What happened this week? It is once again getting boring to review the market every week. Nothing much is happening, and the fundamentals all remain the same. We have entered the month of July which means people are busy preparing for the holidays rather than making specific business plans to create any kind of new or great activity. 

This is particularly true for Europe where, unfortunately, every year the holiday period is increasingly squeezed between the last week of July and the third week of August. The tanning industry has decided to take an almost uniform holiday period in the first three weeks of August. Any hope that the tanners would be able and willing to shorten the holiday period due to the loss of production they faced during the lockdown period continues to fade. We cannot find anyone who is willing to produce any additional volumes, close later or reopen earlier. 

The leather orders are simply not there, although day by day it seems that consumption and business activity rises, including retail sales in Germany rising by almost 14%. With a closer look comes disappointment, as garment, shoes and leather goods were the weakest performers with a drop of almost 33% for the month of May. Bicycles and food were the big gainers. One would expect that manufacturers in Europe would have gained some business for autumn and winter, because overseas suppliers were not able to meet delivery windows anymore. However, here we are also missing positive news. 

The biggest news this week came in rumours that the Chinese government was asking for specific certificates stating that supply sources are free of corona cases. Mainly in the US, several requests were said to have been made and the relevant organisations are dealing with the subject. We can not confirm that this has become an official rule. It is said that some clients are asking for such company declarations, but nothing seems to be legal or compulsory so far. We understand that indeed such kinds of certifications are requested for food and general edible items, but not for hides. It would also be pretty crazy, because scientifically the virus would never survive on salted hides during a trip of around 45 days to destination. However, these days one has to consider everything.

As far as business is concerned, everything depends now on Asia until the European tanners are willing to evaluate if they dispose of sufficient stock for the reopening after the holidays. They are certainly relaxed, because they are aware that almost all raw material grades available today will still be readily available at very short notice in the future. So why put hides into stock before shutting down or bothering to take decisions too early? In Asia the situation is a bit different. If you are optimistic about a busy production season and you want to have the hides to be delivered in time, you have to get a bit more active within the next 2 to 4 weeks. 

This week we saw a decent amount of interest for all cow grade selections. Negotiations were tough, and we are not entirely happy with the prices, but eventually buyers were willing to lift their bids above what we had been refusing for four weeks. As negative as the report may sound, at the end we were able to sell more hides this week than in any other within the past two months. We remain unconvinced that this means we have reached a turning point.

The Kill: The kill continues to bounce a little bit up and down. While last week the numbers had been quite high, they dropped this week to more seasonal levels again. We continue to be positively impressed by the average weights of hides, which are significantly higher than in the past.  

What do we expect: We are now entering the next week with some excitement. Has this been just a flurry, or is the interest from Asia the signal that business is set for an improvement in the months to come? We see this interest particularly in the upholstery business, which is not surprising as people are staying home.

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