German Perspective - 17.01.17
17/01/2017
The good news is that most people do not seem to have big inventories and so they are making sure that hides bought for January shipment get onto the boat in time and that means that their letters of credit and deposits are arranged prior to the Chinese New Year (January 27). Every year there is a bit of a scare about everything arriving on time.
So, everything is on schedule and there’s not too much to complain about at the moment. A bit of a headache remains regarding the availability of shipping space, because everyone wants to ship on time and hides and skins remain one of the less favoured articles shipping companies want to see on their vessels. If the vessel is fully booked hides are the first items to be rolled over and if you can’t meet the last day of shipment during the holidays it also very difficult to get amendments arranged.
It seems that until Asian customers return from their holiday everything is reasonably well set and in order. This leaves the question of what happens next. General opinion in the trade is that the market is not supposed to see much change for the coming weeks or possibly even until the Hong Kong fair at the end of March. The general trend is that cows and cheaper hides used in upholstery and in shoes still enjoy decent demand, while at the same time more expensive male hides that cannot be placed in the automotive industry find the situation more difficult; prices might gradually continue to erode. This does not apply to luxury; the quality end remains unaffected by changes in the mainstream markets.
Leather demand seems stable within the pattern we have seen for quite a long time. Political issues, or which we see plenty at the moment, do not seem to have had any negative effect on the market situation so far. As far as general day-to-day business is concerned, activity was once again mostly focused on clients in China. Most interest was once again focused on dairy cows for upholstery tanners, but testing the waters with some ambitious new asking prices was not rewarded.
Clients were not willing to let the gradual increase in prices continue and the weaker US dollar made final revenues at the end of the week lower than before. Rising interest in low grades is an indication that clients are already trying to find solutions to the shrinking margins triggered by higher prices for female hides during the past months. Excessive quantities of extra-heavy male material remain a problem. Anything not taken by the automotive tanners is extremely difficult to place elsewhere. We still have one week to go before customers in China close and this is the time when the Europeans have to begin to negotiate new programmes for February and March.
The kill: After the excessive drop in numbers after the new year, the kill recovered slightly this week. We would call the numbers normal now.
What we expect: For the next week everything will depend on whether Chinese customers go on another pre-holiday shopping tour. However, it seems that they are not willing to let prices go any higher before their shut-down and if they buy it has to be at last levels at best. It seem pretty likely that anyone who is willing to trade at unchanged levels could still buy or sell, while major variations in bids or offers might not trigger much activity for the moment. Little price fluctuation is expected.
| 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 |
Steady |
| 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 |
€ 1,45 |
Steady | |
|
30/+ kg |
33,5/35,5 kg |
27/+ kg |
29/31 kg |
€ 1,40 |
Firmish | |
| Bulls | 25/29,5 kg | 27,5/28,5 kg | 22/ 27 kg | 25/26 kg | € 1,90 |
Steady |
| 30/39,5 kg | 36,0/37,0 kg | 24/34 kg | 31/33 kg | € 1.90 |
Steady |
|
| 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 |
Steady |
| Thirds bulls | 30/+ kg | 38,0/40,0 kg | 24/+ kg | 33/36 kg | € 1.25 |
Steady |
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