What happened this week: The struggle continues. The supply chain disruptions in combination with frozen private consumption due to the corona lockdowns continue to send their after-shocks throughout the world and almost every industry. We are still learning how much damage this has done to the system of mainstream mass production. There is a long learning curve ahead for all of us regarding what it means when the perfect system of upstream production and managed and planned consumption freeze. Individual decisions have become almost impossible, which is reflected today in the general attitude; everybody is waiting for customers to make decisions and take action. Proactive decisions, creative communications, open and transparent exchanges of facts across the different stages of the supply chain do not exist. There are a lot of lukewarm forecasts that one has to consider as guess-work rather than the result of facts; they do not really offer any insight. This has led to speculation that the situation might be worse today than it was during the peak of the corona crisis. Despite all the money being poured into the markets and all the assistance governments are trying to offer, the restart continues to stutter. With all the unsold inventory, the top priority today is to manage that problem and not really to focus on the future. 

To make things worse, we are, in our part of the world, right in the run-down to the holiday season. We all know that spring and summer are the lowest production season in the leather industry anyway. The dream that the summer vacation period could be used, in part, to compensate for the losses in production and sales since February continues to fade.
There is very little momentum so far that could be considered as a clear vision of what to do and where to go for the rest of the year and what kind of preparations can be made for the high season of production after September. For many reasons the preparations and plans for the product offer this autumn and winter have not yet been properly made. Everyone is just waiting for decisions from their clients or those who occupy the next step along the supply chain. Products used to be designed and made in advance on the basis of the budgets and decisions of brands and retailers. Then, the consumer had to buy whatever was offered. Products were uniform, mostly based on the mantra of volume and price. This had already put the leather industry in serious trouble, long before the corona crisis. What has happened since February was actually only the final nail in the coffin.

There will be a day when the situation recovers, but right now the raw material and tanning business is suffering from a timing problem. Everyone wants to wait, but our raw material and the production chain is less equipped for waiting than.
Trading this week was once again relatively light. In Europe tanning capacity seems to be running at around 50%. Some tanneries used the holiday on Thursday, June 11 for Corpus Christi to close on Friday too, or even to shut down for the entire week. The industry is only taking what it needs and one doesn’t need to be an expert to figure out what this means. There was interest from Asia this week, but the purchasing cartel had obviously decided to test the weakness of sellers, knowing that the number of suppliers capitulating may not yet be too large, but possibly sufficient to set new levels and certainly sufficient to satisfy any real demand. So, buyers were trying to buy good-quality material at low-quality prices, which we turned down. We believe that the total volume sold from the EU to China was limited. 

The kill: Lower again due to the season and the holiday, but not too far from what one expects at the moment. 
What we expect: No idea when we will see a breakthrough. At present levels of production, the industry cannot continue. Either orders will be place soon or we will quickly experience the damage in the industry. The market will sort it out, but if demand does not recover soon there rough decisions are requested.

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