German Perspective - 21.03.17
21/03/2017
We know that suppliers traditionally try to use the long-haul flights to see their customers and to conclude sales for the next quarter, however it seems this strategy won’t work too well this year. Tanners are reasonably well covered and without a serious and substantial increase in leather prices, the raw material prices that have been reached mean buying extra inventory cannot be justified.
There are quite a few optimists around who think that the positive housing market in the US, in combination with a similar situation in China, will lead to another successful upholstery leather season, offering the possibility of raising leather prices to levels that will allow tanners to pay the price ideas many sellers still have in mind. The biggest problem remains, however, the uneven distribution of leather demand in terms of quality and price levels.
Demand for better-quality leather, in particular in upholstery and accessories, has definitely expended over the past year. At the same time, leather prices have not performed not in the same way, and nor can the available raw material supply meet the demand structure. So we are now confronted with a situation in which the tanners are looking for hides that do not exist at a price they can pay. This brings us to a very simple conclusion: either leather prices have to go up or hide prices have to come down.
Prior to APLF, it’s a safe bet that the hide market will enter a stalemate. Everyone expects that the trade show will offer them the upper hand in the negotiations. This is pretty unlikely because today the fundamentals rule and it’s no longer a face-to-face poker game. Since the trade event is not going to offer any news in regard to leather prices it is likely that buyers and sellers will limit their activity. Sellers will continue to stick to their price lists and take only sales around those levels and buyers will just purchase what they absolutely desperately need to keep production running and drums rolling. These purchases will be also limited to preferred selections. We urgently need a change in fashion to find an way out of this vicious circle.
Business last week reflected this situation. There was interest in higher-quality raw material for upholstery, but the prices bid were easily $3-$5 below adequate levels. For other types, the demand was far less. In Europe, tanners are covered owing to the programmes most tanners are running with their suppliers. Asian tanners remain on the sidelines, as explained above. The biggest problem is with extra-heavy hides of medium quality. The calculations do not work out and the main takers, such as automotive and veg tanners, are covered with their premium-quality supplies and do not have any additional demand for medium and lower selections.
The kill: The kill continues to run at the normal levels one would expect for this time of year. Many countries are reporting low kills for cows but we have to admit that we find the levels for dairy cows quite steady, despite rising prices for milk. Possibly when the grass starts to grow numbers will decline. Males continue at the low levels that are normal for this time of the year.
What do we expect: Until the APLF fair in Hong Kong we continue to expect little business, except for the private deals that may be concluded during trips throughout Asia prior to the fair. Time is not yet right for a real new trend in prices across the article list.
| 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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