German Perspective - 14.03.17
14/03/2017
Just looking at sales figures never provides the fully story, however, because the hides have to be turned into leather and then sold. The gains we have seen in hide sales at the start of 2017 have not been reflected in the subsequent leather prices. The writing has long been on the wall, but few people were willing to take notice; Chinese tanners began to dig their heels in several weeks ago for a variety of reasons. Suppliers looking for higher prices and buyers slowly turning away from the market has meant very limited sales and the situation doesn’t show signs of improving. Any deals that have taken place have been below recent levels.
There are several non-economic problems as well. China’s National Assembly has again forced the temporary shut-down of several tanneries in the country’s northern provinces; it seems the government doesn’t intend to increase its leniency on environmental issues in the near future. This has meant the purchase of dairy cow hides has been on hold for a number of weeks. Several importers are also worried that the Chinese government’s policies will weaken the yen and increase the price of raw materials.
It is extremely difficult to export hides to China at the moment, especially from Europe. Following a period of rapid expansion of capacity by shipping companies, they are now restricting freight space in order to push up rates. There is no preferential status for hides and skins and so this move is hitting the industry pretty hard. There are no guarantees that containers that have been booked will actually be shipped and securing freight space for the coming six-to-eight weeks is not only extremely difficult, but also comes with horrendous surcharges. This means there is uncertainty as to how many containers will be shipped or how much they will cost; it could become a serious problem. The situation will need to be monitored very carefully. Suppliers are generally indicating that sales have been good and that they are positive for the coming weeks and months, but many of the hides that have been sold could quickly become inventory again if shipping issues persist.
This week’s sales were on a similar level to last week, with volumes quite small. Most of the trading was carried out by European customers, with only a handful of clients from Asia, who were largely only interested in cheaper hides. Not many orders were completed. Pricing has become extremely complicated due to a chaotic abattoir market and the timing couldn’t be worse.
The kill: The kill has recovered slightly, but the numbers are far from impressive. There is a scarcity of lighter-weight males and bull hides are heavier than ever before. The cow kill remains pretty normal, but higher milk prices are likely to have an effect on this eventually.
What we expect: We were convinced that not much would happen until the APLF exhibition because neither side would try to test the market in advance of the fair. But the general conditions have changed and, most likely, this is going to influence the market before the show. A change on the upside is unlikely.
| 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 |
€ 1,50 |
Steady | |
|
30/+ kg |
33,5/35,5 kg |
27/+ kg |
29/31 kg |
€ 1,40 |
Steady | |
| 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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