German Perspective 20.05.08
20/05/2008
GERMAN PERSPECTIVE—20.05.08
What happened this week: The European market is still in something of an agony. On top, it is divided into two segments.
Regular European tanners using mainly fresh hides are running their normal course and with the seasonal declining kill and the falling weights the heavy, fresh hide supply is just about to be enough to satisfy the present needs of the operations.
This has led to moderate increases in prices. Not, that this can be called a market trend, but it is just a reflection of the typical seasonal market conditions.
With the decent sales the German automotive manufacturers are reporting in the upper price segment, business seems to be well cushioned for the second half of the year. A number of new models will add to the trend and as long as the rising community of fresh wealth is willing to spend, things should be reasonable for the premium car sector and consequently also for the producers of premium leathers.
What is good for one is pretty bad for others and those who are spending freely on cars and leather interior are seemingly not willing to spend in the same way for leather furniture for their villas. Upholstery seems to be the weakest spot in the market and vegetable tanning is not much better, at least in Europe.
Following the high levels of export sales from the US and the assumption that the vast majority of these hides are used in shoe production, the market patterns are clearly defined. For European suppliers the situation in China is consequently not favourable. Most hides from Europe are entering the production facilities that are presently under most supervision from the Chinese government and have been either closed or largely restricted for the time being. There is very little indication that there will be any change for the better until after the Olympics.
Low grades and cows are suffering most from the situation, while bullhides are presently not really attractive for Chinese leather tanners; they are too expensive and technically too difficult to handle to bother with at the moment. We would need either a sharp rise in dollar prices, a steep fall in our prices or 10% rise in the value of the dollar. For the short term there is not much sign of any of these options becoming reality.
So, sales during the week were again either restricted to the regular programme or again rather coincidental. China, or better said all of Asia, is not a factor for us at the moment and, sales aside, even letters of credit are proving slower to come in than we were used to until March this year. The reasons are explained above.
Prices were a fraction better for heavy material while the other bits and pieces were just around present market levels. The gamble of the day is still currency; daily fluctuations of more than two cents have become pretty common and, using the swings a bit, it can help with calculations, but not with business as such.
The kill: In our area we enjoy absolutely beautiful spring weather. Grass is growing and farmers are not too busy to get rid of their cattle. Also, with the better weather, people turn away from beef in general. So, the kill and weights remain on the low side, but due to more working days this year in May the kill is low, but the total numbers for May will be not substantially lower. For the next six weeks we should not see any substantial change.
What we expect: One day the market will change, but we still fail to have any idea when this is going to be. For the time being, with the exception of fresh material, things are pretty stuck and for any market change we would need a revitalisation of activity in Asia to get things moving again. However, we still don’t see any trigger which could actually push the market in any real direction.
| 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 | € 1,45 | Steady |
| 25/29,5 kg | 27,5/28,5 kg | 22/27 kg | 25/26 kg | € 1,33 | Steady | |
|
Dairy
cows |
15/24,5
kg |
22,5/23,5
kg |
13/22
kg |
20/21
kg |
€ 1,45 |
Steady |
|
25/29,5
kg |
27,5/28,5
kg |
22/27
kg |
25/26
kg |
€ 1,30 |
Steady |
|
|
30/+
kg |
33,5/35,5
kg |
27/+
kg |
29/31
kg |
€ 1,15 |
Steady |
|
| Bulls | 25/29,5 kg | 27,5/28,5 kg | 22/ 27 kg | 25/26 kg | € 1,50 | Steady |
| 30/39,5 kg | 36,0/37,0 kg | 24/34 kg | 31/33 kg | € 1,40 | Steady | |
| 40/+ kg | 45,0/48,0 kg | 34/+ kg | 38/40 kg | € 1,21 | Steady | |
| Thirds | 15/+ kg | 25,0/27,5 kg | 13/+ kg | 24/26 kg | € 1,05 | Steady |
| Thirds bulls | 30/+ kg | 38,0/40,0 kg | 24/+ kg | 33/36 kg | € 1,05 | Steady |
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