This week: The holiday season has finally begun in Europe. For the most part, the last drums were filled last week and the last goods were produced before the holidays. For the next three weeks only a few companies will produce any leather at all. 

While taking time to relax, many will certainly be looking at the expectations and conditions for the rest of 2021. Confidence prevails and one can assume that the order books are mostly still well filled. However, while in the past the only question was whether the orders were available, this year the question is whether all orders can actually be processed in the supply chain as planned. If all goes well, the mood will also be buoyant and positive after the holidays. However, if the difficulties in the supply of materials and supplies worsen, then it could very quickly lead to interruptions and standstills in the flow of supplies.

Increased costs, which normally can never be fully passed on immediately, will become a major challenge. Likewise, the need for financing is also increasingly significantly in many businesses. Last year the inventory reduction freed up liquidity; this year the increased costs and increased inventories are tying up more capital every month. For the moment this can still be absorbed, thanks to low interest rates and more-than-sufficient liquidity. However, rising inflation could very quickly cause this situation to become a problem again.

Business activity quickly fell into holiday mode this week. From Asia we could still find interest in low-priced types; even then, negotiations were very tough. At least in our case, we find that customers in Asia continue to be extremely price-sensitive. Higher-quality, more expensive goods find no interest at all. As long as the European leather industry takes up these goods and there is no surplus, it is not a problem, because the transport situation overseas remains difficult and people prefer to sell their goods in Europe anyway. With our European customers, all deals had already been made by the end of July, and so only a few small gaps remained to be filled, which were covered with contracts for individual delivery.

There was little or no change in prices in the course of last week.

The kill: The kill and beef production develop rather randomly from day to day. This is not surprising, as the holiday season means that production and consumption depend on day-to-day business. The numbers continue to move at a reduced level and, in our region, this will certainly continue for another two weeks. After that, the school holidays come to an end here and a slow increase should be expected again, which will then be followed in the south of the country later.

What do we expect: If anything happens in the market in the next few weeks, it can only come from Asia. If anyone is interested in selling in the next few weeks, they will have to be very attentive to what interest can be found among Chinese buyers. So far, at least, there is little indication that the Chinese leather industry is optimistic enough to be seriously interested in the more expensive European hides. This means correspondingly little interest in heavier, male hides. The focus will probably remain on cowhides and the lower selections. However, we do not expect any significant price changes in the next few weeks.

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