German Perspective – 21.08.18
21/08/2018
The quality tanners that have already returned have started their production at totally normal levels. There is no indication that the holiday period has brought any cancellations or slowdown in leather orders. So, the good news is that the European quality tanners will pick up where they left off before the break.
Many have already departed or will soon depart for their trips to Asia. It seems that fewer and fewer people from Europe believe it is worthwhile to travel to Shanghai for ACLE. They have either cancelled their trips or have decided to spend as little time there as possible.
As a result, expectations are running low this year. The regular clients have been in the market during the difficult times and can be reached by email or through agents, so there is no need to visit them. As such, the fair has lost a bit of its shine for the overseas suppliers. The location is great and the timing is okay after the summer break, but any real excitement and influence for the international players has faded and there are fewer overseas visitors.
It has become more of a local event for the Chinese industry, with some international decoration. It also confirms that the era of growth is over; there is not much more for international companies to explore now.
Another reason is certainly the disappointment many suffered due to contracts that were not respected or that had to be renegotiated in order to safeguard sales. This means meetings and business discussions in Shanghai are not the pleasure they once were.
On the other side of the coin, it is a great opportunity. China is still the most important destination for the raw material market. Information from agents and email exchanges can never really replace face-to-face conversations and the feeling one gets from a personal meeting. Without a turnaround in consumer demand in China it will be difficult to reverse the current trend.
The fair may come a bit too early. Leather demand has to be stimulated by a switch from alternatives; the current price structure would allow this. The industry needs to emphasise the pros of leather instead of simply defending against the cons.
There is a fair chance that the downward cycle will come to an end during the winter season if manufacturers and retailers have the courage to shift away from plastic once more. We will know in the next six weeks. General consumer demand can hardly rise much further because we have had one of the best periods ever in recent years.
There was also hide business last week, although the interest we had seen in previous weeks faded. It essentially fell back to the quiet times of July. There some renewals in Europe, but Asian clients were not willing to repeat the deals or pay higher prices. In the end, the week was disappointing in terms of sales volumes.
It is fair to say that hopes for a pre-Shanghai flurry of business disappeared. It may be that clients in Asia are waiting to meet the global supply industry in order to understand what they can expect for the coming production season. It is clear that most clients in Asia believe the decline in prices has not yet come to an end.
The kill: With the end of the school holidays in the north the kill was higher and still reflects the drought conditions. A lot of females are being slaughtered, while males are absent. Weights continue to be quite low and this will likely be the trend for the coming weeks.
What we expect: A bit more activity should take place in the coming weeks with the end of the European holidays. It is unclear what will happen in Asia, but experience makes us believe that we should not be too optimistic as far as sales are concerned. The next bonanza would require there to be fear that the market has bottomed and that it could be missed.
| 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 |
Stable |
| 25/29,5 kg | 27,5/28,5 kg | 22/27 kg | 25/26 kg | € 1,10 | Stable |
|
|
Dairy cows |
15/24,5 kg |
22,5/23,5 kg |
13/22 kg |
20/21 kg |
€ 0,95 |
Stable |
|
25/29,5 kg |
27,5/28,5 kg |
22/27 kg |
25/26 kg |
€ 0,75 |
Stable | |
|
30/+ kg |
33,5/35,5 kg |
27/+ kg |
29/31 kg |
€ 0,70 |
Stable | |
| Bulls | 25/29,5 kg | 27,5/28,5 kg | 22/ 27 kg | 25/26 kg | € 1,60 |
Stable |
| 30/39,5 kg | 36,0/37,0 kg | 24/34 kg | 31/33 kg | € 1.65 |
Stable |
|
| 40/+ kg | 45,0/48,0 kg | 34/+ kg | 38/40 kg | € 1.55 |
Stable |
|
| Thirds | 15/+ kg | 25,0/27,5 kg | 13/+ kg | 24/26 kg | € n.a. |
Weak |
| Thirds bulls | 30/+ kg | 38,0/40,0 kg | 24/+ kg | 33/36 kg | € 0,80 |
Steady |
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