German Perspective - 13.09.16
13/09/2016
There are a great number of people who are trying to talk the business up, making it sound better than it really is. The simple facts are that the same businesses that were running quite regularly before the fair are the same ones that are running well now. They need to be served with raw material; they have to purchase and produce, and whoever is lucky enough to be a preferred supplier to these market sectors can take a relaxed view of things.
This is not the general situation, however. Generalised statements about business do not work any more and could even be dangerous if decisions are based on them alone. Leather as a base material has lost a lot of market-share and this is not changed by continuing discussions about whether the market is firm or weak and if sales are strong or not. The split and ovine markets should be a warning of what could happen if mainstream leather cannot make a strong return as a material. Price is only an argument if you cannot sell the product due to a lack of demand. If people don’t care about the material, it is price that makes the deal. This is what we have been reminded of in the past year and if price and productivity were the only factors, leather would have a difficult time in consumer products that are fashion-, brand- and price-driven, which is definitely the bigger share.
With European hides we are fortunate in that we have not been hit so hard and for certain grades only. However, it still hurts because the general average price calculation at slaughterhouses fails to take into account the difference between critical types and others and the average valuation is well above what the reality is. The adjustment so desperately needed should have taken place after the APLF exhibition in Hong Kong in Apri, but was postponed in the hope that things would change and the market would sort the problems of calculation out. Nobody was willing to give the bad news to the abattoirs.
This is beginning to change now and at least for cow hides the trade is beginning to face reality. However, this might not be enough. Everyone still feels so comfortable with the conditions of the bulls in general. However, if one puts aside the hides that are suitable for top-end automotive, top-quality veg leathers and the top-quality section of shoe upper leathers, there is still material left that cannot be sold at premium prices any more. If these hides are taken into consideration and mixed into the real value calculation, the situation looks quickly different.
Anyway, the week was once again far from being exciting. Sales were mostly focused on specialties. Asia continued to be very quiet and not many of the bids that were promised in Shanghai actually materialised. Prices for low grades dropped massively. Other sales in Asia were just on a weak or steady basis.
The kill: The kill suddenly turned around and numbers went up. This was really a surprise and considering the hot weather and the perfect grazing conditions one could hardly have expected such a move. We now look forward to next week to see if this is already the trend for the autumn.
What we expect: We do not expect much activity during the next week. Holidays in Asia and European tanners preparing for the Lineapelle show in Milan lead us to believe that there will not be much activity. We guess the next direction will be set during and after the show in Milan when everyone should have clear information about the leather business. For low grades, we remain very concerned.
| 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 | € 2,20 |
Weak |
| 25/29,5 kg | 27,5/28,5 kg | 22/27 kg | 25/26 kg | € 1.65 |
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 | € 1,10 |
Weak |
| Thirds bulls | 30/+ kg | 38,0/40,0 kg | 24/+ kg | 33/36 kg | € 1.25 |
Steady |
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