German Perspective - 26.11.19
26/11/2019
At this stage there is absolutely no reason to believe that in the remaining four or five months of the busy season we shall see any major change in the market pattern. Tanners have to buy raw material to cover their existing orders with the problem of creating still a substantial surplus in selections that don’t really have a home to go to. A similar situation is hitting the raw material suppliers. A number of industrial tanners, seeing their semi-finished and finished inventory of unwanted material constantly rising, are beginning once again to emphasise the purchase of selected wet blue and wet white material. This might look attractive and possibly be the solution, but it does not solve the problem at all when the basic problem of the trade is just moved to the desk of somebody else. The revenue calculation of an entire lot remains always the same, as long as no new articles hit the market and restructure the returns.
For the moment the leather industry is still trapped with the articles we have seen for decades: little finish, some finish and heavy finish, to simplify, with all technology just focused on the finish and the yield. The supply pyramid of the articles has been the same, with a widening base because of rising slaughter in the origins serving the medium, low and commodity markets. This created expanding supply and, at the same time, falling demand due to the direct competition with plastic.
We are now in the peak period of raw materials requirements for the active half of the production year; it is unlikely we can expect a boost in demand, unless the tanning industry is willing to build stocks again. This is what would be needed for the clearance of raw material supply now and to prevent a new excess in spring and summer 2020. It is obvious that rising prices and a firmer market would suit a number of people in the trade. The signals can be seen. However, this might be a risky game when we consider that the fundamentals have changed and previous attempts have failed. Time will tell.
Trading and sales have been light this week. There is constant interest from Asia for female hides. On the supply side, some people believe it is time for a change and higher prices, every bit as much as the opposite sentiment on the customer side. Higher prices are stubbornly refused, ending in a stalemate on price. In Europe the market is presently preparing for the next and final round of programmes for the rest of the year.
The kill: The kill continues to be good in numbers and heavy in weights. We still expect a rise in males for Christmas season consumption, but generally not much should change in the weeks to come.
What we expect: There is a rising interest among some people in pushing the market and the question is if these will prove successful. From our point of view we think it would be far more appropriate to leave prices untouched for the rest of the season and to work on stimulating leather demand.
| 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 |
€ 0,55 |
Stable | |
|
30/+kg |
33,5/35,5 kg |
27/+kg |
29/31 kg |
€ 0,50 |
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 |
Stable |
|
| 40/+ kg | 45,0/48,0 kg | 34/+kg | 38/40 kg | € 1.05 |
Stable |
|
| Thirds | 15/+kg | 25,0/27,5 kg | 13/+kg | 24/26 kg | € 0,30 |
Stable |
| Thirds bulls | 30/+kg | 38,0/40,0 kg | 24/+kg | 33/36 kg | € 0,40 |
Weak |
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