What happened this week: It is once again mostly the automotive and higher-quality upholstery tanning industry who have displayed the highest confidence about leather orders for the coming weeks. Shoes and leathergoods remain mostly on the sidelines.

Many tanners have given the impression that they are sufficiently covered or hold adequate inventory for a certain period of time. It seems as well that a reasonable amount of wet blue is ready to fill any gap.

In China the situation remains the same. There is very stable interest for quality hides for upholstery leather production. Another dollar may have been added to prices this week, but the real net gain in terms of euro revenues remains very moderate and would also reflect a more-than-moderate upside potential for abattoir prices.

We continue to believe that it’s too early to discuss any substantial rises in raw material prices. In only four or six weeks a clear picture about the leather business and leather orders for the winter season will emerge. Until then the extent of the still available inventory of salted, wet blue or wet white hides should not be underestimated. They need to be cleared first before any substantial price rises can be achieved. This clearance would require a massive rise in leather consumption, leather production and a broader base, including shoe and leathergoods leather as well as automotive and furniture.

Sales this week have been adequate for the popular grades. There was sufficient interest for the selected items to clear the production. The standard shoe upper hides could not benefit and demand remains insufficient. The present price spread is still not wide enough to make these mainly male hides attractive for alternative use.

The kill: The kill has improved a little and should continue in this way for the rest of the month.

What we expect: We assume that next week business will be quieter again, with most players in our region finally awaiting the outcome of abattoir buying. We don’t see any potential for more acceptance of higher prices for now. 

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