| What
happened this week: Attending the
fair in Milan last week could quickly
seem like a working holiday. From the
beginning of this week, many news
dominated again, which were more
negative than positive. Our opinion that
the mass leather producers are having a
difficult time at the moment for various
reasons had to be seen as confirmed this
week. The most discussed topic in Europe
this week was automotive leather
production. Almost daily news reached us
about production interruptions or
reductions in many automotive plants.
From the loss of a few production days
in October to complete closures until
the end of the year, everything was
there. Of course, it is not only the
models that are preferably equipped with
leather that are affected, and probably
even to a lesser extent, but overall the
production targets are no longer being
met anywhere. It is also becoming more
and more apparent that although leather
production has remained fairly stable in
recent months, the actual shipments to
vehicle manufacturers have been
significantly lower than they were in
production. The bottom line: rising
stocks of semi-finished and finished
leather. This led to well-known
companies announcing that they would
significantly reduce production, at
least temporarily. It is completely
unclear at this point how far this trend
will extend and |
when the
automotive manufacturers will be able
to bring their production back to
normal levels. However, the problem is
not only European, but the same is seen
in other regions of the world. Although
not everything has a direct impact on
commodity prices, the discussion about
inflation, rising energy prices and
power-cuts in China and the ongoing
problems in the transport sector are by
no means positive. At the end of the
third quarter, the outlook for the rest
of the year is thus mixed, to put it
positively. This is all the more
remarkable because normally the winter
half-year is actually reliably strong in
terms of production. Meanwhile, it is
also noticeable that the relocation of
production from Asia, wherever possible,
is slowly gaining momentum. The main
problem is capacity and labour
resources, which limit the trend
considerably, at least in Europe. Sales
this week were very mixed. From the shoe
and bag leather sector we saw good
interest. In the furniture sector,
things will probably only be decided in
the next few weeks and in the automotive
tanning sector, decision following the
adjusted delivery volumes as well as new
prices will also be made in the next few
weeks. Thus, sales this week were not
particularly extensive, but nevertheless
actually better than one might
under have
expected
|
the
given conditions.
Concessions had to be made on
prices, which ranged between 2 and 5
% depending on the category.
However, we do not consider this to
be truly representative of the
current market situation and the
real price level will probably only
settle again in the next few weeks.. The
Kill: As
everywhere in Europe, the meat
business continues to be very
difficult. Slaughterings are going
up a bit, but we are still rather at
the lower end of what you can expect
for this time of year. We still
attribute this to a large extent to
the weather. In the second half of
October at the latest, the kill
should increase significantly. What
do we expect: Last
week we talked about the beginning
of the price correction and that is
probably what is happening at the
moment. With further price declines
in the USA, further adjustment must
be expected in Europe as well. To
what extent this will happen quickly
and to what extent in the next few
weeks is very difficult to judge, as
the slaughter industry continues to
glorify the commodity market
situation. However, increasing kill
for heavy males, combined with a
reduction in the tanneries' intake,
would significantly increase the
pressure relatively quickly and this
would then spread accordingly. It
may take some time, but one almost
never escapes the market realities.
|