German Perspective - 10.10.17
10/10/2017
Today we have several parallel universes and for some it is difficult to understand what happens in the other and hard to accept they are not connected.
Many feel as though they are sitting on a train at the station watching a train on the other platform. When one begins to move, a visual trick makes it difficult to know which is moving, and in which direction. For those on the platform the situation is clear. Let's try our best to be the one on the platform.
From our perspective, the fair in Milan met expectations. Most exhibitors represent producers of fashion and high-quality leathers, and this is the focus of most buyers. Raw material suppliers like us as well as a few others that do not fit into the frame are useful for statistics and to make the event look busy.
Speaking to the tanners and exhibitors covering the fashion sector, we were delighted that no one was really complaining about a lack of quality customers and discussions. In that respect, all those who have been publishing a positive impression of the fair are right.
All who are in one way or another connected to this segment are satisfied and the only discussion is one of raw material price and how to handle different selections related to the tanning process.
The fair was the usual meeting point and melting pot for people to exchange opinions and to try to figure out what the people on the train on the other platform do.
The news about the serious financial difficulties of one of the major producers of automotive leathers hit the aisles after the opening. For suppliers, the biggest question was whether they would lose money and what would happen to quite an important customer. For the others, the question was what consequences this could have on the raw material market. There were many opinions, but there was agreement that it would not make market conditions any easier in the short term.
In terms of selling, prices were determined by decisions taken by the suppliers during the summer. Those who came with decent offer lists and stocks to move had to concede to be attractive enough to anyone willing to spend. Those who were more comfortable tried to hold prices up and stable - however, presumably they were not able to convince many of this position.
This meant the premium quality suppliers went home satisfied with sales and prices while the others will have been unhappy with either prices or quantities.
Globally, the leather demand does not match raw material supply and we continue to wait for the strong upswing in leather consumption.
The kill: The weather is beginning to adjust to the season. The kill is normal, but we have not seen a rise after the summer holidays. Weights continue to be relatively light.
What we expect: Next week all eyes will be on Asia. Is there enough room for European hide purchases after the strong numbers of US hides sold? This will be the question for the next trend of prices over here. Until then, the focus is on abattoir prices after the fair.
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