German Perspective - 29.08.17
29/08/2017
The compressed summer vacation in August has actually prevented the leather industry from too much attention in regard to raw material supply. Tanners had made their plans and procurement in time, and until at least end of September they can take a wait-and-see attitude until they have a clear picture about their leather orders for the rest of the year.
In Europe we at least have the regular programmes of just-in-time deliveries of fresh, chilled hides, which never comes to a complete stop because these tanners do not close. Anyone involved in this type of business has at least a guarantee of a certain quantity of hides from production. Depending on the types one is producing this can be more or less the total production.
From Asia we would call activity very, very slow for the same reasons we have stated for a while. Tanners are not certain about their leather orders and prices, environmental issues and government strategies make the outlook of many tanneries in the north of China pretty uncertain; plus, other origins are cheaper. All this leads to very limited interest in European hides and the only serious interest shown remains for the heavy cowhides needed for the production of higher-substance, higher-quality upholstery leather, where business remains adequate and where tanners are also more optimistic.
The seasonal upturn in demand for leather and hides is pretty close and orders never fall to zero, which means that a certain level of interest and demand has to be just around the corner, considering also that sales and shipments this summer have been way behind the normal levels. Just to understand this particular market the trips to Shanghai for the All China Leather Exhibition (August 30-Septembe 1) will already be quite indicative.
Another big problem is the currency market now. It seems that nothing can stop the decline of the US dollar and whatever statements are made they are all considered to be negative for the greenback and investors, for political reasons, feel comfortable selling the dollar. We are back to almost $1.20 to the euro and what has been ignored by many exporters so far is finally becoming a serious factor. In the short term for raw material sales, but medium-to-long term for the exports of leather and imports of finished products, this is going to hit the European industry accordingly.
People would be surprised if they were to make a simple and rational calculation of the various hide types deriving from the various origins around the globe. The key question remains the leather demand in total. The hide price will, in the end, always be determined by the price paid for leather, but leather demand, absorbing the number hides produced as a by-product of beef production, remains a driver. Once again one should not look at the niches and specialties where the business can be completely different.
In Europe the business has reopened with the usual repetition of regular programmes. Prices for heavy males remain stable while for most other grades downward price adjustments had to be made. From Asia we haven’t seen any serious interest except for heavy cows. We don’t think that too much business has been done with prices quoted still bouncing all over the place. In view of the weaker currency and the global price trends, it is difficult to find a clear level of prices, because neither the fresh hide sales in Europe nor the bouncing quotes in Asia can presently be considered to be a real reflection of market values.
The kill: The kill continues to rise moderately. The number of males in the slaughter mix remains pretty low and the kill of cows remains pretty light in weight. By the end of this week the school holidays all over the country will be over and the total number of cattle slaughtered will continue to rise.
What we expect: It’s pretty useless to make predictions. Asian buyers will now wait and see how suppliers are going to behave during their meetings in Shanghai. It is too early for a real statement about leather orders, but also tanners will have to disclose a bit more about their positions and expectations. More news next week.
| 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 |
Weakish |
| 25/29,5 kg | 27,5/28,5 kg | 22/27 kg | 25/26 kg | € 1.50 |
Weakish |
|
|
Dairy cows |
15/24,5 kg |
22,5/23,5 kg |
13/22 kg |
20/21 kg |
€ 1.70 |
Weak |
|
25/29,5 kg |
27,5/28,5 kg |
22/27 kg |
25/26 kg |
€ 1,35 |
Weakish | |
|
30/+ kg |
33,5/35,5 kg |
27/+ kg |
29/31 kg |
€ 1,35 |
Weakish | |
| Bulls | 25/29,5 kg | 27,5/28,5 kg | 22/ 27 kg | 25/26 kg | € 1,90 |
Weakish |
| 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 | € 1.85 |
Weakish |
|
| Thirds | 15/+ kg | 25,0/27,5 kg | 13/+ kg | 24/26 kg | € 1,15 |
Steady |
| Thirds bulls | 30/+ kg | 38,0/40,0 kg | 24/+ kg | 33/36 kg | € 1.25 |
Steady |
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