German Perspective - 10.04.18
10/04/2018
Politics are beginning to influence business, slowly. Not that the hide and skin trade is being directly affected by the trade war between China and the US so far, as none of the products on the tariff lists of either side are directly related to the leather pipeline, but everything is related in way and we have to study what the implications might be if the dispute continues.
The world has become so globalised that people need a long time to understand the consequences of whatever move. The big and unfortunate problem is that some decision-takers theses days have a problem understanding that real life is far more complex than a Hollywood blockbuster and with a far more uncertain outcome. Anyway, we are still in episode two of season one and so there is still a lot to come.
In the meantime the hide and skin business continues in the same pattern as before. The high end of the market continues to enjoy an almost perfect market balance, the rest face far more supply than demand and prices are not coming down in an attempt to solve this. The market is struggling to accept the facts and this is why it is taking so long to adjust prices. Adjusting in this case does not mean finding an adequate price-level to influence or match the leather market. In this particular market it would simply mean deflating risk, but the owners of large and expensive stocks will immediately disagree because they see prices adjustments as the biggest risk.
Their logic is as follows. Why should they adjust prices if this doesn’t lead to more demand? If adjustments do take place, it always takes too much time for them to have any effect, and perhaps any change that does come is what was already on the horizon.
This takes us to the only question that is driving the trade at the moment. What can and when will leather demand rebound to absorb the surplus of medium- and low-quality hides that are circulating the trade at the moment?
From our perspective there is only one way: present leather as the best alternative to plastic, as a sophisticated, attractive and valuable product. It should not be dumped amid consumer junk, because that’s how we got were we are today, leading to not enough consumption of the material.
Business was the same this week as it has been for a number of months now. Tanners with business and orders buy what they need, while the others don’t buy because they don’t need to (and this applies to the majority of standard items).
Sales for the week were once again all right if we talk about the regular clients. They were also okay as far as premium material is concerned, or even good when it comes to high-end niche clients. But they were far from good when we talk about the commodity and volume trade with Asia for example. We decided to make small price concessions for the premium products as a gesture, while for the rest we did not see enough bids to consider a similar move.
The kill: Supply was down due to the Easter holidays. Beef demand is not brilliant and at the moment the kill reflects that. The weather has gone from snow to summer in a week, all over the place. This is an irregular time of the year and it might still take a few weeks to reach a regular status again.
What we expect: This is not the time for any predictions. Everybody is playing their own game. We are convinced that we will have a tough time ahead. Lower kills for the premium products will help, while the agony on commodity items will continue. It is difficult to find a way through this jungle. Unless we achieve a new status for leather as a material, it will remain a difficult job all over. No matter what, we cannot see how things can become easier any time soon.
| 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 | € 2,10 |
Stable |
| 25/29,5 kg | 27,5/28,5 kg | 22/27 kg | 25/26 kg | € 1,20 |
Weak |
|
|
Dairy cows |
15/24,5 kg |
22,5/23,5 kg |
13/22 kg |
20/21 kg |
€ 1.25h |
Weak |
|
25/29,5 kg |
27,5/28,5 kg |
22/27 kg |
25/26 kg |
€ 1,00 |
Weak | |
|
30/+ kg |
33,5/35,5 kg |
27/+ kg |
29/31 kg |
€ 0,95 |
Weak | |
| Bulls | 25/29,5 kg | 27,5/28,5 kg | 22/ 27 kg | 25/26 kg | € 1,70 |
Weak |
| 30/39,5 kg | 36,0/37,0 kg | 24/34 kg | 31/33 kg | € 1.70 |
Stable |
|
| 40/+ kg | 45,0/48,0 kg | 34/+ kg | 38/40 kg | € 1.60 |
Stable |
|
| Thirds | 15/+ kg | 25,0/27,5 kg | 13/+ kg | 24/26 kg | € 0,90 |
Weak |
| Thirds bulls | 30/+ kg | 38,0/40,0 kg | 24/+ kg | 33/36 kg | € 1.00 |
Steady |
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