German Perspective - 17.12.19
17/12/2019
The long break this year will cover in almost all cases two full weeks, making fresh hides in particular a bit of a challenge. However, with the holidays right in the middle of the week the kill will be pretty low, which means that not too many hides are going to pile up during the vacation. In general everybody confirms that activity from the European customer base and in particular the Italians remains still relatively subdued. They buy exactly what they need but this is still somewhat less than normal. The Asian customer base, and in particular the Chinese, have become, fortunately, a little bit more active in the last quarter. One can hear all kinds of different opinions, but it seems that for the majority of the different grades of hides an adequate clearance was achieved. Just some salted male hides were struggling to find sufficient outlet between Europe and Asia.
The basis is pretty fragile and better business was really desperately needed to prevent the European market from falling out of bed. We still have the Chinese New Year holidays in front of us (January 25) and the low season of leather production usually begins at the end of April, so it is on the way already, looming around the corner. While European clients basically buy just-in-time anyway, in Asia inventories are a little lower than normal and some business can still be expected in January to cover the rest of the busy season.
If one wants to look for good news, it seems that the rock-bottom price for raw material has lifted demand for leather as a material in competition to plastic. However, if one looks at the prices at which stocks have been cleared it is unlikely that this is going to be repeated. Maybe the beef industry in South America has to take whatever is better than burying the hides in landfill, but fundamentally to reach price levels of $1 or less, the hide is almost free. In any case we can note that, at the right price, leather is still used in the global community.
There is promising news also from the garment sector where leather is in widespread use and is a frequently seen material in high-end women’s fashion. If this can be expanded into the online platforms and department stores it would be great news for the coming year.
Trade this week was once again pretty boring. The usual enquiries for female hides from China continued, but so did the resistance against higher prices. A fraction here and a fraction there, but fundamentally the price range established for a while remains intact.
The kill: The high level of kill continues to be unbroken. Also for this week production indications remain at steady levels. Supermarkets and stores are preparing for the Christmas season and it seems that most of the kill is planned to be done just before the holiday.
What we expect: We still fail to see signs of anything that could push the market out of the established ranges. Elections in the UK and positive news from the trade war between China and the US have not triggered anything yet. We should see the market continue to trade in the same ranges into 2020.
| 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 | € 0,70 | Stable |
|
|
Dairy cows |
15/24,5 kg |
22,5/23,5 kg |
13/22 kg |
20/21 kg |
€ 0,70 |
Stable |
|
25/29,5 kg |
27,5/28,5 kg |
22/27 kg |
25/26 kg |
€ 0,60 |
Stable | |
|
30/+kg |
33,5/35,5 kg |
27/+kg |
29/31 kg |
€ 0,55 |
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 | € 0,27 |
Stable |
| Thirds bulls | 30/+kg | 38,0/40,0 kg | 24/+kg | 33/36 kg | € 0,40 |
Weak |
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