What happened this week: Once again a week of mixed emotions. The year has been split into two separate parts. The first half of the year was the Asian/Chinese party which, as we speak, is ending with a hangover, at least for European suppliers. The second half has become, once again, a more European event and such is the situation today. Many of the European high and consistent quality tanners are enjoying good business and orders. They are busy and need a steady, regular influx of raw materials. This applies in particular to side and vegetable tanners. The situation is favouring the European raw hides of higher quality, making a number of suppliers quite happy with their business. They are much less currency affected because many of the finished products are also sold in the European market. This might cover 30-40 % of the total raw material production. The rest, however, are struggling mainly due to currency trends, i.e. standard furniture leathers are produced for the global market or directly dedicated to overseas markets and are calculated in dollars only. This part of the raw material business is a direct reflection of the currency market and the end of the Chinese production festival 2004 with this week confirming the trend. While male and quality hides were in good demand and decent volumes were moved at moderately reduced prices, females were once again under pressure. This is less reflected in price falls but much more in insufficient sales and shipments. With the recent decline in prices, more and more stories are told about L/C delays or even contract cancellations from Asia and, in particular, from China. Tanners’ expectations for business out there has simply not materialised in the second half of 2004 and so many tanners find themselves overbought or realise that the raw material they have under contract does not fit into the orders. With a higher seasonal kill in Europe, this is creating a decent product jam. This situation is reinforced by the inventory policy of many producers along the supply chain. Towards the end of the fiscal year, which is in many cases the end of the calendar year, many are trying to reduce their stocks to the minimum. This is pushed back through the pipeline and affects the raw material. On the positive side, some people in the trade realise that price levels are attractive and some weak sellers are buying bargains clearly recognisable as speculative long positions. This means that the outlook for the first quarter is not entirely negative. The kill: There has been absolutely no change. The cow kill stays high and the male remains normal. With the extension of the budget year for the subsidies until the 31.03.05, the expected kill of males will be more stretched and the ‘wall of bulls’ will not come in an abnormal extent. What do we expect? The coming week will not be easy. The end of the year is approaching and most people are already closing their books. However, we are under the impression that the market wave is rolling out towards the end of the year. The outcome of the final tests on the BSE suspect in the USA could also have an effect on the general spirit. Leather business has not ceased, just changed, and the global economy is still expanding. The market sentiment has seen a settlement, as we are back to a comfortable level of prices.

 

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	€ 1,50	Pressure
	25/29,5 kg	27,5/28,5 kg	22/27 kg	25/26 kg	€ 1,38	Pressure
Dairy cows	15/24,5 kg	22,5/23,5 kg	13/22 kg	20/21 kg	€ 1,40	Pressure
	25/29,5 kg	27,5/28,5 kg	22/27 kg	25/26 kg	€ 1,32	Pressure
	30/+      kg	33,5/35,5 kg	27/+   kg	29/31 kg	€ 1,16	Pressure
Bulls	25/29,5 kg	27,5/28,5 kg	22/ 27 kg	25/26 kg	< Share this story: Leatherbiz.com cannot be held responsible for content if the language setting is changed from English. The translations provided by Google Translate are automated and therefore might not be accurate and may contain incorrect, offensive or misleading language. We offer this facility as a guide only.