German Perspective—10.09.19
10/09/2019
With everything that has been said and written already, the trade travelled to Shanghai in the hope of seeing a big trend changer. The good news first. The attendance in terms of visitors was significantly better than we expected. The aisles were full and the number of people seen was not really much less than in previous years. The situation in terms of exhibitors is definitely a different one and the number of booths in the overseas section and pavilions was significantly less. Entire country pavilions were missing and also a number of individual exhibitors were not seen this time.
Interesting also was the expansion and size of the non-leather materials sections, which were shown in one pavilion. It’s a bit of a paradox that a leather fair allows the main competition to be on stage in an event that should focus and promote the real product. There was no shortage of news. The first two days were mostly dominated by discussions around the future of leather and the problems the entire supply chain is presently passing through.
Chinese agents and customers were in the majority, just going round to test the waters, to collect prices and to carefully check how soft and depressed the suppliers were. The ones who had not already decided to go home after the second day must have been quite satisfied if they were representing origins with better qualities. In particular European suppliers will have been able to go home with a decent number of sales in their pockets for the better grades they had to offer. From dairy cows up to heavy bulls, there was a market for everything and prices may not have looked fully satisfying, but in the end can’t be complained about either considering the general status of the market. Some European origins were even able to get a little more money than in the full depression time in August and slowly but surely the various origins in Europe are closing the gaps that developed in prices over the summer. For the low-end market the situation remained as bad as ever and even the last optimists are beginning to understand that the outlook for commodity leather remains poor, with no real improvement to be seen on the horizon.
Another negative factor is the news from the automotive industry where car sales continue to fall, the positive outlook for the rest of the year is fading and the industry continues to consolidate, with another merger this time in China. Towards the end of the event, public announcements from fashion groups and retailers began to circulate stating they would refuse to buy leather from Brazil in future for use in their products until full traceability and compliance with their environmental standards can be established. It is amusing that fast fashion chains are now discovering the marketing benefits of being environmentally concerned. It’s only a matter of time before they call their full product range ‘vegan’ just to sell more products with a short lifecycle. It would be a good idea for the leather industry to label its products ‘plastic free’, but possibly we should think of a better slogan or header related somehow to saving dolphins, whales and turtles.
To sum up, the problems remain, but disaster has been avoided.
The kill: We continue to be impressed by rising slaughter numbers. What is even more impressive is the rise in weights, which is really unusual for this time of the year. The only answer can be that farmers have been holding cattle back and have fed the animals for longer.
What we expect: The All China Leather Exhibition was not good, but it was not as bad as we feared. Prices remain under pressure and the surplus supply, at least for the moment, continues. The coming weeks will tell us what it all means. More material decisions and orders will have to be placed and this will finally allow us to think about the price trends for the winter season.
| 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 | € 1,15 |
Pressure |
| 30/39,5 kg | 36,0/37,0 kg | 24/34 kg | 31/33 kg | € 1.15 |
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 |
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