German Perspective - 17.11.15
17/11/2015
In Europe, companies are beginning to plan their holidays and for many, the end of the calendar year is also the end of their fiscal year, which has implications on inventory and cash management.
In some cases it means inventory has to be balanced according to the normal end of the year averages. This means many decisions are taken from the view of an accountant and less from the view of the production or commercial manager. It is also important to consider when goods are delivered and when they have to be paid for.
For the Asian customers we, as European suppliers, are now going into the final lap of full shipping weeks, because from the second week of December the arrival dates collide with the holiday season in Asia.
Some tanners, in particular those in the upholstery sector, are looking for enough material to be on the boat to arrive before they close for the holidays.
This gives us all the opportunity to move product before shipments cease for few weeks. This might give the impression of better business and more demand, but we believe this is more the seasonal influence than an increase in leather demand.
The main problem seems to be the uncertainty about the orders starting from mid-January. With the exception of automotive, almost every customer has the same worries.
Leather orders and production is hand to mouth and the majority of tanneries are missing reliable orders for the first quarter of next year. Leather orders for the coming season are coming late if they come at all and this makes planning difficult.
Sales during the week have been minimal and this was one of the quietest weeks since beginning of the summer. Whether people have taken a break or we are already entering the quiet period remains to be seen.
In terms of prices, the market seems steady although this is based on few trades. The interest has possibly moved towards other origins that look more attractive.
The kill: The kill remains pretty steady, maybe even a little lower this week and hide weights are finally moving up, in particular for males.
What we expect: It is difficult to make a prediction, but we would say that most quality suppliers are now in a comfortable position and might also see the benefit if prices stay where they are. Activity could be subdued with little offers and little interest. Buyers might look for bargains and sellers might push to see how far they can go.
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