Demand keeps prices high in Germany

24 October 2005

The merger in South Germany of long standing hide trader Gruenberg with Germany's biggest meat packer Moksel has created a very powerful organisation which is said to now absorb about 80% of the area's hide production. Traders are left to divide the remaining 20% between themselves which cannot keep all of them in business. Some of those traders, who were already active in Switzerland, are now operating in and trying to source hides from Austria. All this results in very firm hide prices in the South. The automotive leather industry which traditionally consumed almost 100% of South German bull hides has good orders but is not prepared to pay higher prices for the leather. Automotive leather tanners are, therefore, squeezed between higher raw prices and similar or even lower leather revenues. This clearly reduces their margins. The German furniture industry is not in good shape. With strong demand from them there would no doubt be even greater pressure for higher raw prices.

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