German Perspective - 28.08.18
28/08/2018
For farmers it’s a bit of a different story and travelling through the countryside, you quickly see the complications. No grass, no fodder for the winter and not even the sudden start of constant rainfall could resolve the situation for this year now. The consequences for the industry will be seen in the coming weeks and months. Animals that have been exposed to the sun and the heat will most likely show variations in their hide quality. We will know pretty soon if this is going to present a serious problem.
The summer season traditionally ends with the trade departing for the All China Leather Exhibition in Shanghai (August 29-31). The flurry of business we saw at the beginning of August has faded and disappeared the closer we have got to the start of the show. During this past week, tanners’ interest was almost completely non-existent. As far as Europe is concerned it’s not a surprise, because most people are covered for the weeks after the holidays. In the case of Asia it also pretty normal in a market like this, because most of the Chinese tanners are now awaiting visitors at the fair in Shanghai to get a feel for how desperate suppliers are to move material.
Several origins under the lead of the United States were trying to build some kind of a firm tone to the market prior to the show, but actually it doesn’t look as though this has been particularly successful. The tanneries that have leather orders seem to be reasonably well covered; we certainly have not encountered any who seem to be in desperate need to buy or particularly short of raw material.
From the European automotive perspective, it is a little bit worrying to see the inventory of finished cars building up; various component suppliers have become cautious about their business for the rest of 2018. Only the Chinese vehicle market seems to be performing well while the rest of the industry is facing problems that suggest negative implications for production for the rest of the year. Other consumer products that can be made from leather are now awaiting their trade fairs to understand what retail and manufacturing plans are. On one side it is a question of how optimistic retailers are about consumer activity. On the other hand we have to hope for a recovery in the use of leather in upholstery, shoes and bags.
There were some enquiries at the beginning of the week, but it turned out these were not serious; it was just about collecting information for the showdown that we will most likely experience in China. All business was, once again, limited to specialties and niches, which are still covered successfully by a number of small tanners. This activity is small in quantity but quite important in terms of margins and selection investment. However, it has no real influence on the mainstream market at all.
The kill: The kill continues to creep up and Muslim festival of Eid al-Adha added to the general numbers. Consequently, the total weekly slaughter was well above average. The mix still shows a strong performance of females, while the slaughter of bulls continues to be on the low side reflecting the weak performance of beef consumption. We believe that the trend will continue for some more weeks.
What we expect: We are not too optimistic as we depart for Asia. Leather demand is still missing and we will have to wait for the results of the consumer product fairs taking place between now and mid-October to know the situation. We continue to believe that the supply-and-demand balance of the market has not yet been restored.
| 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 |
€ 0,90 |
Stable |
|
25/29,5 kg |
27,5/28,5 kg |
22/27 kg |
25/26 kg |
€ 0,70 |
Stable | |
|
30/+ kg |
33,5/35,5 kg |
27/+ kg |
29/31 kg |
€ 0,60 |
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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