| What
happened this week: The
slaughter industry has been
pretty successful to move
the market higher now on the
story of generally shrinking
supply. In complete ignorance of
the general conditions and the
economical situation in the
leather industry asking levels
have been substantially
increased at the abattoirs and
obviously nobody is taking into
account, that the situation for
European hides is not anymore
the same as it used to be some
weeks ago. The impression, that
the debt crisis in Europe might
be easing have given the Euro a
lot of tailwind and the currency
has actually gained almost 5% in
little more than a week. 5%
means about $3-$4 per hide which
the market at the moment is
hardly willing to pay. Within
Europe the situation is also not
getting much better and with
rising raw material prices we
are slowly returning to the same
problems we had been discussing
and facing already a couple of
months ago. The entire focus of
the European slaughter industry
remains on the few bright spots
which are still the luxury
accessories made from leather
and the automotive industry
still enjoying in the premium
end a decent order book to be
worked down. As much
justification this might deliver
for the premium raw material
segments as little it is
justifying higher prices for the
bread-and-butter articles. The
situation in the mainstream
production hasn't been good and
isn't much better today. Many
people are pointing at |
the fact,
that the hide market globally is
trending firmer again, but that
these people are obviously
overlooking the currency
effects. European hides had just
become competitive again after
the correction in November and
December and is included as well
the declining value of the Euro.
The US market may have gained
four or five dollars a piece
over the past weeks, but if we
consider the decline of the US
dollar the Euro revenues haven't
actually gone up for European
suppliers. Connsequently there
is very little justification for
higher domestic prices. However,
we have to deal with the fact,
that supply control is making
the pace at the moment. Reports
from the beef industry about
falling slaughter scares many
tanners and they try to secure
raw material atthe corrected
levels. That's what they have
done and that also why the
demand and the sales have been
pretty adequate on the corrected
market levels we have seen since
mid December. The key question
is actually now if this is
enough to push the market higher
without causing too much
economical damage. Pretty
questionable and the interesting
question now is if the serious
extend of purchasing has put the
tanning industry already in the
position to refrain from
accepting substantially higher
asking levels. Another factor we
have to consider is the fact,
that many Asian buyers still
favour to purchase into a rising
market as they are afraid and
refraining to buy as long as the
market is falling. This is certainly
adding
|
to the present
trend, than the real need
for more raw material.
Anyway, fundamental market
trends are hardly changing
from the week to the next
and so has also the present
trend possibly still some
time until it has run its
course. Trading this week
was pretty light. The
European tanning industry
and the suppliers are
waiting
for the outcome
the next round of
abattoir purchasing and the
Asian customers were pretty
quiet during their holidays.
They were willing to buy at
the price levels we had been
at two weeks ago and asking
just the 4-5 % increase for
the currency they returned
quickly to their families
and continued to enjoy their
vacation. Apart from some
patchy sales there was
actually nothing going on
this week. The
Kill: The beef
business is still pretty
poor. the slaughter numbers
remain on very low levels
and with the carnival season
ahead of us we don't expect
any major rise in the
numbers. The only positive
thing we can find are
rising hide weights which
are helping calculations a
little. What
do we expect: Despite all
the strong trend we are
still not totally convinced,
that this has such a solid
base to drive prices
significantly higher. the
slaughter industry will have
no mercy and will push as
long and as hard as they
can. This might, with the
help of the low kill, still
dominate the market for a
while, but economical
fundamentals should take
over again eventually. For the
coming week higher asking
prices and little business
should still be expected.
|
