German Perspective - 31.01.17
31/01/2017
It’s good that this has not happened this year because it allows shippers to continue with the regular work and is a clear demonstration that the tanners need what they have bought. This means that they are either working on their regular inventory or they have total faith in the stability of the market and possibly even expect rising prices. We tend to believe that it is actually rather better management than anything else, because the current leather prices would not allow any additional increases in raw material cost.
Having said all this it basically applies to the bag leather and upholstery leather tanners, who seem to have enjoyed a pretty decent season this winter in China. At the same time we understand that production costs in China will most likely rise once again after the Chinese New Year with the cost of labour, environmental issues and chemicals are expected to rise by approximately 10%. As a logical consequence, either raw material prices will have to compensate or leather prices will have to go up. Let’s see which way it goes.
For the moment at least it seems that buyers cannot totally withdraw from the market and have to make sure that their pipeline remains sufficiently filled to meet leather orders and to keep the drums rolling. The next chance to reconsider is when the trade gathers for the APLF exhibition in Hong Kong (March 29-31).
In Europe we found things pretty quiet last week. Tanners are not rushing for any additional raw material yet and it does not seem there is much ambition for anyone to push prices either way. Most players in the market seem to feel that it is best not to risk any major variations. This might indeed be true in times when political decisions could quickly change market conditions and currency rates.
Last quarter there was definitely a surplus of hides and this is most likely being used up now to compensate for lower slaughter until the end of February. The total number of sales this week has been pretty limited, which is basically no surprise.
The kill: The kill last week was normal for the time of the year although we are seeing far more cows than bulls go to slaughter at the moment. This is not unusual and is likely to continue for another six or eight weeks. Hide weights remain on the high side.
What we expect: We believe the market will continue to trade in a very narrow price band in the coming weeks. Asian tanners are mostly absent and Europeans display little willingness to seek prices changing by much in the short term. It would require a speculative trigger to push prices out of the present range and it’s difficult to see any convincing trigger now.
| 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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