German Perspective—27.01.09
27/01/2009
What happened this week: There is absolutely no change in the fundamentals. The leather business in general remains in agony and the business is still gripped by fear. The biggest trouble can still be seen in Europe.
Payments are becoming more problematic every day and discussions about the financial situation of a number of tanners are becoming more and more frequent. In particular suppliers to the automotive industry are the focus of interest. Some of them have been badly hit by the bankruptcy of a larger operation in Austria and it seems that this has tightened the cash position of some leather suppliers to critical levels.
The credit insurance companies continue to be pretty aggressive in their attempt to reduce their risk and exposure. Almost daily further cuts of credit insurance covers have taken place this week. Under these circumstances trading is becoming more and more complicated in Europe, and the selection of customers one could sell to, whether or not they are willing to buy, is becoming tighter every day. However, there are still a few, and one has to assume that they are doing quite well and enjoying cheap raw materials prices. This situation in the upholstery market tanning business in Europe remains pretty disastrous and, at least for automotive, there is very little hope of any improvement in the near future.
A lot of people were waiting for good news from the IMM furniture fair in Cologne. Reports were pretty mixed and did not offer any clear direction. The number of exhibitors and visitors was said to be significantly reduced, but in general it was also mentioned that the quality of visitors was pretty good and the general impression was not totally negative. However, we all know, that these initial reports can be pretty misguiding, because they don’t say anything about the real order situation and the reaction of the consumer.
New trends were not actually mentioned, with the only exception that the general quality of the leather displayed was better than in the past. Not really a surprise, with today’s hide prices.
Most people are calling the market steady with still reasonable pressure on the extra heavy hides, which are still suffering from the situation in the automotive business. For the rest of the market prices were pretty steady, but we would say this is rather theoretical because not all hides that are produced are actually sold.
The firmer US dollar has compensated for any possible price pressure from overseas and European prices were steady, but at the lower end of the trading range.
If there is anything special of interest to mention, it may be that there were players in the weight range between 25 and 40 kilos. These hides are still a reasonable alternative to their counterparts from America. However, as already mentioned, sales and consumption are still not in balance with supply.
The kill: The kill remains still completely steady. Weights, particularly for cows, are running well below normal annual averages. The upcoming carnival season should reduce the slaughter in weeks to come.
What we expect: The next weeks should remain reasonably quiet. Asia is on holiday and it will take at least two weeks for everyone to get back and think about raw materials purchases. In Europe there is still almost no sign of any improvement and we would be surprised if trading activity in the weeks to come were any better than what we have seen in the recent weeks. Prices should stay steady, but still under pressure for a 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 | € 1,30 | Struggling |
| 25/29,5 kg | 27,5/28,5 kg | 22/27 kg | 25/26 kg | € 1,20 | Struggling | |
|
Dairy
cows |
15/24,5
kg |
22,5/23,5
kg |
13/22
kg |
20/21
kg |
€ 0,90 |
Struggling |
|
25/29,5
kg |
27,5/28,5
kg |
22/27
kg |
25/26
kg |
€ 0,80 |
Struggling |
|
|
30/+
kg |
33,5/35,5
kg |
27/+
kg |
29/31
kg |
€ 0,70 |
Struggling |
|
| Bulls | 25/29,5 kg | 27,5/28,5 kg | 22/ 27 kg | 25/26 kg | € 1,20 | Struggling |
| 30/39,5 kg | 36,0/37,0 kg | 24/34 kg | 31/33 kg | € 0,95 | Struggling | |
| 40/+ kg | 45,0/48,0 kg | 34/+ kg | 38/40 kg | € 0,75 | Struggling | |
| Thirds | 15/+ kg | 25,0/27,5 kg | 13/+ kg | 24/26 kg | € 0,60 | Struggling |
| Thirds bulls | 30/+ kg | 38,0/40,0 kg | 24/+ kg | 33/36 kg | € 0,60 | Struggling |
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