German Perspective - 15.9.15
15/09/2015
However, while there was a mood of uncertainty, there was not too much pessimism. The fair in Italy is about fashion and quality, and tanners there demonstrate what can be made from an animal by-product when expertise, ambition, commitment and a long history of taste are invested.
One was impressed by the number of visitors and the activity on the stands. We have not met a single customer who was complaining about a lack of orders or has a negative expectation for leather demand next season. We think a lot of the negative mood has been wiped away after having visited the show. So far, so good.
For those who have taken a more negative position, it must be said there was still uncertainty. Tanners were afraid of what the leather buyers would expect in terms of leather price concessions.
The 40% that was mentioned in a newspaper report some weeks ago hung like a phantom above the stands. The report contained false information and was quoted wrongly a number of times, but fortunately the leather buyers did not turn up with these kind of expectations.
Yes, leather buyers expect reductions and they will have to be granted, but we could not get a clear picture of the extent. Consequently, not many buyers were willing to commit. There was also the fear of being in a falling market and being the first to pay a higher price than the competitor. Many decisions were postponed and it seems not too much business was concluded during the show.
However, tanners have to replenish inventory and this will be done during the next weeks.
Whatever we say only applies to for the medium and higher end of the quality range. In the commodity sector, the situation is as dull as it was some weeks ago.
Sales this week were adequate. Price reductions have had to be taken or the hides would have remained unsold. However, the regular customers expect adjustments but do not disappear and that’s good. The main problem is to find a common base, because tanners are still uncertain by how much they will have to lower their leather prices for the coming season. Sales were across the board, but more for ox/h, cows and low grades while the bulls should follow next week.
The kill: The kill continues to rise week by week and this trend should continue with the last regions now finishing their school holidays. Weights are still light.
What we expect: Despite the sales it does not seem the market has found a solid base. Money problems in China and reduced demand for leather remain a threat to prices for the rest of the year. For the short term, a bit of the pressure has been lifted in Europe. A controlled slide of prices with the rising kill seems to be the most realistic scenario for the weeks to come. The weaker dollar is also a factor.
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