German Perspective - 06.12.16 - leatherbiz: Lea Leatherbiz

Intelligence

German Perspective - 06.12.16

06/12/2016
What happened this week:  The end of the year is close. In this part of the world this means a slowdown in business. For most, the year is done and what has gone well or wrong in the past eleven months can hardly be corrected anymore. Consequently December is generally not a time of big changes. This is normally true for the hide and leather business too, but not for the beef industry in continental Europe, which is once again trying to dominate the price of its main by-product, the hide. They have used every option to stem against the situation using blackmailing positions, the general changes in the industry and the tailwind of the firmer US dollar to light a hot fire under the market kettle. In some regions, they have had a degree of success and it has to be seen if this will finally spill over into the general market.

This has come at absolutely the wrong time of the year. Not for them, because it is always the right time for higher returns from a by-product, but for the hide and leather pipeline. We are in the middle of the winter season. Prices for leather are set on the basis of raw material prices in October. Holiday breaks are in front of us, the global kill in general is higher than normal at this time of the year and the industry has once again to deal with serious capacity problems. We see also demand issues in the strongest season of the year. Anyway, there are always two parties in a deal. One asks for a price, the other accepts it.

Politics is also a driver for buyers and in this case select players in the hide industry (not the tanners) thought that it would be a wise idea to play the political card. It is what it is and one has to expect a bumpy final lap of business in the last weeks of 2016. There is still some time left until the last prices for the year are fixed at the abattoir doors; then we can all settle down. Tanners remain unimpressed by the situation.

In Europe the kill is reasonably high for males and weights are really heavy. What is normally the best of all worlds has become a bit of a burden. Heavy bulls are normally absorbed in the numbers they are killed by the drums serving the automotive industry garnished with some (salted) needs from veg and specialty shoe tanners. However, at the moment supply is bigger than demand and regular buyers are beginning to complain about all the hides they are being asked to take, even though it’s material they normally love to get.

Apart from the question of price, many are uncertain about demand from the auto industry and whether it will reach the same levels in 2017, not to mention the missing tanning capacity. In Asia demand has ebbed. One can still sell some heavy cows to selected buyers, but the heat is gone. More money is asked, but not paid. There are rumours that the government has once again closed a number of tanneries in Hebei province. This time it is the finishing plants and not the beamhouses.

Trading and sales this week were light, with just bits and pieces here and there, mostly for heavy cows of good quality. Europe was once again very quiet and it seems that only standard renewals of supply contracts will take place until the end of the year. There is no sign of any additional demand.

The kill: The kill has fluctuated a little and it seems the peak weeks of the year are definitely behind us. There should still be some inventory building for the Christmas period, but exceptional numbers would be a surprise. Weights remain heavy.

What we expect: One has the strange feeling that this market has gone into bumpy territory. There is no general trend in the market, with cowhides mostly cleared due to strong sales and active shipments between the start of October and the end of November. Low grades and now also males are struggling. Holiday interruption ahead of us and reasonable supply could become a challenge. The new situation at the abattoirs will make discussions with buyers pretty difficult as the tanning industry has no appetite for higher prices at the moment.


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 € 1.60
 Steady

Dairy cows

15/24,5 kg

22,5/23,5 kg

13/22 kg

20/21 kg

€ 1.70

 Steady

25/29,5 kg

27,5/28,5 kg

22/27 kg

25/26 kg

€ 1,40

Steady

30/+ kg

33,5/35,5 kg

27/+ kg

29/31 kg

€ 1,35

 Steady
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 € 1.80
 Weakish
Thirds 15/+ kg 25,0/27,5 kg 13/+ kg 24/26 kg € 1,25
 Weakish
Thirds bulls 30/+ kg 38,0/40,0 kg 24/+ kg 33/36 kg € 1.25
 Steady


Leatherbiz.com cannot be held responsible for content if the language setting is changed from English.

The translations provided by Google Translate are automated and therefore might not be accurate and may contain incorrect, offensive or misleading language. We offer this facility as a guide only.