German Perspective - 14.02.17
14/02/2017
From last Monday people began to return to their desks and started phoning agents and suppliers to see if there had been any major change in the marketplace. People were checking the offer lists to see that asking prices were almost the same or that some suppliers were even daring to test the waters and to ask for a bit more. Early in the week customers and agents were basically only collecting information and listening and in response to ambitious asking prices they threw low bids around to see what the counter reaction would be. Consequently it took until Thursday before anything serious happened and people were willing to lay cards on the table for serious business. We would say that most of the deals ended up at almost unchanged levels, with moderate advances for the most favoured items and moderate discounted levels for the less attractive raw material articles.
As far as the Chinese market is concerned people are still looking for premium-quality hides suitable for upholstery and handbag leathers, while low grades and hides for shoe leather did not generate too much excitement. From the seller’s perspective we would say it was a reasonable week because a normal number of hides moved and what was lost on one side was gained on the other so that nobody could complain.
In Europe, it’s still ‘business as usual’. The manufacturers of premium leathers of any kind continue to run at satisfying and steady production levels. The better and more prestigious the leather, the better the situation. Looking at the results of the top five in the luxury segment one cannot be surprised by the strong demand for top-quality hides and the low kill for this kind of product is keeping the market pretty strong. This applies to all raw material that is destined for the high-end market.
The higher production of the winter season has, in these first weeks of the New Year, met reduced kill and so the raw material inventories have eroded, which is always supportive of prices.
Stiff resistance to higher leather prices and more realism at the table between buyers and sellers have capped prices. After the experiences of last year, people are aware that the end of the production season could quickly change the situation again. There seems less chance that prices could move out of control in relation to leather prices this year. However, the time until the APLF exhibition in Hong Kong (March 29-31) is traditionally a tricky one and packers and traders have often become far too excited in the final lap of the peak season for leather production. Maybe political risks will contribute to making 2017 different.
Sales have been normal with prices remaining within a pretty narrow range since beginning of the year.
The kill: The kill continues to be at normal seasonal levels. However, the number of males remains pretty low and the weights are seasonally light for dairy cows and seasonally very heavy for bulls. We don’t see any reason for this to change in the coming weeks.
What we expect: This week all Chinese tanners will be back and we will see how desperate they are if they have not been in the market yet, or if the pressure on leather prices continues to dominate purchase decisions. If we could choose, we would say stability for several more weeks would be the best of all options in view of the fairs ahead.
| 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 | € 2,20 |
Steady |
| 25/29,5 kg | 27,5/28,5 kg | 22/27 kg | 25/26 kg | € 1.60 |
Steady |
|
|
Dairy cows |
15/24,5 kg |
22,5/23,5 kg |
13/22 kg |
20/21 kg |
€ 1.70 |
Steady |
|
25/29,5 kg |
27,5/28,5 kg |
22/27 kg |
25/26 kg |
€ 1,45 |
Steady | |
|
30/+ kg |
33,5/35,5 kg |
27/+ kg |
29/31 kg |
€ 1,40 |
Firmish | |
| Bulls | 25/29,5 kg | 27,5/28,5 kg | 22/ 27 kg | 25/26 kg | € 1,90 |
Steady |
| 30/39,5 kg | 36,0/37,0 kg | 24/34 kg | 31/33 kg | € 1.90 |
Steady |
|
| 40/+ kg | 45,0/48,0 kg | 34/+ kg | 38/40 kg | € 1.80 |
Weakish |
|
| Thirds | 15/+ kg | 25,0/27,5 kg | 13/+ kg | 24/26 kg | € 1,25 |
Steady |
| Thirds bulls | 30/+ kg | 38,0/40,0 kg | 24/+ kg | 33/36 kg | € 1.25 |
Steady |
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