German Perspective – 25.02.20
What happened this week: The world is dominated by the news surrounding the coronavirus. Travel, trade and transport are being seriously hit and almost everyone is being affected by the consequences. Under these circumstances, the trips to Milan were made and everyone was interested to see what it would mean for such an international event. Already on day one the attendance was quite impressive. The aisles were far from being deserted, despite the majority of Chinese visitors not attending.
It was all pretty much business as usual and we would even go as far as to say that most exhibitors we spoke drew positive conclusions about the business and commercial discussions they had had. There is no question that nobody knows what the medium- and long-term consequences of the coronavirus might be. Private consumption will be hit. The almost complete shutdown in China will leave deep gaps and the disruption in many supply chains will have consequences. However, the leather pipeline took it very professionally.
Demand for leather, which has been so much in question in recent times, is in many sectors is not in decline. All the anti-leather campaigns including some obsessed designers seem not to have worked. In particular in garments, but also in shoes and leathergoods, the manufacturers have leather as part of their plans for the future. Their buyers were interested in new articles and colours. They were also interested in environmentally friendly manufacturing processes. In general, there was more interest in leather rather than less.
The situation points to prices going down owing to the market situation in this first quarter. The picture will only be clear at the end of the quarter. Only then will we know how much the present situation will hit leather consumption and plans for the rest of the year.
The kill: The kill continues to be slow. Uncertainty, higher live cattle prices and reduced availability of livestock weighs on the situation. Cattle are still heavy and so are the hides.
What we expect: The industry in China is slowly resuming production. Logistics are the challenge: getting material shipped is one problem, but the ‘peak season’ surcharges are a problem too. Prices are under fire again, although even cheaper prices would not move more hides to Asia.
