German Perspective - 15.12.15
16/12/2015
Well-informed sources in China blamed an unexpected drop in demand and prices for wet blue, in particular from Hebei province. Tanners there were also possibly concerned about smog in Northern China, which could lead to more shutdowns.
In the case of upholstery leather, the high season will be over by the end of March. Leather demand in general is no better. That explains why tanners are so reluctant to purchase at any higher prices and sales at higher levels have been in limited volumes. By mid-week the euro gained strength and went over 1.10 against the dollar, but the hope for further profits from the currency market faded quickly.
Towards the end of the week it seemed like the holiday season had come early and so the coming week will be interesting.
We do not expect any purchasing activity from Europe and one will mostly be busy sorting delivery programmes out. Asia is unpredictable, but it seems the flurry of sales for cows is over and tanners have lost confidence for the first quarter of 2016.
By beginning of January, shipments are going to resume for arrival after the Chinese New Year and one has to hope that all letters of credit and deposits arrive in time.
Sales were patchy this week and only a handful of hides were moved at steady or slightly lower prices. Returns in euro due to the weaker dollar declined.
The kill: The kill hasn’t been impressive and is lower than expected. Males went down in the slaughter mix, which is a surprise. Next week should be good, but predictions have become difficult.
What we expect: We don’t expect much from next week. Europe will be finished for the holidays, and the Asians seem to have lost confidence. Sellers will not be willing to change their policy before the end of the year and so anything other than a quiet week would be a surprise. However, let’s hope for another round of a year-end buying to get the books clean.
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