German Perspective - 02.04.19
02/04/2019
This is missing and this, in combination with the seasonal decline, makes it difficult to create a positive scenario for the coming months. The next big moment will be in the autumn when brands and retailers disclose what they are going to put into their collections for the season to come.
With mainstream opinion against leather in large parts of Western society, it will be difficult to hope for a major turnaround in the coming months. With the rising seasonal kill in the US and considering all the unsold stock of material around the globe, it would be optimistic to believe spring and summer could see any improvement. As far as Europe is concerned, many will realise that holding salted inventory as the temperatures rise is not great fun.
This is where we stand at the start of the second quarter.
Leather demand and production is not zero and so raw material is still needed. Those who have focused on the supplier-customer relationship, who have not questioned the price, kept on going and not opened the door to others still enjoy a decent throughput and might still move the majority of the production on a regular base. For others, those who have been more for the deal, have not built trust and confidence, the times ahead may look a bit more grim.
There is a general consensus that the coming months will not see any change in the market owing to a persisting imbalance between supply and demand, and it will become an intensifying battle between origins and suppliers for the market that is there. Of course, not everyone sees it this way. There are still some left (mainly in the beef industry) who think this will sort itself out as it always did in the past. Prices go down, demand goes up and you better have good stocks of cheap inventory to take full benefit of the cycles. We don’t share this view, but time will tell who is right.
In the meantime we spent another week with only a limited amount of general interest and activity. Anyone who wants to buy hides today is either a regular client or has a specific interest in a particular type of hide. Without going into too much detail, the main interest remains either in hides with a high thickness or better-quality grains and tighter structures. We notice also that outside the standard and established chains several tanners are looking for a new article strategy, which generally means they want to upgrade production, to find something to meet a specific customer requirement or to try to break into one of the more successful markets.
Sales were again sporadic and prices were steady or moderately lower for the small quantities sold.
The kill: No changes in the kill. It is fine, for the time of the year, dominated by females which reflects poor beef business for the better cuts. The beef industry is generally not too happy about business at the moment.
What we expect: We cannot find any reason or information that makes us believe that the situation could change shortly. There may be a week with more or less activity, but the fundamentals remain the same and dictate business and the price trend. Instead of thinking about price advances it might the best just to focus on the client.
| 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 |
Weak/Stable |
|
25/29,5 kg |
27,5/28,5 kg |
22/27 kg |
25/26 kg |
€ 0,60 |
Weak/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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