German Perspective - 27.09.16
27/09/2016
Consequently it’s still the only place where one can find all types of representatives from the leather purchasing industries: designers, technicians and raw material suppliers, who this year might have been present in greater numbers than ever before.
Many reports have already been published in the past days and most of them painted a very positive picture and impression of the fair. In the end it is like always. It depends on whom you speak to, from which section and production level you come and what your commercial interest is, leading you to a very individual statement about the event. We have come to the conclusion, that it was very nice to be in Milan, it was fantastic to see that the leather industry is still alive, that there are still enough enterprises alive who can and want to invest in stands and the related costs to display their capabilities and attract interested customers. This leaves a very positive note in general.
The industry is standing up against a general negative trend and is willing to deal with the generally very challenging conditions. Tanneries with strong relations to successful brands, tanneries with specialty products and outstanding quality can still find reasonable business and still have sufficient order books. Big is getting bigger, thriving on monoculture supply chains and big-chain consumer fashion. Those offering special quality for niches can also successfully defend their position in a generally shrinking market.
It has also to be mentioned that most shoe brands have confirmed that their consumption of leather is down in the past two years by anywhere between 10%-30%. Fashion and price have cost leather its full share of the market and nobody has been sending messages to indicate that this trend will turn around soon. You find those along the supply chain who say that it doesn’t touch them at all and others who are seriously affected and are concerned.
It is mainly cheap leathers that are suffering and more and more stocks are building up around the globe. Splits, shoulders and bellies, low grades, sheep and goat, low grades parked in raw, wet blue and crust are not in the inner circle of attention of many people, but they are the first example of what could become a price issue for the entire industry eventually if we do not manage to turn the general trend around. If demand shrinks further, more raw material will get stuck and the question is how far the price gap can widen before big industry players start to have difficulties too in explaining their price structure to customers.
Anyway, the end of September is usually the breaking point in raw material market activity. The stocks for the time after the summer holidays have been consumed and tanners need to replenish and to plan for the rest of the year. This activates more business and sales, despite the tough price negotiations. In Asia, some of the hides stuck on vessels run by the Hanjin Shipping (the Korean company that went into receivership at the end of August) have to be replaced because nobody knows if, when and in which condition they will ever arrive. This has triggered a long-awaited and much-needed round of business, which ended in trades at steady or slightly lower prices for the majority of the offer list and steady money for the heavy material. Sales volumes in the end have been satisfying, but we still miss the interest for lightweight males.
The kill: The kill in our region suddenly jumped by impressive double-digit numbers. We fail to see the reason for this and we are now very curious to see if this is now the beginning of the strong uptick we have been expecting for a while.
What we expect: We are now interested to see if this week was just a one-off or if it has really been the beginning of winter with the traditional increase in market activity. The fundamental problems persist, but business never stops and the coming six months will be more active than the last six months.
| 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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