The Week at a Glance
- Currency market: $1.186/Euro, £ 0.881/Euro on 12/01
- Raw stock week 48. Never seen so many hides on the market.
Low prices are a logical consequence - American competition for British hides
- Weak cows, with some exceptions
- Market wants only African sheepskins
- France/Italy – LVMH invests in Italian production
- Italy – Natuzzi lost 6% of turnover
- Italy – Cinti looks for investor for shoes
- Italy – Tecnica grows beyond estimates
- Italy – After The Bridge, Piquadro ready for new acquisitions
- France – Renault grows outside EU
Click on a specific headline to go directly to a particular story.
Click here to read the report in Italian
PRICE SURVEYS
Survey of UK and Irish Ox/Heifers
*UK prices in GBP, Irish Prices in Euros, delivered North Italian tannery, payment terms 30 days
This Week | Last Week 11/24/2017 | |||
OX/HFRS | UK | Ireland | UK | Ireland |
36.00 and up | 1.25-1.30 | 1.30-1.40 | 1.30-1.35 | 1.35-1.45 |
31.00 – 35.50 | 1.35-1.40 | 1.40-1.50 | 1.40-1.45 | 1.50-1.60 |
26.00 – 30.50 | 1.45-1.50 | 1.45-1.55 | 1.50-1.55 | 1.55-1.60 |
25.50 and under | 1.55-1.65 | 1.60-1.65 | 1.60-1.70 | 1.65-1.70 |
Survey of the European Cow Markets
*All prices quoted in Euros/kg. on 30/32kgs. delivered North Italian tannery, payment 30 days
Cows | This Week | Last Week 11/24/2017 |
N. German 25 kg and up | 1.30 | 1.30-1.35 |
N. German 15-24 kg | 1.40 | 1.40-1.45 |
S. German 40 kg and up | 2.00 | 1.95 |
S. German 30-39 kilos | 1.65-1.70 | 1.65-1.70 |
French Bretagne 32 kg and up | 1.80-1.90 | 1.80-1.90 |
French Bretagne 32 kg and under | 1.85-1.95 | 1.85-1.95 |
Central French 32 kg and up | 1.70-1.75 | 1.70-1.75 |
Central French under 32 kg | 1.65-1.70 | 1.65-1.70 |
Italian | 1.15 | 1.15 |
Dutch | 1.30-1.35 | 1.30-1.35 |
Poland 26/27 kg* | 1.30 | 1.30 |
Sweden* | 2.10 | 2.10 |
Spain* | 1.30-1.35 | 1.30-1.35 |
Finland* | 1.80 | 1.80 |
Norway 17+ (av 24 kg)–* | 2.50 | 2.40 |
*delivered Northern Italian tanneries
Heifers | This Week | Last Week 11/17/2017 |
N. German 25 kg and up | 1.60 | 1.65-1,70 |
N. German 15-24 kg | 1.80-1.85 | 1.80-1.85 |
S. German 40 kg and up | 2.00-2.05 | 2.00-2.05 |
S. German 30-39 kilos | 1.90-1.95 | 1.90-1.95 |
S. German 24-30 kilos | 2.05 | 2.05 |
S. German 15-24 kilos | 2.20 | 2.20-2.25 |
Survey of Dutch Veal Skin Market
*All prices quoted in Euros/kg. delivered North Italian tannery, payment 30 days
Weight | This Week | Last Week 11/24/2017 |
14.5 kgs | 5.00-5.50 | 5.10-5.70 |
16.5 kgs | 5.40-6.00 | 5.60-6.10 |
Survey of French Veal Skin Market
*All prices quoted in Euros/kg. delivered North Italian tannery, payment 30 days
Weight | This Week | Last Week 11/17/2017 |
13+ kgs (Luxury) | 8.00-9.00 | 8.00-9.00 |
13+ kgs (Black and White) | 6.80-7.20 | 6.80-7.20 |
8-12kgs (Luxury) | 6.80-7.20 | 6.80-7.20 |
8-12kgs (Black and White) | 6.30-6.60 | 6.30-6.60 |
Survey of Italian Veal Skin Market
Weight | This Week | Last Week 11/17/2017 |
18kg and up | 4.50-5.00 | 4.50-5.00 |
18kg and under | 4.10-4.50 | 4.10-4.50 |
Survey of European Bull Markets
*All prices quoted in Euros/kg. delivered North Italian tannery, payment 30 days
Origin | Avg. Green Wt. | This Week | Last Week 11/17/2017 |
French – CentralFrench – Bretagne | 37 kilos and down37 kilos and down | 2.30-2.352.50-2.60 | 2.30-2.352.45 |
French – CentralFrench – Bretagne | 37 kilos and up37 kilos and up | 2.20-2.252.45-2.50 | 2.22-2.252.35-2.40 |
N. German | 30.0 – 39.0 kgs | 1.95 | 1.95-2.00 |
N. German | 40.0 – 49.0 kgs | 1.80 | 1.90 |
S. German | 40.0 – 49.0 kgs | 2.20 | 2.20 |
S. German | 50.0 kilos and up | 2.20 | 2.20 |
Benelux | 30.0 – 39.0 kgs | 1.80-1.90 | 1.90-2.00 |
Benelux | 40.0 – 49.0 kgs | 1.85-1.95 | 1.90-2.00 |
Italy | 40 kg and up | 1.90 | 1.90 |
Spain | 40 kg and up | 2.00-2.10 | 2.00-2.10 |
Poland* | 40 kg and up | 2.25 | 2.25 |
Sweden* | 34 kg and up | 2.45 | 2.45 |
Norway* | 34 kg and up | 2.65 | 2.65 |
Finland* | 34 kg and up | 2.30 | 2.30 |
*delivered Northern Italian tanneries
Survey of Spanish Lamb/Sheep Markets
*Prices are ranged to reflect the different regions in Spain, from lower end to top end quality.
**Prices quoted basis fob origin on euros per piece basis (5.5-7ft range, 6.5ft avg.)
Category | This Week | Last Week 11/17/2017 |
Entre Fino doubleface | 11.00 | 11.00 |
Entre Fino nappa | 10.50-12.00 | 10.50-11.50 |
Merino doubleface | 14.50-15.00 | 14.50-15.00 |
Merino 80/20 1st/2nds | 14.00 | 14.00 |
Merino 2nds | 7.75 | 7.75 |
Lachaune Lechal 90/10 % 1st/2nd | 7.50 | 7.50 |
Lechal aprox 40% P+SP balance rasato | ||
100% 1st | 5.00 | 5.00 |
90/10 % 1st/2nds | 4.00 | 4.00 |
Tigrados original | 2.00 | 2.00 |
Survey of United Kingdom Lamb/Sheep Markets
*Prices quoted in GBP/pce.
Category | This Week | Last Week 11/17/2017 |
Sheep skins | NQ | NQ |
Hoggets | 1.00 | 1.00 |
New season lambs | 2.00-2.20 | 2.00-2.20 |
Survey of Greek Lamb/Sheep Markets
*Prices quoted in USD/dz (pickled)
Category | This Week | Last Week 11/17/2017 |
Lamb skins (70/20/10) | 80 | 80 |
Lamb skins (C2) | 50-55 | 50-55 |
Survey of New Zealand Lamb/Sheep Markets
*Prices quoted in USD/dz (pickled)
Category | This Week | Last Week 11/17/2017 |
Lamb skins (standard) | 70 | 70 |
Lamb skins (C grade) | 28-30 | 28-30 |
Survey of Australian Markets
AUSTRALIA Wet blue, ox, USD/piece
Grade A | This Week | Last Week |
14 kg | NA | NA |
14-18 kg | 46 | 46 |
18-23 kg | 60 | 60 |
23-27 kg | 71 | 71 |
27-31 kg | 78 | 78 |
31kg and up | 90 | 90 |
Grade B | This Week | Last Week |
14-18 kg | 42 | 42 |
18-23 kg | 50 | 50 |
23-27 kg | 66 | 66 |
27-31 kg | 75 | 75 |
31kg and up | 80 | 80 |
Grade C | This Week | Last Week |
14 kg | NA | NA |
14-18 kg | NA | NA |
18-23 kg | NA | NA |
23-27 kg | NA | NA |
27-31 kg | NA | NA |
31 kg and up | NA | NA |
Survey of New Zealand Markets
NEW ZEALAND Wet blue ox, selection 80%-20%, USD/piece
This Week | Last Week | |
20-24 kg | 86 | 86 |
24-27 kg | 89 | 89 |
27+ kg | 97 | 97 |
NEW ZEALAND Wet blue heifers, selection 80%-20%, USD/piece
This Week | Last Week | |
14-18 kg | 70 | 70 |
18-23 kg | 86 | 86 |
NEW ZEALAND Wet blue cows, selection 80%-20%, USD/piece
This Week | Last Week | |
14-18 kg | 58 | 58 |
18-23 kg | 70 | 70 |
RAW HIDE MARKETS ACROSS EUROPE
UK/Irish Ox/Heifers: Five cents less
Projections have been rejected. The price drop in recent weeks was not enough, contrary to our expectations, and the latest contracts were closed at £1.25-1.30/kg for 36+ English and at €1.35/kg for the same Irish selection. A stronger sterling pushed down the values of British hides, which must deal with American competition. Italian tanneries, if they can, prefer to buy in Britain for reasons related to delivery time and average quality assured by flaying operations in British slaughterhouses, but the pressing need to adapt has won out. Alternatives are not lacking and high American slaughter figures benefit those who buy, not those who sell.
Forecast
We are convinced that the market cannot go beyond these levels, but we were also convinced of the same thing last week and the quotes dropped further. British slaughter activity, on the other hand, remains high and a shortage of Asian purchases contributes to depressed prices. We’ll see…
European Cows: No market for under 30kg
This week saw rising value for cows, which was not recorded for a long time. The 40+ southern German selection earned five cents and rose to €2.00/kg. This is the exception that confirms the rule: All other values remained stable, if not experiencing a slight decline. For selections below 30 kg there is no market. The 25+ North German are sold at €1.30/kg, while 15-24 kg lot five cents, dropping to €1.40/kg. French cows are stable, but the difficulties of Tuscan tanneries push the contracts for these and other sources to very low volumes. In addition, tanners are increasingly attentive to the quality of the materials received and disputes are overwhelming, not only on salted hides but also on fresh hides. The situation is undoubtedly complicated.
Forecast
The market, as anticipated a week ago, will continue to be one of contrasts: Big sizes and high quality are OK, but all the rest is down. Sellers still hope that the Chinese will return to buying, but it will be late…The situation is stationary with the residual possibility of a new decline.
Veal Skins: First drop after more than a year
Stable prices for French skins, while Holland’s willingness to deal results in a drop of 5-10 cents per kilo. For more than a year, calf did not show any signs of this type, and the reason seems understandable: The demand for high quality demand is always great, but for lower quality fashion brand decisions are conditioned by price and therefore tanneries have included semi-bovines subjected to innovative finishing, in order to make skins suitable for use in leather goods. We must also consider sheepskin, which is an alternative for some articles by. The result is that prices started to fall and no one wants to pay more than €6.00 for Dutch large sizes (over 14,5 kg).
Forecast
We do not expect high-quality variations, but if activity by big brands doesn’t restart, we might see a drop in the standard selections from Holland, Italy and Eastern Europe
European Bull Market: Extreme selection
Prices do not change. Fresh southern German origins are sold according to programs already defined at €2.20/kg with peaks of €2.22-2.23, while German salted hides are quoted around €2.30/kg. Prices for French origins are confirmed, with central regions 37+ listed at €2.25/kg and the finest selections from Brittany are sold for ten cents more. The situation is more difficult in northern Germany, where there has been a drop of five to ten cents linked to qualitative issues. In general, tanneries have stock in house and are not forced to build supply, carefully checking every single lot. The selection is extreme.
Forecast
Programs for January are not yet fully outlined. Nonetheless, tanneries do not expect unpleasant surprises from the automotive industry and the programming for fresh purchases is being respected. We do not rule out any downsizing, even to a limited extent for selections that can be used for winter footwear.
Lamb and Sheep Market: High prices for African origins
The situation for sheep is extremely contrasted. Prices are steady for both European and African origins, but if stability for British skins means staying at the lowest level, for South African skins it means staying at the highest historic level, and the same goes for example for Nigerian sheepskins. Generally, anything not used for garment is doing fine. It’s a good time for medium/high quality leather shoes and soft leather goods. In Solofra, however, only a few companies are doing well — meaning those most connected to the basic articles of luxury brands — while the others are sadly waiting for Christmas.
Forecast
We do not expect any news in December. Italian tanneries will continue working at 40-50% of their production capacity and prices will not rise or fall.
REFLECTIONS OF THE WEEK
Raw stock week 48. Never seen so many hides on the market. Low prices are a logical consequence of extra global offerings
I made the usual round of phone calls this week with contradictory impressions. Here are three examples:
The first seller told me: I have never seen such a bad situation on the 1st of December. Considering his specialization (French origins for high-end tanneries) I can understand. Outside of France, big luxury brands are reducing orders because the trend in leather goods is moving to cheaper and alternative materials. This is fashion: If today’s added value depends on the accessory attached to the bag, in full Gucci trend, it is evident that attention to the quality of material becomes secondary. But beware: Fashion changes and these aspects will also become less important. The segment that will remain stable, with small but steady growth margins, is true luxury that is not tied to fashion. This is the segment that has pushed the top French calves higher and higher.
The second seller, answering my usual question (Everything OK?), asked if ever in his life he told me that things were going well. For my part I reassured him: Sometimes, in the past, it happened. He’s a sheepskin seller, which is a really complex selection for market trends. But when sheepskins begin to reverse the trend, those sellers do good business. Currently the problem is that some origins cost too little and the demand associated with these origins is so low that it is not worth buying at half of that price, while others cost too much. Consequently, buyers purchase them because there is no alternative, but in small lots.
The third, however, told me: I sell very well, as always, because I sell to large tanners and I sell fresh hides. Fresh hides are the ones that are always purchased. Again, in this case, there is a reason: That seller lives in Arzignano and therefore belongs to a region forced to buy fresh hides or those that already have been transformed into wet blue. Salted hides are a purchase to be excluded for purification reasons, and readers know how much trouble Arzignano has had with purification for the past two years. Nevertheless, Arzignano has strengthened its leadership, not only with respect to the rest of Europe but also over China, thanks to the automotive industry.
The United States, on the other hand, is heavily dependent on China. The Chinese were raising the price of their hides when purchases were mostly Chinese and when slaughter had fallen below 600,000 head per week. Now we are over 700,000 hides and sales are abundantly lower than slaughter. China has not disappeared, as it is the top destination for raw exports and the second for wet blue, but certainly Italian imports have increased: Figures say about 600,000 extra pieces have been exported to Italy, and the simultaneous increase in Chinese imports of raw (11.5 million hides in the first 11 months) is not enough to provide a boost. There are two assumptions: American meat production will fall and prices will return to, or will remain at, these levels and only booming Chinese demand will trigger the market. It is very difficult for China to go beyond these levels, however.
Slaughter is making a difference. There are so many hides around and tanners have the embarrassment of deciding where to buy. Indeed there have never been so many hides in the market as there are now. And there was, once, some talk of a shortage…
Given the premise, the conclusions are automatic: Until February we see no possibility of a slowdown. Then it will be necessary to understand whether slaughter, especially European, will fall and how much prices will change. But the difference in the market is always made by the United States and Brazil, countries where no one needs to reduce slaughter.
Upcoming European Trade Show Events
BLOSSOM PREMIERE VISION | Paris, France | 12-13 December 2017 |
PITTI UOMO | Florence, Italy | 9-12 January 2018 |
EXPO RIVA SCHUH | Riva del Garda, Italy | 13-16 January 2018 |
INDUSTRY NEWS
France – Roche Bobois moves toward listing on the Stock Exchange
The process for listing Roche Bobois on the Paris stock exchange was formally launched. The first high-end global furniture group is about to define the process for the financial market. The objective is to debut in 2018, probably within the first half of the year. The French company closed 2016 with a consolidated turnover of €255 million and a gross operating margin of 28 million (with a 10.98% EBITDA margin). The process toward listing is managed by the BNP Paribas bank, who then will be joined by Rothschild. The goal of the partners of Roche Bobois, a company founded in 1960 by the Roche and Chouchan families, is to bring to the French list a floating balance between 20% and 35%. Looking at the listing process of the French company, which has a network of 330 stores worldwide and controls the French retail chain Cuir Center, is the financial partner of Tip-Tamburi investments partners.
France/Italy – LVMH invests in Italian production
Speaking in Florence, where the headquarters of a new high school for leather artisans created by Polimoda was inaugurated, Antonio Belloni, LVMH’s second in command confirmed the will of the group chaired by Bernard Arnault to invest in Italian production. In 2017, the group has allocated more than €150 million to the construction of a footwear school in Veneto, the expansion of Céline and Fendi manufacturing in Tuscany, as well as a new Milanese headquarters for Loro Piana. Belloni said “LVMH represents the other side of globalization. Over 90% of our products are manufactured in Europe and 80/85% of these are sold outside Europe or to non-European customers. European heritage is a unique distinctive element to be defended, giving value to craftsmanship.” In Italy, production sites will increase from 23 to 24, thanks to the completion of the Thelios plant, a joint venture for eyewear. The new Céline manufacturing plant of Radda in Chianti (Siena) will be built in 2018, and it will bring from 130 to 380/400 the number of workers employed by the brand in its historic production district. In Bagno a Ripoli (Florence) in the middle of 2019, the Fendi manufacturing site will be expanded thanks to the acquisition of an old factory that will be renovated in 2018.
Italy – Natuzzi lost 6% of its turnover
Natuzzi announced its results for the third quarter of 2017. The numbers are negative: Consolidated net sales amounted to €95.8 million, down 6.1% compared to the €102 million recorded in the same period of the previous year, pushing the total for the first nine months down by 0.9%, closing with a turnover of €329.5 million. Pasquale Natuzzi, president and CEO of the group, looks to the future with optimism: “Although the financial results for the quarter were disappointing, the operational results have begun improving and give us confidence in our future. Our retail sales are growing, both through our expansion and organically in our existing stores. Our numbers were damaged by the lack of proper coordination between procurement and production, a situation which we have fixed. Had we not had this issue, our revenues would have grown. I am more convinced than ever that our strategy works and that Natuzzi will return to its place as the leading global high-end branded lifestyle manufacturer in 2018.”
UK – Neo enters into partnership with Victoria Beckham
Victoria Beckham has a new partnership. The British designer and head of the fashion label, received €30 pounds from Neo investment partners, a fund that participates in brands such as Valextra, Alain Mikli and Ladurée, among others. The private equity company received a minority share in the fashion house, whose value is rumored to be around 100 million pounds. Victoria Beckham has expressed a willingness to invest money in the growth of e-commerce and in the retail network, but also in the development of new categories for her brand, without forgetting the possibility of recovering the loss of 4.6 million reported at the end of 2016.
Italy – Cinti seeks investor for its shoes
The race for the acquisition of Cinti has begun. The footwear brand founded in Bologna in 1952 and controlled by TB Holding — under extraordinary administration since the end of 2016 — has opened the call for expressions of interest. It is rumored that interest has already come from parties interested in the divestment of the business unit. Before the crisis, the company had more than 90 stores throughout Italy, currently down to 40, equally distributed in urban areas and shopping centers, of which 35 are under direct management. The turnover expected at the end of the year is about €21 million. The reduction initiated by the Cinti family and carried out by the commissioner appointed by the Ministry for Economic Development proved to be effective: The company has transitioned from a deep negative EBITDA to an active margin of around €700 thousand. According to estimates by the experts and the commissioner, the overall assessment of the company is around €10 million, €1.8 of which concern the brands owned by the company. All the debts incurred by previous management, quantifiable at €65 million, will be excluded from the sale.
Italy – Tecnica grows beyond estimates
Italmobiliare and Tecnica group are preparing for new business challenges thanks to the finalization of the deal signed last summer. According to the financial transaction, the investment holding company acquired for €60 million, through its subsidiary Clessidra, 40% of the capital of the Veneto-based company that is a leader in the world of outdoor footwear and ski equipment. It belongs to the Zanatta family. After closing 2016 with a consolidated turnover of €334 million, Tecnica has raised the estimates for 2017, aiming to achieve a growth of 10.7% for 370 million compared to the initial 360, with an EBITDA above 31 million (+14.6%). The upward performance could also revise results for the 12 months of 2018, expected to close at €380 million. The business plan launched at the beginning of 2016 expects to reach €500 million by 2022. The company exports 94% of its products and can count on historical brands, starting with Lowa, which accounts for 46% on the overall business, followed by Nordica (17%), Tecnica (12%), Rollerblade, Blizzard and Moon Boot & Co. The latter has scored a 50% run in 2017, followed by a comparison with Lowa and Nordica at +15%.
Italy – After The Bridge, Piquadro ready for new acquisitions
Piquadro’s great activity does not stop. After The Bridge company, acquired a year ago, the Italian leather goods group is putting new acquisitions on the agenda to create a high-end leather holding company. CEO Marco Palmieri declared that the goal and is to find a historic brand with a strong identity in the segment. The goal finds its “raison d’être” in the more than positive results related to the group’s addition of The Bridge. The last half-year closed 30 September saw revenues increase by almost 37% to €46.8 million, above all thanks to the sprint of the Tuscan leather goods brand (+32.4%) which, although limited, already accounts for over 20% of total turnover and a 4.5% increase in sales of Piquadro. For the end of the fiscal year, revenues should reach the €100 million threshold with increasing margins.
France – Renault grows outside EU
Sales growth of the Renault group accelerated in October. After the +5.7% posted in September, sales rose by as much as 13.5% last month to 317,558 cars and commercial vehicles. On the other hand, the final balance for the first ten months of the year shows an improvement of 10.4%, with a total of over 3,063 million vehicles put on the market. The commercial performance of the group chaired by Carlos Ghosn was supported not only by some emerging markets, such as Russia, Brazil and China, but also by Europe, where the slight decline in September was offset by double-digit growth in October. Sales outside the EU, on the other hand, show an increase of 9.2% with 167,398 units, which bring the annual total over the threshold of 1.49 million vehicles, with a growth of 14.9%. Among the various markets, Russia, where the Lada brand has been the leader for decades, guaranteed 41,674 sales in October and an increase of 21.4%. Overall, the Eurasian region grew by 22.3% last month. The Americas also performed well, with a monthly increase of 8.6%, thanks mainly to the recovery of Brazil, where the French group posted a 31.1% increase.
We remind readers that all price tables that we drafted are intended as a basis to illustrate the trends. Our prices quoted do not reflect quality changes present between one and the other source. Hidenet.com recognizes that there is a variety of factors able to determine different prices for similar materials.