German Perspective — 13.08.19
13/08/2019
The trade war continues to be the dominating factor and the currency issue is also affecting decisions. It remains frustrating how sensitive Chinese customers are to such influences. They may be negative, they may complicate business decisions, but a currency variation of 2%, 3%, or even 5% is not really the end of the world; it is basically just a change in the calculations.
Uncertainty is toxic for business in Asia and this is reflected in the activities over the past weeks. While for Europeans it does not make too much difference, because we have only the choice between bad and very bad business in Asia, it will influence trade and shipments between the US and China. Everything is possible and this could mean even a positive influence for European exports to China eventually. It could, however, also mean a complete drama.
If the mind of the industry in China is already negatively touched by the trade war, the complications between China and Hong Kong are making it additionally difficult. A real conflict with possible military force involved will certainly cause additional problems for our and other businesses. In aggregate, it means that the political situation and the global economy are playing a much bigger role for our business than they normally do. With very little taking place within the trade due to the holiday season, the importance of these external factors is rising.
Those who are not on holiday continue to discuss an exit strategy from the decrease of leather demand globally as well as the mismatch between supply and demand in many different sectors. There are many opinions, many facts, but it is still not easy to get to a clear picture. For the time being, tanners and buyers still feel comfortable in purchasing hand to mouth and postponing purchasing decisions to the very last moment. Nobody considers this to be a risk; buyers have become used to the continuously falling raw material prices, with the only exception being the pick-up in the US.
In our part of the world some tanners will have to discuss new programmes or an extension to existing ones in the coming weeks. Abattoir prices will have to be fixed too. This means for the moment very restricted trading activity, which in our case continues to be focused only on specific-quality hides. Tanners are more obsessed than ever with avoiding selections or hide types that do not fit into their regular production. Consequently they have become more picky than ever, which is bad on one side, but good on the other. The price discussions have become much more moderate in the past weeks.
The number of sales was limited, but what was sold was achieved once again full or close to asking price levels. The price for this is, however, that for other items there is almost no price and no demand.
The kill: The kill continues at low summer levels. In the north, people are returning to work now, while in the south the holidays will continue until the end of the month. Depending on weather conditions, we should see the slaughter climb again from mid-August.
What we expect: We think that politics will continue to dominate. There are so many small fires around the globe and so much instability that it would be a miracle if the consumer ignores them all and just continues with easy spending, despite low interest and easy money. Most are convinced that the market will be stable until the All China Leather Exhibition in Shanghai at the start of September. Maybe or maybe not, but the risk level has increased substantially again.
| 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 | € 1,20 |
Stable |
| 25/29,5 kg | 27,5/28,5 kg | 22/27 kg | 25/26 kg | € 0,65 | Stable |
|
|
Dairy cows |
15/24,5 kg |
22,5/23,5 kg |
13/22 kg |
20/21 kg |
€ 0,65 |
Stable |
|
25/29,5 kg |
27,5/28,5 kg |
22/27 kg |
25/26 kg |
€ 0,50 |
Stable | |
|
30/+kg |
33,5/35,5 kg |
27/+kg |
29/31 kg |
€ 0,45 |
Stable | |
| 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 | € 1.20 |
Pressure |
|
| 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 |
Weak |
| Thirds bulls | 30/+kg | 38,0/40,0 kg | 24/+kg | 33/36 kg | € 0,45 |
Weak |
Share this story:
