German Perspective - 12.1.16
What happened this week: With an extended Christmas break in many parts of the world, many returned to their desks refreshed and full of enthusiasm for New Year. Most companies and politicians are looking at 2016 fairly positively.
However, the fall in Chinese stock market suddenly changed the mood. From Wednesday many people realised it was the one market that had been setting the pace before Christmas. The requests for offers which were there on Tuesday afternoon vanished and raw material decisions were delayed, a typical Chinese reaction when uncertainty develops and in this case it was the yuan exchange rate in combination with the slump of the stock market. The tanners like it to be predictable. The devaluation of the yuan was predicted for 2016, but not the speed, the extent and the handling of situation by the government. This made it all unclear and the week ended quietly.
In Europe, tanners are well covered for raw material. For the few sales booked, prices were steady.
Interest was again mainly for cows while all other hides had a difficult time.
The kill: The extreme weather conditions this week with snow and ice until Thursday kept numbers low. Some are forecasting a much higher cow kill from now on due to incentives to reduce the herd to limit the oversupply of milk and support market prices.
What we expect: We fail to see any positive trend in leather demand. To turn this market around it will need convincing indications for more leather demand and consumption. There are isolated sectors where it is better than others, but they are not strong enough to change the market balance.
