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Osterhorn,
Friday, 13.09.2019
Market Report

The US $ in EURO
1,1090


What happened this week?: Most people will have returned from Asia to their desks and cleaned up their backlog of office work usually piling up. The focus was consequently shifting back to Europe and the market situation over here. Here and there some might have returned from Asia with a little more optimism, but we tend to believe that there was not sufficient follow up yet this week to support already a better tone for the rest of the year. The market in China was dominated by the short holidays end of this week and the preparations of the anniversary celebration at the beginning of October. Consequently with the tanners from China reasonably quiet this week and if there were willing to show any kind of interest it was once again for the better of premium quality hides. The phenomenon we see already for quite some time and we have to acknowledge that the tanners holding leather orders are finding pretty expanded margins for specialty and high quality types. That is actually the good news, but as good and as expensive hides may be they still produce a certain quantity of lower grades where the valuation is presently pretty much an unknown.It is not just the price it is more that the market potential for lower grades is significantly lower than the existing stocks and current offer. However, also the tanners in Asia are now looking for the safer bet and try to buy as good as possible. Those customers which still hold contracts for more commodity type of hides are either trying to postpone shipment or even try to exchange standard hides for premium hides.This becomes slowly bit of a problem. The spread between the prices continues to widen and it seems it's close to touch the limits. There would be more premium quality hides supply, but the top end of heavyweight quality material from Europe is still beyond what the Chinese client can really imagine to pay.In some isolated cases the ice might be broken, but for the mainstream we fail to find already leather market for the Chinese tanners which would be willing to pay the logic price premium for leather too to justify the raw material levels.This week the IAA automotive fair in Frankfurt took place and became a good demonstration all the discussions and problems the automotive industry is presently facing about its future. The good news remain that between talks, political noise and protestors activities vehicle sales might see some headwinds, but all over continue to be reasonably stable at least for the majority of the brands. What this means for leather consumption and better penetration is so far not absolutely clear, but one can have the impression that we do not have to expect any substantial short-term changes. This means that there is a justified hope that the expected recovery for the demand from the automotive tanners has not to be buried. The The rest of the market continues to remain in pretty much the same pattern as we have seen for a long time. The substitution of leather by plastic does not show any indication for the reverse. The use of leather in premium accessories and handbags continues to be stable although the large brands are putting a lot of pressure on finished leather prices. Premium shoe manufacturers are willing with the new and lower prices to scratch some of their shifts to plastic in their shoe designs. The biggest impact on decisions still coming from the trade war and the uncertainty about the trade between the USA and China. For business and prices this week it all meant very little. For our part of the world most people were quite happy to consider and talk the market stable knowing that any up and down would not really have any positive influence on selling activity. The kill: Number continue to be stable with some warm weather returning. Weights continue to be surprise on the high side of expectations and experience. What do we expect: We fail to find any reason for a change of the fundamentals. The leather production returns further to stable and normal seasonal gear and the volume boost we would need now  has to come from Asia/China, but can only be expected when the trade war, the celebrations and the trade fairs are over. In the meantime watch this on
https://www.youtube.com/watch?v=qsBPWO3XYBY
We think an easy, simple and way of describing the realities and we would just have liked to see ALL hides an skins mentioned.


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 € 1,20
Stable
  25/29,5 kg 27,5/28,5 kg 22/27 kg 25/26 kg € 0,65 Stable

Dairy cows

15/24,5 kg

22,5/23,5 kg

13/22 kg

20/21 kg

€ 0,65

Stable
 

25/29,5 kg

27,5/28,5 kg

22/27 kg

25/26 kg

€ 0,50

Stable

30/+      kg

33,5/35,5 kg

27/+   kg

29/31 kg

€ 0,45

Stable
Bulls 25/29,5 kg 27,5/28,5 kg 22/ 27 kg 25/26 kg € 1,15
Pressure
  30/39,5 kg 36,0/37,0 kg 24/34 kg 31/33 kg € 1.15
Pressure
  40/+     kg 45,0/48,0 kg 34/+   kg 38/40 kg € 1.05
Pressure
Thirds 15/+      kg 25,0/27,5 kg 13/+   kg 24/26 kg € 0,30
Weak
Thirds bulls 30/+      kg 38,0/40,0 kg 24/+   kg 33/36 kg € 0,45
Weak





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