German Perspective – 23.10.18
23/10/2018
Such weather changes normally trigger the heavy kill until at least Christmas. This usually matches the higher demand from the industry; the window has always been the period of high activity and leather production. All the different sectors are busy and the only interruption is the Christmas season and the Chinese New Year holidays in the first quarter. The outlook is different this time.
The situation in the shoe and upholstery industry has been discussed enough, but the news published in recent days about the automotive industry has not been especially positive. Car sales plunged in Europe and more profit warnings were published. It is unclear how transparent the automotive industry is in terms of reporting production and sales. From our point of view, the industry has been playing down the situation for a while.
They may have plenty of excuses, but the result is always the same. Falling sales and less production would hit demand for hides. It would add to the problems the market is already facing. Last but not least, it would leave the luxury leathergoods market as the last strong performer for the industry.
In the meantime, the fundamental problems of leather demand have not been solved. Last week, German discount stores offered casual ‘leather look’ ankle boots at €15 per pair. With fashion and design very exchangeable these days, products can barely be distinguished from brands. The price is so attractive that shoes are considered a quick, takeaway article. Nobody cares about the material because it doesn’t really matter at that kind of price.
‘Leather look’ descriptions are becoming increasingly common. This means the appreciation and value of leather as a material continues to fade. People are getting used to artificial materials and if they are not concerned about the waste and the lifecycle, they have no reason to worry about the difference.
The biggest problem for tanners at the moment is how to deal with the low quality selections they produce. Many tanneries continue to build stocks of such material, as does the entire pipeline. The mass market has shifted so much into alternative materials that it is no longer an outlet. No new markets have been developed either. The situation is actually getting worse. There are many problems but the biggest is that even if solutions are found, it will take time before they are implemented and can trigger a change.
Before we get completely depressed, we should mention that there was at least a rise in activity for the weekly bread-and-butter business. Some interest was seen, in particular from Asia, but tanners have become very selective in terms of what they are buying and what they are looking for. Bids for dairy cows have been exceptionally low and can only be called ‘bottom fishing’.
We were not willing to accept the bids, which were $3-5 below market levels. Some business was concluded on heifers and on selected types of bull hides. Prices were around $2 below market for heifers. It is better we don’t mention the price for bulls as selling them abroad means having to accept almost unworkable levels. In view of the prices of competing origins, the only other option would be to wait for better offers.
The kill: The kill for cows remains pretty high. The last warm week held down the kill for males, but that is likely to change soon. Weights for cows remain light.
What we expect: Since the tanning industry is not completely closed down globally, we still hope that a seasonal uptake in demand is going to take place. However, low grades and hides for the mass market will continue to struggle. Prices will continue to be controlled by demand and the pressure will persist.
| 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 | € 1,05 | Stable |
|
|
Dairy cows |
15/24,5 kg |
22,5/23,5 kg |
13/22 kg |
20/21 kg |
€ 0,90 |
Weak |
|
25/29,5 kg |
27,5/28,5 kg |
22/27 kg |
25/26 kg |
€ 0,70 |
Weakish | |
|
30/+ kg |
33,5/35,5 kg |
27/+ kg |
29/31 kg |
€ 0,60 |
Weakish | |
| Bulls | 25/29,5 kg | 27,5/28,5 kg | 22/ 27 kg | 25/26 kg | € 1,50 |
Weak |
| 30/39,5 kg | 36,0/37,0 kg | 24/34 kg | 31/33 kg | € 1.60 |
Weakish |
|
| 40/+ kg | 45,0/48,0 kg | 34/+ kg | 38/40 kg | € 1.50 |
Weakish |
|
| Thirds | 15/+ kg | 25,0/27,5 kg | 13/+ kg | 24/26 kg | € 0,60 |
Weak |
| Thirds bulls | 30/+ kg | 38,0/40,0 kg | 24/+ kg | 33/36 kg | € 0,80 |
Steady |
Share this story:
