German Perspective - 16.07.19
16/07/2019
Everything we predicted a long time ago has now become reality and the material flow of product in the pipeline is like a river after a long drought. Many ships are sitting already on the sandbanks; others can see that they, too, will go to ground without a big and sudden rainfall. Only the small ones with the best captains who know their way around are able to continue. The main question is now if this summer season will be the bottom of the decline in leather demand or only another temporary pause in an ongoing descent. Nobody knows and everything is hypothetical, but it is at least feasible now to discuss if the trend could peter out.
There is certainly not too much hope for a swift recovery of leather demand, in particular when we see the latest news from the automotive industry. This industry had been misleading the public for a while about the realities, but now any hope of a swift recovery of sales and demand are vanishing and so the production and profit forecasts have to be corrected, with not much good news for leather.
This means the main driver for raw material demand that the leather market had until 2018 will give no new boost. With the size the automotive sector has reached in this millennium it is not easy to compensate when this market begins to lag. In shoes it seems a that a certain status quo has been reached and can be defended. The French luxury industry continues to believe in leather and is still willing to expand its vertical integration with additional purchases of tanneries to secure know-how and manufacturing capacity. Leather is far from being out of the picture, but it needs a special, new stimulus to replace plastic again and to attract consumer interest. Basically the chances are not so bad.
At least in Europe almost everybody is falling over each other to save the planet. A lot is just PR and marketing talk; a lot is also just that people and companies are concerned about making sure they swim with the mainstream, but if this could be used to trigger more knowledge and concern for quality and the longevity of material and products, leather would quickly make the headlines again.
It might still be a little way off the front pages, but if one seriously studies the media and searches the internet, many start-ups, designers and smaller manufacturing units are playing around with leather again and stress its beauty, naturalness and durability. This will not change anything in the short term, but it also took years to destroy the base of leather. It’s the trend that counts.
Business this week was just a copy of the previous weeks. The last and final trades were done for fine-tuning before the holidays and as part of the plan for the restart. Prices continue to be under pressure but the free-fall has stopped and adjustments are moderate now. Female hides are now pretty close to the potential minimum levels while males still have room to adjust. Low grades don’t fetch enough to cover the processing costs. There are still frightening levels of stocks in several hands considering that the next offer little chance to reduce inventory owing to holidays. China continues to underperform while other Asian destinations prove that they are willing to grab market share.
The kill: In our region we are now in full holiday mode and in the next six weeks the kill will reach the lowest numbers of the year. Weights are moderately heavier than usual for this time of the year.
What we expect: Next week should be the last one in which we see European players buy. Normally we should then see more activity from China, if anyone there wants to replenish inventory in time for arrivals in September. At the moment they are still trying to find weak sellers and bargains. For real sales, more realism is needed.
| 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 | € 1,40 |
Weakish |
| 25/29,5 kg | 27,5/28,5 kg | 22/27 kg | 25/26 kg | € 0,70 | Weakish |
|
|
Dairy cows |
15/24,5 kg |
22,5/23,5 kg |
13/22 kg |
20/21 kg |
€ 0,65 |
Weaker |
|
25/29,5 kg |
27,5/28,5 kg |
22/27 kg |
25/26 kg |
€ 0,50 |
Weaker | |
|
30/+kg |
33,5/35,5 kg |
27/+kg |
29/31 kg |
€ 0,45 |
Weaker | |
| Bulls | 25/29,5 kg | 27,5/28,5 kg | 22/ 27 kg | 25/26 kg | € 1,20 |
Weaker |
| 30/39,5 kg | 36,0/37,0 kg | 24/34 kg | 31/33 kg | € 1.25 |
Weaker |
|
| 40/+ kg | 45,0/48,0 kg | 34/+kg | 38/40 kg | € 1.10 |
Pressure |
|
| Thirds | 15/+kg | 25,0/27,5 kg | 13/+kg | 24/26 kg | € 0,30 |
Weakish |
| Thirds bulls | 30/+kg | 38,0/40,0 kg | 24/+kg | 33/36 kg | € 0,45 |
Weak |
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