German Perspective - 04.09.18
04/09/2018
We had been hoping for the turnaround in leather demand for the coming season but understand that this is not going to take place. No question that the time from April to September, which is traditionally the low season, will now be once again followed by a more active season with rising leather production, but the missing interest for leather as a material and the insufficient volumes that are required by the finished product manufacturing and retail industry hasn’t changed.
Actually the exhibition and all the meetings have not changed anything; they may just have convinced a few more people in the trade that we have to rethink the general business concept of an endless cycle of ups and downs. The further you go down the quality scale the less demand there is. It’s hard to have any idea of how much and what kind of business was done during the show, but from our impression the volume is most likely rather limited.
The first two days, it was basically just the general greetings and sniffing around by customers. Towards the end of day two and on day three the gossip became a little bit more concrete. The first bids came in for European material and in general customers were trying their usual cherry-picking.
Some upholstery tanners need to replenish some of their inventory for the coming season, considering also how long it takes these days to bring material from Europe to a tannery in China. However, presently their focus is completely on heavy cows and clients are trying to avoid the lighter ones as much as they can. This is in direct contrast to what is being slaughtered now and throughout the summer so it was very difficult to reach agreement. Clients were more willing to pay a premium for extra-heavy material than even consider the lighter ones; this ended quite a number of attempts to reach a conclusion.
Consequently the number of sales that were nailed down was reasonably limited and we have no idea if our colleagues fared any better. The price difference between Asia and Europe for male hides is still extremely wide and if one has to place surplus material outside Europe it can only be done with great pain.
Generally one has to accept that the downward trend of leather use in the shoe industry continues. Shoe brands indicate a further decrease in their leather use despite an expected further growth in shoe production globally. To make things even worse, in the lower segment at least, a number of representatives from various countries confirmed that the destruction of raw material is either already taking place or is being seriously considered.
The processing and preparation of hides for the leather industry has a cost that is not insignificant. So one may be forced to sell stocks at whatever price the market offers, but who will invest more money into a product when the prospects for achieving an adequate return on that investment are negative? The beef industry needs to take a different perspective when it comes to valuing the by-product. Better-quality hides continue to find a home and despite the general weak trend they can hold their value much better because supply and demand continue to be in an adequate balance.
The kill: The kill continues to reflect of the trend of the past weeks. A lot of females are coming in as a consequence of the drought. Males are very slow, because in view of slow beef demand the packers prefer to slaughter the cheaper animals and limit prime qualities to a minimum. We suppose this will continue until the weather really changes and the nights get colder.
What do we expect: The concerns have been fulfilled and the situation has not changed following Shanghai. Cheap hides are beginning to hit a critical price level at which serious discussions will begin about whether or not it is worth processing them any more. Demand has not increased yet and tanners do not seem desperate to replenish yet. So, little change.
| 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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