US Perspective—29.08.17
29/08/2017
www.themaxfieldreport.com
The number of people still in the US dwindled as last week progressed. This has popular opinion of the trade that it was a lacklustre, disappointing week, and actually rather confusing, especially considering last week ended with the majority of the trade of the opinion we had a substantial number of hides sold, leading to thoughts prices had finally stabilised. Looking back over the course of the week, we saw packers start out with some looking for higher prices, ranging from $1-$3, depending on the packers and the selection, while other packers appeared as if they were content to leave their asking prices alone. However, what offer lists had in common is that there were not nearly as many hides for sale, while shipping times on hides offered were for much later shipment than only a couple of weeks ago.
As mentioned above, the previous week ended with a decent number of buyers looking to buy hides, while packers were informing the trade that they sold plenty of hides, resulting in some of the packers withdrawing their offers. In turn, this led to thoughts that we would see interest resume this past week; however, this is where it appears the best laid plans went agley. Members of the trade report interest this week was dismal, with some sources sharing they experienced one of their quietest weeks of trading in quite some time.
In the meantime, packers with aspiration of obtaining higher prices quickly encountered substantial resistance from perspective buyers, while buyers still in search of bargains and testing the will of packers with lower bids, found packers unwilling to trade the market lower.
The number of hides changing hands last week was well below expectations, and it is highly unlikely packers liquidated their production. As it pertains to trading levels, prices are no better than steady, while we have had some sales reported at the end of the week at slightly lower than some of the higher levels we saw the week before leading us to call prices ‘soft steady’.
We have reports that “special” offers from US suppliers were nearly non-existent this week, after numerous offers were seen last week; however, to replace these, we heard there were a number of producers from Europe and Brazil filling the void. Meanwhile, a number of suppliers continue to complain about tanners who are dragging their feet opening their letters of credit for their older, more expensive orders. This has most pundits of the opinion that many of those travelling in Asia at the moment are trying to secure payment from tanners.
The majority of producers in the US have decent sold-forward positions on paper; however, they are in desperate need of customers to take immediate delivery of their outstanding sales (supported by 10 consecutive weeks of shipments falling well short of the slaughter). Environmental issues remain a major concern for tanners, while there are “rumblings” that even some of the large Chinese tanners are encountering problems, as they do not have wastewater treatment facilities up to current standards. This is fuelling speculation that we will continue to see the number of tanners in Chain decrease and likely that the hide business in China in the future will be in the hands of a few well-financed, large tanneries.
All eyes will be on China this week and the All China Leather Exhibition that will take place in Shanghai from August 30 to September 1. Members of the trade in attendance will look to see if they can come away from the fair with a better idea of what we can expect for the leather business in the remainder of 2017 and the first half of 2018. Those looking for a large round of hides to be traded should not hold their breath because, usually, producers sell hides prior to the fair when travelling. However, it should be noted that this spring at the APLF in Hong Kong we did see producers sell some large numbers of hides at prices several dollars lower.
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