders might still be placed in the next four to six weeks, but the dream that tanners in their majority are running low inventories and are in a desperate need to replenish might be a bit too optimistic. Desperate customers with immediate needs usually behave completely differently.
Even if one is more positive and believes in the speculation that tanners in Asia are just waiting for the holidays in Europe to do some bargain-hunting, it is important still to consider that it would be pretty late anyway. In any case, the high season of leather production only starts in October and consequently we can all still be optimistic.
Trading and selling activity continues in holiday mode. There is always something, but not much again this past week. There were enquiries for low grades and bargains, but very little that can be considered serious or valuable business for a seller.
The kill: Most likely we are going now to enter the lowest numbers of the kill in the entire year. In the coming three weeks the majority of the country is on holiday and beef consumption is consequently at the lowest level too. At the end of the month the usual seasonal recovery should take place again.
What we expect: We would be surprised if anything special happened before the All China Leather Exhibition in Shanghai (August 31-September 2). However, we would love to be surprised by something out of the blue, but do not expect anything really.
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 | € 1.80 |
Weak |
|
|
Dairy cows |
15/24,5 kg |
22,5/23,5 kg |
13/22 kg |
20/21 kg |
€ 1.70 |
Weak |
|
25/29,5 kg |
27,5/28,5 kg |
22/27 kg |
25/26 kg |
€ 1,45 |
Weakish | |
|
30/+ kg |
33,5/35,5 kg |
27/+ kg |
29/31 kg |
€ 1,40 |
Weakish | |
| Bulls | 25/29,5 kg | 27,5/28,5 kg | 22/ 27 kg | 25/26 kg | € 1,90 |
Weak |
| 30/39,5 kg | 36,0/37,0 kg | 24/34 kg | 31/33 kg | € 1.90 |
Weakish |
|
| 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 | € 1,30 |
Weakish |
| Thirds bulls | 30/+ kg | 38,0/40,0 kg | 24/+ kg | 33/36 kg | € 1.30 |
Steady |
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