German Perspective—03.11.08
04/11/2008
What happened this week: All eyes in the hides, skin and leather market were on Bologna in Italy this week for this autumn’s Lineapelle, the industry’s first major event since the earthquake in the financial markets. Consequently concerns were running high and we guess that most people were as scared as we were arriving for the show.
With the aisles being completely empty for the first hours of the show, the sentiment did not get any better and the few people around considered their concerns to be confirmed. But it worked out differently. As the morning progressed the booths and the aisles filled up and despite general discussions about the crisis, more and more ‘business as usual’ took place.
People were busy and on the second day attendance could even be called good; sales people on the stands were all busy and apart from the general gossip about the financial markets there was generally very little of the panic of the last weeks. As far as what the focus of the Bologna fair is—shoes, accessories and fashion—it was a good show with hardly any tanner complaining about business (yet) and many relaxed faces in view of the better conditions with regard to calculations.
Reduced raw material prices, a firmer dollar, and falling energy and chemical costs are having a very positive influence on margins, and with the good presence of leather buyers one could almost physically feel how quickly tanners of side leather relaxed.
This is obviously only one side of the coin. There were also quite a few negative vibrations, particularly from suppliers from the US dollar origins that are now feeling the pain we had when the dollar fell constantly. With the market decline and the rise of the dollar, a lot of shipments and contracts look pretty expensive today and large numbers of containers are being refused or renegotiated.
This has meant a pretty hard time for suppliers and has confirmed that business morals in this trade are still far below acceptable levels. One can only hope that a number of players will be blacklisted.
The upholstery business remains in the doldrums. However, there are signs of a cyclical change. With the adjustment of prices, the quality of leather tanneries are producing can be improved and some with a longer-term view had the courage to book pretty decent quantities of dairy cows at further discounted levels knowing, of course, that in the long run these hides will look pretty attractive in price.
Some premium suppliers took the chance to get a safe forward position and sizable volumes have been contracted already for the first quarter 2009. Tanners don’t want them in stock for the balance sheet of 2008 and sellers like to cushion against further market risk; these two positions met pretty nicely during the show. This means, however, that abattoir prices need another decent adjustment for the months ahead. Prices were moderately lower for males except the automotive heavies, and down on dairy cows.
The kill: To our surprise the kill dropped a bit this week. We can offer no reason for this, except that the crisis could also now be influencing the consumption of beef. With nights getting colder now, the kill should remain on better seasonal levels into November.
What we expect: The next week will probably be more quiet and it will depend now on the reaction of the Asian buyers. In Europe it seems that the year 2008 is already closing down. Tanners are covered and not interested in having any additional stock for the end of the year on their balance sheets. European hides look pretty attractive, however, and might also attract some Asian buyers to position themselves already for the time after the Chinese New Year.
| 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 | € 1,35 | Steady |
| 25/29,5 kg | 27,5/28,5 kg | 22/27 kg | 25/26 kg | € 1,25 | Steady | |
|
Dairy
cows |
15/24,5
kg |
22,5/23,5
kg |
13/22
kg |
20/21
kg |
€ 1,30 |
Weak |
|
25/29,5
kg |
27,5/28,5
kg |
22/27
kg |
25/26
kg |
€ 1,15 |
Stabilizing |
|
|
30/+
kg |
33,5/35,5
kg |
27/+
kg |
29/31
kg |
€ 0,93 |
Stabilizing |
|
| Bulls | 25/29,5 kg | 27,5/28,5 kg | 22/ 27 kg | 25/26 kg | € 1,40 | Steady |
| 30/39,5 kg | 36,0/37,0 kg | 24/34 kg | 31/33 kg | € 1,25 | Steady | |
| 40/+ kg | 45,0/48,0 kg | 34/+ kg | 38/40 kg | € 1,00 | Stabilizing | |
| Thirds | 15/+ kg | 25,0/27,5 kg | 13/+ kg | 24/26 kg | € 0,80 | Weaker |
| Thirds bulls | 30/+ kg | 38,0/40,0 kg | 24/+ kg | 33/36 kg | € 0,85 | Weaker |
Share this story:
