What happened this week: What can actually be written under the circumstances we are facing at the moment? One may or may not be concerned about the personal risk from the Corvid-19 virus, but sooner or later the side effects will hit every business related directly or indirectly to China. 

Everybody can read the daily reports, the questionable counts of infections and casualties, but this is really only the tip of the iceberg and not the whole story. A major problem is the news media, which can’t easily be considered a reliable source of information these days. 

As far as business is concerned, activity in China is only very slowly beginning to recover. Companies may reopen, but what they are really capable of and how much they’re willing to produce is completely unclear. 

The biggest challenge remains transport and travel. Workers cannot return to their factories and goods cannot be timely transported to their destinations. The ports are congested and if this is not quickly resolved the real problem is still to come within the next few weeks. 

The Chinese government is in a difficult situation, having to choose between fundamentally pro-health and pro-business stances. The world can definitely continue for a while, but in some cases the dominance and dependency on China within the global supply chain can become quickly critical. 

In the leather business the world has become pretty much two-fold. Everything related to China has become pretty sluggish or even put on hold, while the rest of the world continues quite undisturbed. And actually, at least in our case, Chinese clients continue to be reliable. Deposits are paid, as are balances, even though many containers are still stuck in ports and it’s unclear what is happening to the ones that are reaching their destinations. So, thanks to those who are not using the circumstances to their particular benefit — but fair enough to the many people who are afraid of the uncertainty. 

We can only hope this situation isn’t going to last and container terminals and domestic transport in China will return to normal very soon. Otherwise the capacity of the ports will be quickly exhausted and it is unlikely international shipping lines will still be willing to call at the scheduled ports. Business under these circumstances is certainly very difficult. Nobody can really expect Chinese buyers to be active players in the market if they don’t know what their future in production holds. At the same time, waiting too long would also mean that by the end of the present problem one would and could be without adequate raw material in supply. 

The next unknown is the availability of shipping containers. The number of available, empty containers is hard to assess and, in any case, it seems unlikely that the shipping lines would be willing to take hides and skins as a priority.

This week, business outside China continued on a reasonably steady level, although enthusiasm about a firmer market has definitely faded. Tanners seeing offers with higher prices were actually quite a bit upset. For hides and skins, which are mainly finding their homes in China, prices were not a factor today. Lower prices could possibly find more speculative interest, but whether the hides are ultimately going to be taken and can be shipped remains totally in the air. As a result sales were limited and, in most cases, stable and steady.

The Kill: The slaughter numbers remain relatively low, and there’s been quite a bit of trouble with beef sales and prime cuts. Weights continue to remain high, and so we live from week to week with not much of a change.  

What do we expect: We have little indication that all will return to normal next week. We expect prices to remain pretty steady which, under the present circumstances, is actually best for everyone. The number of unknowns remains still too high to make a fair judgement about the market’s next step.

Share this story: