GERMAN PERSPECTIVE—21.01.20
21/01/2020
Business and production activity in Europe has pretty much returned to normal and are now at the levels we saw in the last quarter of 2019. The first round of discussions with the European customer has not led us to believe that very much has changed in terms of leather demand; the production season is just running its course. Depending on the sector people are operating in, they are now waiting for the next round of tradeshows to form an opinion of what 2020 is going to bring in terms of orders. However, once again everyone has to understand that the calendar year is one thing and the season of leather production a completely different one.
For the vast majority, it makes much more sense to divide the year into the winter season and then the summer season rather than go by the calendar. The winter season is busy while the summer season in general is mostly slow and, despite fast fashion, leather’s most active season is still from September to April. This means that the trade shows at the beginning of the year can offer certain indications, but they cannot become a serious reflection of the leather demand for the entire calendar year.
It was obvious that many players here in Europe were impressed by the positive production and sales figures that the big premium manufacturers of cars in Europe have published for 2019.
These news in Europe and the relatively stable interest and purchasing activity from the Hebei region of China seem to have triggered more optimism across sellers in Europe. The signing of the first phase of a trade agreement between China and the US might also have had a positive psychological effect.
However, at the risk of being considered party-poopers once again, we tend to believe it’s premature to call this a big change or turnaround in the market. We are in the peak season of leather production and so is not unusual that the tanning industry is looking for a larger volume of hides. If everything were outstanding, as the optimists want to us to believe it is, all stocks of raw material would be gone and the interest would be far more widespread. One should never forget that those clients in China who, by now, have a pretty solid reputation for disappearing as quickly as they have appeared when things do not turn out the way they were expecting.
There are also just two more month of production to cover until the slower season affects demand once again, as it does every year. Even with good results from the end of last year in automotive, vehicle production for this year remains vulnerable. A bright spot might be women’s shoes; manufacturers from all over the globe are predicting a strong season for leather boots for winter 2020-2021.
Business and sales this week were relatively quiet. A few latecomers from China were in the market for cowhides and at the end of a long negotiation, sales at steady or fractionally higher prices could be concluded. In Europe most players are waiting for the price trends at the slaughterhouses to see what influence these might have on negotiations for February. This has postponed most of the sales for a few weeks.
The kill: The kill in the region is slowly returning to the levels one would expect for this time of the year. Weights continue to be high and for the coming weeks we have absolutely no reason to expect any change.
What we expect: Quiet times from Asia and a focus on the trend at the abattoirs will be the biggest questions; nothing else will change for a little while.
| 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 | € 0,30 |
Stable |
| Thirds bulls | 30/+kg | 38,0/40,0 kg | 24/+kg | 33/36 kg | € 0,40 |
Stable |
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