German Perspective - 30.08.16 - leatherbiz: Lea Leatherbiz

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German Perspective - 30.08.16

30/08/2016
What happened this week: Finally the holiday period is coming to an end. Day by day more and more people are returning to their desks and by the end of this week everyone should have resumed working after the summer holidays. The vast majority will already be back in full production and many of them are preparing to take part in shows and exhibitions over the coming eight weeks around the world. It all begins with the All China Leather Exhibition in Shanghai this week; this event has become the traditional opening of the busy winter season after the summer break. It is a show that, in our opinion, is far more important and interesting for raw material suppliers than for the tanners themselves. Many are exhibiting, but the biggest number is from China and over the years we have formed the impression that they just spent the money to be there because it’s a must, the politically correct thing to do. Most of the international exhibitors who produce leather are mainly just there because their country pavilions are highly subsidised by their governments.

For raw material people the situation is a bit different; they consider the event as far more important. It is not only the opportunity to meet people at the show but also to combine the long-distance trip with individual visits to selected customers. The number of people one can speak to, plus the direct contact with colleagues and competitors from around the globe, make it a very valuable opportunity to obtain a first-hand impression of the market situation at the beginning of September.

Consequently, expectations always run pretty high and it seems that this year is no different. Everybody knows very well about the general status in the leather business and those who are serving the high-end quality customers have no need to worry at this stage. However, China has been the limitless outlet potential for almost every raw material at the medium and lower end and this seems to have changed absolutely.

Most of the people travelling to China in 2016 want to obtain a clear picture about the potential for their specific raw materials for the future. At the moment we are once again suffering from government decisions that have ordered a number of industries to cease production for environmental reasons. The presentation of the country to politicians coming from around the world for G20 Leaders’ Summit in Hangzhou on September 4 and 5 must not be disturbed by any kind of pollution. Such an interruption would have normally created a large outcry in the industry, but the lack of orders and the uncertainty about the business has kept things pretty quiet and is being used to justify low-price bids.

Activity last week became somewhat better. This was already overdue because we must admit that we haven’t seen such a quiet August for quite a long time. The regular business was never really touched and the sales to the high quality and automotive customers were never the problem. However, the bread-and-butter business for the volume products, which are normally absorbed by Chinese tanners, was missing. This week far more interest was seen, at least in Europe, and quite a bit of sales at steady prices took place. Also from Asia we saw more interest, but not a single bid that was close to asking prices. So, from all the interest (which is the good news), very little turned into sales, (which is the bad news).

The kill: With the return of the heat, the kill declined. Beef business is still far from being adequate and so the slaughter continues to be low.

What we expect: We don’t travel to China with much expectation. Tanners will need to buy hides, as usual. However, rising production costs and serious pressure on finished leather prices in China will not make it an easy trip and negotiations with the clients will be difficult. The biggest interest is going to be about who will surrender first to close the gap and how leather demand is distributed among the articles.

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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