German Perspective - 25.8.20
The week began relatively quietly, which is pretty much common practice. Agents, WeChat groups and other parties such as tanners have created a certain pattern of behaviour. On Monday, information and offer lists are collected. Anyone who hasn't offered by Tuesday is asked to do so. By Tuesday afternoon the WeChat cartel has analysed figures and decided upon strategies. This is followed by bids, which are placed with a certain amount of organisation.
After the massive purchasing activity in the US the week before, Europe had come into the focus. The main interest is generally premium hides with characteristics other origins cannot offer. This means it is difficult to pit German material against the heifers and steers from the US and possibly also against material from the UK and Ireland.
However, when it comes to better quality upholstery hides the choice is more limited and here we have quite a number of types and weight ranges which suit the increasing quality expectations of the domestic Chinese market.
Consequently, we were quite pleased with a sufficient amount of bids for better quality and heavy female hides.
The Chinese customers were ambitiously trying to bid down, but realising that there was no pressure to sell nor any intention to discount prices, they accepted relatively quickly. Those who came first were able to buy and those who waited too long were disappointed on Friday.
It seems that for the first time in a long time, buyers couldn't get the hides they wanted even at asking prices. We felt there was some level of frustration. We think tanners in China who are serving the medium to higher end of the domestic upholstery market take a positive view on their sales for this winter season.
For the commodity types, for export and for shoes, the situation seems different and does not leave much room for European male hides to find a home in China, unless prices are discounted to seriously beat other origins, which isn’t really possible at the moment.
In Europe, business was reasonably quiet. There is no question that the demand for automotive leather continues to normalise. Tanners are beginning slowly to increase their weekly production levels, but we are still at a very early stage. However, good-quality heavy standard males as the bread-and-butter product for these tanners could be placed and also marginal increases in price have been achieved. The total sales number for the week was satisfying and matched the production for the first time for a long time.
The kill: The kill saw a setback this week and numbers declined. Butchers say the number of cattle offered is the point.
What we expect: We have seen waves and strong sales weeks already before, but they have never been sustained. Some sectors may be improving and performing better, but the key market - shoes - still lags behind, which leaves us with limited confidence for a real turnaround.
