German Perspective – 6.3.18
06/03/2018
The Chinese quickly realised what had happened during their absence and did not return with a long shopping list in hand. Quite the reverse in our case. They began to sniff around over the previous weekend and bids were not placed until Monday. Volumes were very small and were possibly just market tests.
Surprisingly, the bids were only marginally lower than before their departure. It seems that the ones willing to purchase had not yet completely analysed what had happened during their vacation. When the orders were finally booked, several clients needed a few days to supply the contract details. One didn’t need too much business experience to understand that they were trying to figure out how they could escape from the deals and the commitments.
As the week progressed interest faded and it became clear that Chinese customers are waiting for suppliers to travel and to knock on their doors for sales. The news quickly spread that sellers are far more desperate for sales then they are advertising in their offers and emails. It became obvious that buyers considered it to be more favourable to wait and so business was very quiet by the end of the week.
The situation is a little different in Europe. Adequate price concessions created a reasonable amount of business opportunities. There was far more market activity in Europe than in other regions. Even the rising US dollar was not enough to generate significant interest from Asia.
Business in Europe continues for the same quality hides as before. Males, in particular, benefit from interest in heavy, quality leather. We do not need to mention the automotive business because everyone can read in the media that car sales remain strong, regardless of the negative news that is swirling around.
The calculations for successful tanners are now starting to get a little harder. Higher production costs, lower selections and strict demands from leather buyers for price adjustments is forcing them to be firmer on raw material prices. Those competing for the most privileged hides types are aware of the strong position of sellers. At the same time, they are rewarding a certain amount of understanding and cooperation with a willingness to find a compromise between their ideas and the mostly unchanged asking prices.
In short, we believe suppliers willing to find a way may have had another decent round of sales in the week after Lineapelle. The general feeling about business last week is mixed, depending on who you talk to and what kind of business and customer base they have.
There were a variety of reactions to last week, ranging from reasonable to disastrous. Sales were actually better than we expected at the beginning of the week. It was also a week when interest was not just focused on one sector, but stretched from the top to the bottom of the range. Prices had to be adjusted, ranging from minor decreases to drops of 5%. The best performers, once again, were heavy males. The sharpest declines were for lightweight cows.
The kill: The extremely cold weather has been positive for the kill. Numbers are not brilliant, but where the extreme weather conditions were not hindering transport and slaughter there was a moderate increase in production. Weights are now in the peak period and we should see a similar pattern for another month or so.
What we expect: We believe activity will slow down for those not travelling early to Asia. With the experience of last week, it seems Asian tanners are in a strong position and are willing to wait until the APLF exhibition Hong Kong with a clear expectation that prices will fall before they rise again.
| 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 | € 2,10 |
Weakish |
| 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 |
€ 1.35 |
Weak |
|
25/29,5 kg |
27,5/28,5 kg |
22/27 kg |
25/26 kg |
€ 1,15 |
Weak | |
|
30/+ kg |
33,5/35,5 kg |
27/+ kg |
29/31 kg |
€ 1,10 |
Weaker | |
| Bulls | 25/29,5 kg | 27,5/28,5 kg | 22/ 27 kg | 25/26 kg | € 1,70 |
Weak |
| 30/39,5 kg | 36,0/37,0 kg | 24/34 kg | 31/33 kg | € 1.70 |
Weakish |
|
| 40/+ kg | 45,0/48,0 kg | 34/+ kg | 38/40 kg | € 1.60 |
Stable |
|
| Thirds | 15/+ kg | 25,0/27,5 kg | 13/+ kg | 24/26 kg | € 0,95 |
Weakish |
| Thirds bulls | 30/+ kg | 38,0/40,0 kg | 24/+ kg | 33/36 kg | € 1.10 |
Steady |
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