German Perspective - 23.1.18
23/01/2018
In Europe, all production has gone back to normal levels and the tanners with orders are demanding their standard raw materials, both in terms of quality and quantity. Buyers are covering what they need, which is basically the normal programmes suppliers expect throughout the year, both in good and bad times. The quality tanneries may have better or worse times, but it has been a number of years since they have changed their regular production levels.
The market in Italy is said to be a bit quieter; the general problems related to wastewater treatment continue to boost demand for fresh, chilled or wet blue hides, while salted material is taken as an unavoidable measure if needed in the northern parts of the country.
It seems that once tanners are matching present orders with their existing raw material coverage, they come to the conclusion that there is no need to rush for more raw material.
We are now beginning a period of trade fairs which are in one way or another important for the next step in leather production. The IMM furniture fair in Cologne, the shoe fairs in Italy, the Lineapelle exhibition in Milan and, last but not least, the APLF show in Hong Kong in mid-March will leave their impressions and will be indicative of what is going to happen next to prices and demand.
For the time being the trade has had to realise that there was some truth in the general complaints from the hide processing industry. One of the larger Central European hide processors has had to file for bankruptcy. The policy of buying high and selling low proved once again not to be a successful road in business. However, it is unlikely that the beef industry has recognised that the by-product, the hide, has to be marketed at a fair value which reflects the leather market rather than believing in miracles which don’t exist.
Nevertheless, the more they become direct suppliers to the tanning industry, the more they have to realise the realities of the business. In general, our market still struggles to find a fair average price level. The currency variation and the wide spread of the performance of the leather business makes it difficult to find a stable price at the abattoir doors.
The spread of values, in particular between heavy, high-quality fresh males and standard, lower weight ones, is so wide that the average price valuation leaves too much space for individual policies and games. From the leather demand side, we do not sense any major changes.
In Europe, everything is running normally with unchanged production for all the premium producers. It is just in Italy where one senses more headwinds and where general business seems to be lower than expected. The Orient is repeating itself; there are bids every week, sometimes more and sometimes fewer, but for several weeks prices are well below acceptable asking levels.
The currency situation is making things more complicated every week, with the constant decline of the US dollar. The final result this week below the bottom line was not convincing in terms of volume and prices. Interest was good for the better quality section and heavier weights for upholstery and handbag production.
The kill: The kill is finally back to normal levels for this time of the year. The weather is bad, but generally positive for beef consumption. Weights are heavy and there is very little reason why this should change in the coming weeks.
What we expect: We continue to be without a real trigger for a fundamental market change. The beef industry is trying everything to fight against further declines, while the tanning industry is suffering as a result of massive competition from other materials. Leather demand for medium to low articles continues to be below the level needed to absorb all the raw materials that are circulating. Our hides remain on the high side of the price range, so it reasonable to expect price pressure to continue.
| 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 |
Stable |
| 25/29,5 kg | 27,5/28,5 kg | 22/27 kg | 25/26 kg | € 1.30 |
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 |
Stable | |
| 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 |
Weakish |
|
| 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 |
Stable |
| Thirds bulls | 30/+ kg | 38,0/40,0 kg | 24/+ kg | 33/36 kg | € 1.10 |
Steady |
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