What happened this week: Another week ended which did not offer any further insight. Opinions, news and market activities paralysed each other. Most suppliers around the globe are still convinced that global leather production still outpaces the supply of raw material and so it is just a question of time and patience until the customers will come and pay the asking price. Since this is also the strategy and policies of most of the leading suppliers and hardly anyone has got the courage to bet against it, the market stays steady, prices hardly change and trading volume is restricted to those buyers who have no other choice than to step in and pay what is asked for. Since the trading activity on the market has very little to offer as far as information and stories are concerned most people are actually dealing with the problems of shipments. Overseas transport to Asia is becoming increasingly difficult and apart from the sharply rising freight rates it is also increasingly difficult to book shipping space within an acceptable time period. With freight rates rising almost every month it is getting more important to ship sooner rather than later, because almost every delay means an increase in shipping cost. On 1st May freight charges are going up and for the 1st June another increase of about $300 per 20 feet unit is already advised.

Hides and skins are actually not really one of the privileged materials and so shipping lines are not rushing to take lots for shipment. While not all buyers regret, that their shipments could be delayed, some are pretty furious, because they might have planned their inventories a bit too tightly. Consequently one is today more busy trying to sort shipping issues out, than actively sell hides. The market this week was generally pretty quiet. The coming weeks will be dominated by either shortened production days or even a total holiday week. This applies for almost the whole world. It seems that quite a number of people were quite happy to take a break and to think about how to deal with the present situation. At the moment it seems that almost every market is stuck in a very narrow trading range and this applies to all kinds of commodity markets and to the currency market too. Minor movements and nothing more. Just the skin market delivered a bit more drama in the past weeks with some selections of lamb and sheepskins being seriously affected by the problems in China, losing in some cases up to 30% of their value in just the past two weeks. This is all related to the problems in Hebei province where the market and the players are still suffering from the customs investigations some weeks ago. The supply chain hasn’t been repaired yet and so quite a number of shipments are either in arrival and will either not be clear at all or definitely with significant delays. Many buyers in the area are still hiding away from the officials and cannot finish the import administration for the material they have bought. This is not only difficult for containers and arrival it also touches existing contracts which are scheduled for shipment and cannot be shipped as scheduled, because buyers are not clear about their future.

Apart from this short-term congestion it seems that the times of cheaper imports by avoiding customs and taxes will be over or at least not be available for some time. This means that the area will not be any more the region of cheaper wet-blues and the competitiveness within the mainland will be more balanced in the future. Sales this week will be limited to isolated trades with people who have either immediate replenishment needs or regular customers which were due for renewal of their long-term contracts. General interest for hides we couldn’t trace very much and price remains a very serious issue. Rumours about desperate sellers from other European countries offering at cheaper levels didn’t make the situation easier.

The Kill: The kill this week was pretty low with a long weekend ahead of us. Next week the numbers will not be much better with the holiday on Tuesday. However for this time of the year this is not unusual and for a while this is going to be the situation of the market. Falling average weights and reduced numbers are never pleasant at this time of the year.

What do we expect: For the moment we still cannot see the markets seriously moving. The low kill is preventing any major pressure. It seems that there are a number of traders who still hold some stocks of questionable qualities and origins. They might be ready to take lower prices if they could move the material quickly and get it paid. Regular material doesn’t seem to be ready for any move so far yet.

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