US Perspective—17.01.17
17/01/2017
www.themaxfieldreport.com
Reports from members of the big packer trade claim interest last week was improved compared to the last two or three weeks. Several sources shared they had more bids to consider; however, it appears most sellers were somewhat disappointed that they did not see more interest. Overall, it appeared as if packers were pushing for higher prices this week, looking for price increases of roughly a dollar across the board and meeting quite a bit of resistance. Ideas of buyers were running well below the last traded levels of packers and packers refused to succumb to lower prices; it is likely there may have been more business that was not concluded than business that was actually booked.
Trading levels for the most part were steady last week. We have heard of a few isolated instances of packers being able to hold out for slightly higher trading levels; however, it appears that volumes traded at these higher levels were limited and not reflective of where the majority of other trading occurred. With regard to the number of hides changing hands this week, popular opinion is that it is likely that packers did not liquidate their production his week, especially with slaughter levels returning to levels north of 600,000 head.
Elsewhere, reports from China claim interest last week from tanners was disappointing as pundits were of the opinion we would see better interest. Some sources claim that a combination of slaughter levels returning to levels of 600,000 head-plus with offer lists from packers that appeared fairly populated was lending support to thoughts by tanners that they would see prices soften.
Most sources admit demand in the domestic footwear market in China continues to shrink, and business appears sporadic. Elsewhere, automotive business continues to appear decent, as this segment of the trade continues to use plenty of US HNS, BBS, and even some HNDS, not mention to numerous Brazilian wet blue and Australian raw hides. In the meantime, pollution problems in Guangdong dating date back to early November continue. Sources report that four very large tanners who are regular buyers of US big packer hides have been heavily impacted; however, sources share these tanners are slowly increasing production since the start of the year.
Meanwhile, a number of smaller tanners are also affected and remain closed, while we are now hearing rumblings of some tanners in this part of China requesting to delay shipments. In addition, pollution controls in northern China, (mainly the Hebei and Wuji areas) appear ongoing; however, it seems as if many of these tanners continue to find a way to keep their business going.
The good news is that there are reports of some tanners receiving new leather orders in the last week or ten days; however, it is not clear if this is “new” business, or leather buyers pulling orders from tanners with pollution issues in order to ensure they receive their leather in time.
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