German Perspective – 19.03.19
19/03/2019
One thing that has to be mentioned it the lack of visitors and exhibitors from mainland China. One would think that Hong Kong is a convenient location that offers the industry from China a very attractive opportunity to present their products to an international audience. Very little of this was seen, with only the large operators represented.
As a result, the attendance was dominated by the same international traders and producers that have been seen there for almost the entire history of the event. We left with the impression that staff on the stands were in most cases pretty busy. Whether this was to sell leather or to just to enter into dialogue with suppliers and customers doesn’t matter so much.
We found it remarkable that most people we met with seem to have finally arrived at a state of realism. In the past, the raw material traders used such events, in particular the fair in Hong Kong, to spread the usual stories of success and optimism in an effort to secure better deals and higher prices. Even though it failed many times, they continued to try it. This time, most people discussed the situation as it is and tried to analyse if there were any kind of exit strategies. We heard many opinions, but very little is convincing.
The main concern for the majority of raw material suppliers is to make sure that their supply is sold on a regular basis, and that it is also paid for. Without going into too much detail, the main problem is still in the low grades and low-priced hides. In particular, the existing stocks of semi-finished material at the bottom end of the range continue to struggle to find any kind of solution.
Interestingly, there is a little ray of hope with sales of low grade hides to China at better prices than before. The main reason is the reasonable price for gelatine splits derived from cows that allow lime selection once the ‘beauties’ have been picked for leather. This means a better average return on hides than if they were all used for leather production.
It was difficult for the rest of the game. Prices were set, but none really attracted anyone. Some came with an unspoken optimism for cows after the stable market of the previous few weeks and the good clearance in January. We believe that any attempt to raise and to sell volume was unsuccessful. It was clear that the agents that were around had been asked by tanners to collect information. They were not sent with orders to buy, although they were busy chasing clients on WeChat to negotiate.
The bottom line was that sellers are hoping to hold prices stable in the coming weeks. Asian buyers are convinced that they will be able to buy cheaper if they don’t rush. It seems that until this week they did not need to. In the end, most sales were made in Europe. Most activity was for specialties and niches. The trip was a good opportunity to obtain a general picture and to meet business friends from around the world. For the targets in Asia, we believe it was not very successful.
The kill: The kill continues to stroll along. Carnival season has passed and we are now waiting for Easter. The kill will now hover between low seasons in Europe. Weights will fall and they will only turn around after the summer.
What we expect: We hope for a surprise, but we will only get one if next week everybody suddenly needs more hides. The tanners who have business buy their regular volumes and still expect price concessions. The big slump might be over, but not all hides can find a buyer. The hope is to hold the prices steady and to sell all the hides.
| 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 | € 1,60 |
Stable |
| 25/29,5 kg | 27,5/28,5 kg | 22/27 kg | 25/26 kg | € 0,90 | Stable |
|
|
Dairy cows |
15/24,5 kg |
22,5/23,5 kg |
13/22 kg |
20/21 kg |
€ 0,70 |
Stable |
|
25/29,5 kg |
27,5/28,5 kg |
22/27 kg |
25/26 kg |
€ 0,60 |
Stable | |
|
30/+ kg |
33,5/35,5 kg |
27/+ kg |
29/31 kg |
€ 0,55 |
Stable | |
| Bulls | 25/29,5 kg | 27,5/28,5 kg | 22/ 27 kg | 25/26 kg | € 1,40 |
Pressure |
| 30/39,5 kg | 36,0/37,0 kg | 24/34 kg | 31/33 kg | € 1.40 |
Pressure |
|
| 40/+ kg | 45,0/48,0 kg | 34/+ kg | 38/40 kg | € 1.25 |
Pressure |
|
| Thirds | 15/+ kg | 25,0/27,5 kg | 13/+ kg | 24/26 kg | € 0,40 |
Stable |
| Thirds bulls | 30/+ kg | 38,0/40,0 kg | 24/+ kg | 33/36 kg | € 0,60 |
Weakish |
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