German Perspective – 23.07.19
23/07/2019
The holidays of the European tanning industry are now almost completely synchronised. What used to be a little bit spread between the tanneries in the north and the south has become a complete shutdown from the last week in July until the third or fourth week on August. Some low scale operations remain open here and there, and some contract tanners are used to bridge the period. However, this is only a fraction of what is needed and in years like this nobody really worries about what it means to handle and to safeguard the quality of the raw material at this time of year.
On one side, the European industry is shifting more and more towards fresh, chilled hides. At the same time, they are simply ignoring that a continuous supply chain would normally also mean responsibility for everyone along the road. The generally declining demand for finished leather and the dark clouds in the automotive industry hit the product flow in Europe hard and it is a major challenge to pass the time until the end of August for everyone involved. It may surprise some, but there are hard-working guys salting and packing hides that have families and children with school holidays too.
This issue is not new, but 2019 seems to us extreme and very special. In previous years there was some relief in terms of turnover and movement of stocks was always experienced from clients in Asia. Since the crisis has hit, possibly China the most, there is also very little assistance in terms of sales and shipments coming from that part of the world. On one side there is the struggle with prices, but on the other side not all of the hides in Europe are the ones also taken by the industry in Asia. This applies in particular to the heavy material that traditionally has its home in Europe and is the largest burden at this time of year.
We are now beginning the critical time until the end of August. In addition to the already planned reductions there are additional players who are making further cuts at short notice. When it comes to planning, the present reliability of Chinese clients can also not be considered a safe base for logistics. Although there is no short-term solution, the main question is if this year's summer is going to be the bottom of the trend. We think so because if the demand doesn’t solve the problem, the supply will do with a decline in the number of hides being collected and prepared for leather production. This will continue until the market returns to balance. The days are coming back when there is not an abundant supply of hides to pick from and when supply management will become a challenge again.
Hide business has almost fallen into the summer agony. Some Chinese tanners continue to bid and it is the prices from the UK for cows that are setting the market. They are too low to be acceptable for continental sellers and Chinese tanners don’t seem to have enough need for more product to consider paying more money for hides. We are not finding any interested buyers in Europe and we feel the leather industry has mostly made its plans and purchases until September, with the exception of a few programmes that still need to be discussed.
The kill: For the summer holiday season the kill is at steady and stable levels.
What we expect: At this stage we don’t think much will happen. Abattoir prices need another serious adjustment for August to enable us to be globally competitive. The rest will be warehouse and finance management and wait and see for September.
| 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 | € 1,25 |
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 |
Weaker |
| 30/39,5 kg | 36,0/37,0 kg | 24/34 kg | 31/33 kg | € 1.20 |
Weaker |
|
| 40/+ kg | 45,0/48,0 kg | 34/+ kg | 38/40 kg | € 1.05 |
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 | € 0,45 |
Weak |
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