German Perspective - 08.03.16
08/03/2016
We were suspicious and since the end of the Chinese New Year holidays the trade has been waiting for the return of the buyers and the fulfilment of the forecasts of many agents and Chinese experts that tanners will return to the market and that the upholstery business will remain strong. The same people are now scratching their heads and fail to understand why tanners and their customers have suddenly disappeared. What is so different now? From our perspective, what is happening now is far less surprising compared to what happened before the holidays. Something serious must have changed the minds of many tanners in the region. It can’t really be something only related to leather business.
The positive view of the market came from a general conviction of a strong domestic market in China. Since everyone in China was on holiday at the same time very little can have happened to change the conditions and market opinions. An understandable reason could be that the cash flow in the domestic pipeline dried up after the holidays, with many tanners not receiving the funds and payments they had planned for and needed to be able to pay for imported materials, to finance stock and to believe in a strong domestic consumer performance.
Anyway, this is all speculation at this stage, except for the fact that sales in the region have dried up and several contracts have turned sour. This makes it difficult to believe in anything positive, even though there might still be some patches of sunshine somewhere for something. If one reads the commercial reports, which are so plentiful these days, plus all the various publications fighting for customers, you notice how much they all copy each other. Perhaps they only write what people want to read. At least on one aspect we may agree. What people are being told about the general raw material market is certainly not reflected in the day-to-day business nor in leather demand in most sections of the market.
In theory, preparing trips to Asia and to the APLF fair in Hong Kong is still worthwhile. It is always much better to see you customers with a strong market and positive mood backing the negotiations. However all this does not change the fact that tanners buy what they need at the price they can pay and everything else is just temporary.
Trading and sales this week were again pretty light. With the absence of the majority of the Chinese customers most activity was on the sidelines and not for the mainstream or popular items. Prices were at a weak or steady level if representative volumes for a particular hide type were achieved, what was not the situation in many cases.
The kill: The kill remains pretty steady and we have noticed a better proportion of males. The level is still below normal but at least some more males with pretty high average weights are coming in.
What we expect: We still fail to find any big positives in the market place. It is not long until April when, normally, leather demand and activity begin to fade. Hide weights fall, temperatures rise, people start to go on holiday and, generally, the second quarter is a more difficult time in the European hide business. One has to be reasonably pessimistic for the market, at least in our environment, and particularly for cows and heifers. Heavy males could do better.
| 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 | € 2,30 |
Weak |
| 25/29,5 kg | 27,5/28,5 kg | 22/27 kg | 25/26 kg | € 1.85 |
Weak |
|
|
Dairy cows |
15/24,5 kg |
22,5/23,5 kg |
13/22 kg |
20/21 kg |
€ 1.90 |
Soft |
|
25/29,5 kg |
27,5/28,5 kg |
22/27 kg |
25/26 kg |
€ 1,60 |
Soft | |
|
30/+ kg |
33,5/35,5 kg |
27/+ kg |
29/31 kg |
€ 1,55 |
Soft | |
| Bulls | 25/29,5 kg | 27,5/28,5 kg | 22/ 27 kg | 25/26 kg | € 1,95 |
Weak |
| 30/39,5 kg | 36,0/37,0 kg | 24/34 kg | 31/33 kg | € 1.95 |
Soft |
|
| 40/+ kg | 45,0/48,0 kg | 34/+ kg | 38/40 kg | € 1.85 |
Steady |
|
| Thirds | 15/+ kg | 25,0/27,5 kg | 13/+ kg | 24/26 kg | € 1,35 |
Weak |
| Thirds bulls | 30/+ kg | 38,0/40,0 kg | 24/+ kg | 33/36 kg | € 1.35 |
Soft |
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