This week: The past week offered no shortage of items that the industry suddenly had to think hard about. Almost daily, the media reported further production cuts in the automotive industry between now and the end of the year. Not every car is equipped with leather and therefore it always needs a closer look to see the extent to which this affects the supply chain for automotive leather. However, it is indisputable that in the first half of the year more expensive cars were prioritised ahead of cheaper ones.

At the moment, this situation is clogging up many supply chains, and even if ‘postponed’ is not ‘cancelled’, a reduction in the production of automotive leather is to be expected in the coming months. This, of course, coincides with the peak slaughter of heavy male stock in Europe and all parties involved need to think about how they will manage this phase. Tanners should remember that last year, too, the future looked very uncertain and prices were at rock bottom.

Meat companies should be aware that the exaggerated price development this year has no solid basis. In a perfect world, this would lead to understanding and a discussion about volumes and prices for the coming months.

In addition, the leather order situation is below expectations for this season. European hides are not very competitive in terms of price and thus sales and interest from China remained rather weak. However, it can basically be said that the question at the moment is not so much about price, but rather about weighing up the risks and opportunities for leather sales in the winter season. It is important to bear in mind that we have already reached October and, therefore, most of the planning for material and quantities for the coming months should actually already have been completed. It would therefore be expected that the interest in raw material should be greater than what can be seen at the moment.

Sales within the week were rather sluggish. In Europe, this is mainly due to the fact that they first want to wait for the development of prices at the slaughterhouses for October. In Asia, European prices are not attracting volume buyers at the moment. This leaves only the specialists who, for various reasons, prefer European goods for their production.

Prices for the few trades that took place did not change much and if they did, they had to be adjusted downwards,which in the case of Asia was mitigated a little by the firmer dollar. 

The kill: Slaughter increased slightly again this week. However, farmers are increasingly busy with the harvest and the constantly rising prices for live cattle also ensure that there is no hurry to sell. The next weeks and months will show whether this is a smart idea, because meat sales are still not exhilarating. The massive drop in prices for pigs will not cause beef prices to go sky-high.

What do we expect: We think the market correction is not yet over. The next step will be taken with new prices for October. It is not so much a question of if, but only of how much. There, as so often, opinions differ widely. It is not too difficult at the moment to place the situation and prices in an international context. As is well known, you can delay price developments, but you cannot prevent them.

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