German Perspective - 07.05.19

07/05/2019

What happened this week: Another week that can be considered as a lost one for selling hides. In many parts of the world May 1 was celebrated as Labour Day and here and there the holiday was also used for an extended period to shut down businesses and production. In particular in China it is pretty common to see a few days in the first week of May used for a break. This year was no different. Activity was not completely dead, but the level was down. In the end it did not really make too much difference compared to the weeks before.

The interest for raw material is reduced to leather producers that continue to be successful in marketing their product. This means those who have something special to offer and are serving markets in which leather is still the dominant material to be used.

Even the last remaining optimists are realising that the balance between supply and demand has changed and it is not possible to absorb all raw material in leather production. The facts that can be checked and analysed do not point in the direction of this changing in the coming months. This means that there has been congestion of material along the supply chain for some time and the piles of material continue to grow. What are the possible options to reverse the trend and to allow the by-product to be used with any kind of added value?

More and more meetings are taking place and more and more ideas are coming forward. We have long thought that hides unwanted by the leather industry could always be used to make gelatine and collagen products. These options are not ones that can be applied everywhere. Leather remains the best option, but everything has gone the way of making the material cheaper. There are plenty of headwinds for leather in general, but we haven’t found any of the conflicts or problems when leather is presented with its natural beauty and is, preferably, even veg-tanned. True, that this can’t be the one and only solution, but it is definitely one way for the tanning industry to convince finished product manufacturers that there is a profitable market for it. Without this, no turnaround can ever be expected.

Trading this past week was pretty light and, with most of Asia taking holidays, there was also very little interest. Sales were coincidental and not enough to clean up the entire range of production. Buyers continue to have the upper hand: they don’t need product and the ones who are working with their suppliers on a regular basis realise that blackmailing is not an option and would not do any good to their business in the long run. This conviction has definitely not reached many Asian clients yet.

The kill: The kill was interrupted by one day this week and consequently the numbers were well down. In general the kill is falling and abattoirs are complaining about slowing beef sales.

What we expect: The market will stay weak. We can’t expect more for the time being other than to prevent a market and price collapse and to secure payments.

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	€ 0,80	Weakish
Dairy cows	15/24,5 kg	22,5/23,5 kg	13/22 kg	20/21 kg	€ 0,70	Weaker
	25/29,5 kg	27,5/28,5 kg	22/27 kg	25/26 kg	€ 0,55	Weaker
	30/+kg	33,5/35,5 kg	27/+kg	29/31 kg	€ 0,50	Weaker
Bulls	25/29,5 kg	27,5/28,5 kg	22/ 27 kg	25/26 kg	€ 1,25	Pressure
	30/39,5 kg	36,0/37,0 kg	24/34 kg	31/33 kg	€ 1.30	Pressure
	40/+ kg	45,0/48,0 kg	34/+kg	38/40 kg	€ 1.20	Pressure
Thirds	15/+kg	25,0/27,5 kg	13/+kg	24/26 kg	€ 0,35	Weakish
Thirds bulls	30/+kg	38,0/40,0 kg	24/+kg	33/36 kg	€ 0,50	Weak

German Perspective - 07.05.19 - leatherbiz: Lea

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German Perspective - 07.05.19