Demand and kill down10 July 2008
The long hot summer has begun early this year. Kills are lower and so is demand. It seems as if fuel bills are now increasing on a daily rate and the dark mood that prevails in our industry is further compounded by the collapse in the property market in the UK and Ireland. People are depressed because they feel that they have lost something that they never had in the first place.
It is generally felt that the market will remain softish until after the Beijing Olympics are over. This is because the Chinese authorities have temporarily shut down tanneries within 200 km of any Olympic site. This is thought to account for 40% of the licensed tanneries in China but they are also the oldest and tend to be the smallest and are believed to represent 10% of the tanning capacity in China. This still amounts to a huge quantity of hides and skins that are being offered to other markets. It is fortunate indeed that the kill levels are low otherwise we might have had a collapse in the market. Italy slowed down in terms of orders placed and in the time that they take to pay invoices. This is putting pressure on suppliers as the abattoirs will not extend payment terms to their hide and skin customers. Despite all of this and the current volatility on the currency markets, hides continue to move. Quite how this will pan out at the back end of the year, when the true impact of oil prices and the credit crunch shows in the volume of car sales, remains to be seen. However, anecdotal evidence points to falling restaurant business reflecting less disposable income. Less disposable incomes means people keep their cars for four years instead of three and do not buy new leather sofas. All in all it appears that we are in for a fairly torrid time. Hide prices have softened a little from last month and were as follows: 36kg+ 77p 31/35.5kg 83p 26/30.5kg 87p 22/25.5kg £1.02 Cows went for a stand on price of £25. The new season doubleface lambskin business has now started and Irish skins were sold at £2.70 ex yard for the first few loads. However, as the kill in England began to kick in, this market came under pressure a little and offers for early June were at the £2.60 level. This was also the price for UK doubleface skins. It is possible that these prices may drift slightly in June.