German Perspective – 28.11.17
28/11/2017
The general circumstances can't be ignored. The kill in Europe is at its seasonal peak and the numbers are unlikely to fall until the last week before Christmas. The higher production level is not being met with increased demand and the surplus cannot be easily placed. This means the general pipeline continues to be congested. The higher kill is allowing tanners to pick their material; the usual choice is fresh, chilled hides.
This applies not only for Italy, but for most tanneries across Europe. This means that salted hides are being stored in tanneries and in the warehouses of hide suppliers. Hides that cannot be placed fresh and need to be salted are struggling to find a taker. This is particularly affected by the situation in Asia, where demand for European hides is well below average.
A number of people are concerned by the messages from China early last week which suggested there is going to be another serious production cut in Hebei province. The information talked about a government decision to limit production to 50% and the threat of complete production stops at very short notice should rising air pollution be detected.
It is difficult to say what kind of influence this will have on the market, but it certainly will not be a positive one. As already mentioned in previous reports, there are very few alternative destinations for hides in Europe.
Tanners are not really complaining about business and order levels as they are operating at levels they can handle. There is also very little real news from the leather market. The demand for leather from brands and manufacturers has been reflected in orders. There are no signs of additional, fresh demand. It seems unlikely anything new will happen in the near future.
Only a boom in sales during the Christmas season has the potential to trigger some replenishment activity within the pipeline. The biggest news is that the cold winter weather is not prompting increased leather demand as a result of better shoe, garment or glove sales. Although people are buying these products, only a small percentage of them are made from leather these days.
Some people are trying to paint a more positive market picture, but the general balance between supply and demand hasn’t changed. If we are to exit the spiral we are currently in, there will need to be a major change in either supply or demand.
Trading last week was mostly with regular programme buyers. The good news is that the same quality producers are still active, so we can at least rely on core business. There was very little activity outside of this inner circle. Prices continue to be under pressure and it is very difficult to figure out the true value of a hide. Based on real sales, prices are down by another 2% to 5%, while it is impossible to put a price tag on the surplus material currently available in the market.
The kill: The kill continues at seasonal peak levels. The really good news is that weights have gone up once again. We are fairly certain that the slaughter will continue at current levels for the next two or three weeks.
What we expect: It is difficult to make any serious predictions at the moment. Last week, we were convinced that price movements were unlikely for the rest of the year despite the current market situation. However, we have to at least consider the possibility that somebody gets nervous and drops their prices, as has already happened in some parts of Europe.
| 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 | € 1.40 |
Weak |
|
|
Dairy cows |
15/24,5 kg |
22,5/23,5 kg |
13/22 kg |
20/21 kg |
€ 1.50 |
Weak |
|
25/29,5 kg |
27,5/28,5 kg |
22/27 kg |
25/26 kg |
€ 1,20 |
Weakish | |
|
30/+ kg |
33,5/35,5 kg |
27/+ kg |
29/31 kg |
€ 1,15 |
Weakish | |
| Bulls | 25/29,5 kg | 27,5/28,5 kg | 22/ 27 kg | 25/26 kg | € 1,75 |
Weak |
| 30/39,5 kg | 36,0/37,0 kg | 24/34 kg | 31/33 kg | € 1.75 |
Steady |
|
| 40/+ kg | 45,0/48,0 kg | 34/+ kg | 38/40 kg | € 1.70 |
Steady. |
|
| Thirds | 15/+ kg | 25,0/27,5 kg | 13/+ kg | 24/26 kg | € 1,00 |
Weakish |
| Thirds bulls | 30/+ kg | 38,0/40,0 kg | 24/+ kg | 33/36 kg | € 1.10 |
Steady |
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