German Perspective - 29.10.19
29/10/2019
Having said this, the start of a new decade often sees the start of a positive cycle, although we haven’t had much indication that things will get better next year. The consensus is that the demand for leather continues to shrink, business will be difficult and prices are unlikely to improve.
In view of the rising demand for beef and the globally increasing number of cattle killed it is unlikely we will reach a balanced market any time soon.
Without a fundamental change one must accept that the supply of hides for the leather industry is shrinking, because far fewer hides are made available due to the exceptionally low prices.
For the types of hides that still have a fair value, the clearance of this kind of material has become significantly better since the second half of the summer. For many hides, the price pressure has eased and the amplitude of price variations has declined substantially.
The tanners holding leather orders may still face problems selling all selections, but in general their margins are sufficient with a relatively low price for raw materials.
The tanneries in mass production and with a lack of orders have or might become the victims of the shift away from leather.
This means we are approaching a new equilibrium. In the past, the balance of the market was measured by supply and demand, but we now must take out those hides that cannot be sold. The leather industry should not expect all types of hides to continue to fall in price for ever.
We found trade this week to be stagnant. Despite all the positive reports about sales we didn't see much interest except the regular programmes in Europe. Prices were stable across the board.
For the hides with no interest, price reductions do not trigger buying while the hides you can sell can be placed at steady levels but not a cent more.
There is a lot of contradicting information about offers, which makes a market evaluation difficult.
The kill: The kill continues to be below the seasonal expectations and the warm weather is the only reason. Weights are what they should be at this time of the year.
What we expect: We continue to miss the great breakthrough. Things are better than in spring. The influences on sales by the Christmas and Chinese New Year holidays will be seen soon but are unlikely to be positive. Prices are likely to be flat.
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