German Perspective – 25.06.19
25/06/2019
We are now at the beginning of the summer season and this is possibly the last chance to review the position that everybody has in the trade and what each person is going to do about their business. From slaughterhouse to tannery, there are plenty of different situations, which are likely to lead to different decisions as well.
The fact remains, however, that the total number of hides can no longer be economically and successfully handled. Reducing production means at the same time increasing overheads and this means more added value has to be created if one wants to survive with a reduced volume of production. The only one excluded to a certain extent is the slaughterhouse, but even here there is the missing revenue from the by-product. All the others have to decide if they can actually manage and restructure their business based on reduced volumes.
It remains to be seen how much this is going to touch the European hide and leather industry. For the time being, realistically, one has to exclude renderer hides, low grades (mostly already done), and the hides that cause higher costs of collection and processing, which are not going to be matched by the leather industry.
A similar picture can be drawn for tanners. A good part of the tanning industry in Europe has become a full industrial sector where productivity and production cost are the commanding parameters. Sufficient margins can now only be generated, in most cases, in niches and specialities, which by the nature of their business are not industrially produced items. Should there be any recovery in demand, which would still take a couple more seasons to take effect, it is unlikely that there are enough niches and specialties around to keep the entire industry working and surviving.
In today’s world, almost anything can happen, but as long as the big retailers and brands are not willing to return to leather, a recovery of volume production cannot really be expected. Ideas are plentiful, but without a positive response from the consumer and the manufacturers of consumer products, the ship cannot be turned around.
As a result, there are only two serious scenarios that can help in the short term. One of them has pretty negative side effects, while the other would require a serious common effort to be made towards the public. The first scenario is a sharp rise in oil prices, which would mean conflict in the Persian Gulf region, while the other is a real global anti-plastic campaign that opens the doors once more to natural products. We find it hard to think of any other option.
Away from the general depression, there is still some business going on. The focus last week remained on quality products and we even managed to conclude some business for premium hides in the East. The price difference between good and bad hides has narrowed and business for leather is still for the better, more natural grades. Buyers tried to bargain aggressively, but our strict position in the past few weeks has resulted in prices that are pretty close to our asking levels. There might be a general surplus of hides, but there is definitely no excessive supply of quality products.
The kill: We are now in the low season, and this can be seen every week in the numbers. Until mid-August, we are pretty sure that any variation will continue to be on the downside.
What we expect: Things will remain pretty much the same for the coming weeks. Demand will continue to be slow and there will be isolated interest and deals for quality hides, in addition to the final renewal before the holidays of the regular programmes in Europe.
| 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 | € 1,40 |
Weakish |
| 25/29,5 kg | 27,5/28,5 kg | 22/27 kg | 25/26 kg | € 0,70 | Weakish |
|
|
Dairy cows |
15/24,5 kg |
22,5/23,5 kg |
13/22 kg |
20/21 kg |
€ 0,65 |
Weaker |
|
25/29,5 kg |
27,5/28,5 kg |
22/27 kg |
25/26 kg |
€ 0,50 |
Weaker | |
|
30/+ kg |
33,5/35,5 kg |
27/+ kg |
29/31 kg |
€ 0,45 |
Weaker | |
| Bulls | 25/29,5 kg | 27,5/28,5 kg | 22/ 27 kg | 25/26 kg | € 1,20 |
Pressure |
| 30/39,5 kg | 36,0/37,0 kg | 24/34 kg | 31/33 kg | € 1.25 |
Pressure |
|
| 40/+ kg | 45,0/48,0 kg | 34/+ kg | 38/40 kg | € 1.10 |
Pressure |
|
| Thirds | 15/+ kg | 25,0/27,5 kg | 13/+ kg | 24/26 kg | € 0,30 |
Weakish |
| Thirds bulls | 30/+ kg | 38,0/40,0 kg | 24/+ kg | 33/36 kg | € 0,50 |
Weak |
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