This week: Summer has not quite surrendered to autumn yet, but most of us have to spend our time back at our desks or in production. Most tanners in Europe are covered with contracts for deliveries until the end of the month and overseas customers, quite rightly, feel that European prices are in almost all cases far too expensive today. All the other factors that are currently weighing on the business do not need to be brought up again. This leads to a situation in which nobody really wants to move or make far-reaching decisions at the moment.

The most remarkable event this week was probably the rumour that a well-known tanner in Europe intended to stop raw material purchases for a certain period of time in order to bring stocks back in line with the purchases by customers. In the end, volumes will probably be reduced owing to the current production levels in the automotive industry and the demand for raw material will be reduced accordingly. This is significant but, ultimately, not a disaster. Besides, anyone would be naïve if they ignored the news from the industry in recent months.

The biggest problem now is pricing at the slaughterhouses. The facts are quite clear. Prices for the standard product in Europe are now too high; other competing markets have already made price  corrections. There is also the transport problem and the uncertainty about further global developments must not be forgotten either. Therefore, anything other than a significant reduction in prices would hardly be justifiable. Naturally, the slaughter industry is fighting against this with all means at its disposal. Its main argument is the still very low slaughter number in many European countries. At the moment, the commodity is still flowing and with few restrictions. It is also not new that price adjustments are always made only when the economic pressure is high.

By the end of this week it will probably become clear to what extent the situation should really already be met in the pricing for September. It would certainly be very dangerous to postpone price adjustments further into the future.

Business this week was again limited to individual deals in Europe, because there are still leather producers who are not yet fully covered for certain orders. These are always short-term deliveries and, as we said weeks ago, the big and somewhat longer-term decisions will certainly not be made until the negotiations for the volume orders in leather for the winter have been concluded. Only then will we have the planning security we need.

The kill: Live cattle prices are very high and farmers have no pressure at all to sell. At the same time, business with meat in the supermarkets is very sluggish and the catering trade cannot generate any serious additional demand at the moment. The further we go into autumn, the more this situation will settle and slaughter will increase all over Europe.

What do we expect: At the moment we see no real trigger that can free us from the current paralysis. There is no real need for a decision on either side at the moment and that is why everyone is playing for time. We will probably not see the big moves in the market in the coming week. The market needs a significant correction so that stability and a solid calculation basis return. The gap versus international levels will close eventually anyway.

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