This week: First of all, we would like to wish all our readers and business friends a healthy, happy and successful New Year. We also wish, of course, that the horror of the pandemic will finally cease and that we can return to what we have known as ‘normal life’.

As expected, last week was not very eventful. Businesses were either still on holiday or using the start of the new year to observe the situation before being drawn into new decisions. Everything still seems to revolve around the pandemic. The number of infections is rising around the globe. Even if cases are often milder, quarantine is affecting not only economic activity, but also planning and the entire global logistics chain.

The big unknown is, of course, China, where a ‘zero covid’ policy still applies and, thus, even a few cases can lead to strict closures. The 2022 Winter Olympic Games and Chinese New Year, which will take place in February, are too important to risk major disruption.

In terms of business, ‘a quiet start to the year’ would probably be an understatement. In Europe there was no interest at all in talking about sales, and from Asia we received the usual enquiries about the weekly offer lists, but there was no real interest to be taken seriously.

All in all, we have had to assume for many weeks that sales to China are rather strategic at the moment. The considerable shipping delays, especially from the US, ensure that goods are secured on all continents, regardless of whether they are actually needed in the end. The considerable delays in shipping ultimately open up the possibility of cancelling deliveries later if one realises that one does not need the goods. If there is any truth in this theory, then we have to assume that we are currently not seeing any real reflection of the actual supply and demand situation.

Beyond the next few weeks, looking at leather demand, it remains very difficult to be optimistic. Basically, we will soon be past the seasonal peak of production and there is still a relatively large amount of outstanding raw material shipments. In Europe, the slaughterhouses are trying to play the reduced supply card with the declining production. However, this is of relatively little help at the moment as volumes are still sufficient to meet demand. There have been relatively few deals this week and they are again limited to isolated chance deals. This will probably only return to normal in the coming weeks.

The kill: Beef production this week was even lower than expected. In some cases the figures were up to 50% below the level of mid-December. We don’t expect a very steep increase, but we do expect an increase and we should get back to normal volumes for this time of year in the next few weeks. These should be 20% or 30 % below the fourth-quarter peaks. Weights are heavy, but seasonally normal, although they fall short of the levels a year ago. The number of males in the slaughter mix is also well below average at this time of the year.

What we expect: We are sticking to our assessment that a meaningful market situation can only emerge again from calendar week three onwards. The conflict between abattoirs’ expectations and the leather industry’s possibilities and planning seems to be intensifying again for the first months of the year. Nevertheless, we do not expect any major price swings in the short term, because the big triggers are missing. It seems that neither the beef industry in Europe nor the tanners need to move on price at the moment. But the longer this lasts, the closer we will be to the next major trend-setting move.

Share this story: