German Perspective – 27.03.18
27/03/2018
There is hardly any correlation anymore between the positive sectors and the negative ones. In the end, it is all leather and the fundamental difference between the materials is pretty small. The function and specifications are pretty much the same and are only influenced by the tanning process and what the tanners want or have to achieve. How you feel about the market seems to depend on the decisions you took years ago about which direction to take and which types of leather to produce.
It was not long ago that several tanners who are now riding the wave of automotive success were upholstery or shoe tanners. It was not long ago that tanners which are now part of the successful supply chain of the luxury industry were struggling operations. It was not too long ago that tanners in China believed there was an endless growth of leather demand which just needed to be fed by an ever-increasing tanning capacity along with the charming competitiveness of low production costs and smart buying in raw material markets.
There are many more such examples. We have the part of the tanning industry linked to the consumption of leather in the successful sectors and the ones which see the consumption of leather by their clients shrink almost every day. In the past, the temporary performance was more linked to sector than to product, but today we have the largest separation by quality and price segment.
The more mass production there is, the more problems there are for the supplying tanner in terms of volume and price. Additionally, big feeds big and there is not much left in the manger when the big ones are at full capacity. This means that the top of the market is nicely balanced, which has been the case for a while. The further down you go, the more inventory that is hanging over the market; anyone who hasn’t secured enough customers and taken care of them is seeing their sales possibilities shrink and their potential disappear.
The answer so far has been to protect price levels as much as possible for the demand which can still be traced. Many have already realised that lowering prices would not actually generate more sales, so it is better to take what is obtainable from the market and to wait with the rest for the better times to come. These times have not yet come and do not appear to be on the horizon.
As a result, buyers feel comfortable enough to continue to buy from hand to mouth in full security that they will not face any supply shortages. They believe there is a great chance that their next buy will be a cheaper one. Leather buyers in these sectors have smelled blood as well and this has triggered the usual downward spiral of prices as the trend feeds the trend. Last week did not break this trend, with sales and demand underperforming for standard items. Niches, specialties and high quality sells at almost steady prices, while others struggle to find buyers.
Nothing has changed following the APLF exhibition in Hong Kong. Bulls of medium and high quality as well as light weights of superior quality did well. Commodity items such as cows, middleweights and low grades are struggling to find demand and common
agreement on prices.
The kill: Beef business, in contrast to pork, is doing reasonably well; this does not create a brilliant production level, but it is okay for the time around Easter. The coming two weeks’ productions will be curtailed by the Easter holidays. Weights begin their seasonal retreat slowly.
What we expect: There is no indication that the big change and the recovery of standard leather demand is on the way. The low season is also approaching. The promising thing is that leather is still a strong performer in all the niches and high-quality products, so maybe the volume problem is a homemade one, made by all the discussions about the product. That which is homemade can also be ‘homecured’ using the right medication. The cure needs patience to work, however.
| 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 | € 1,20 |
Weak |
|
|
Dairy cows |
15/24,5 kg |
22,5/23,5 kg |
13/22 kg |
20/21 kg |
€ 1.30 |
Weak |
|
25/29,5 kg |
27,5/28,5 kg |
22/27 kg |
25/26 kg |
€ 1,10 |
Weak | |
|
30/+ kg |
33,5/35,5 kg |
27/+ kg |
29/31 kg |
€ 1,00 |
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 | € 0,90 |
Weakish |
| Thirds bulls | 30/+ kg | 38,0/40,0 kg | 24/+ kg | 33/36 kg | € 1.00 |
Steady |
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