This week: You can twist it however you want, but the market development and market assessment is rocking back and forth like a small rowing boat on the Atlantic. One reason is that, owing to the upcoming holiday season, the finished leather market is determined more by opinion and hope than by real business activity.

The lifting of the lockdowns in China is forcing the leather factories there to make decisions on how they want to organise their raw material supply for the second half of the year. With extended times for transport, those who need a certain type of raw material for their production have no choice but to face up to the procurement question in some form. Those who buy today are unlikely to have their goods in the factory before end September and so time is running out for raw goods that cannot simply be substituted locally. Even those who want to use their beamhouses have to provide for raw material supply in some way.

So, we have a situation like we have seen many times in history in July: hardly any activity in Europe, but a clientele in Asia actively looking for the good opportunities. Even if there is still a massive resistance to price increases, at the moment the very weak euro is at least helping to prevent greater price pressure. However, demand is still limited to either very low-priced or very high-value types of goods. In our case, this means that normal cow hides are attracting price-sensitive interest, and at the same time high-value cow hides are being bought at market prices.

Male hides, which are still available in sufficient quantities in Europe, attract little interest in Asia at the current asking prices. As a result of this, the suppliers are trying everything in their power to reverse the price trend and have now significantly reduced their willingness to accept lower price offers. The continuing low kill and the strong dollar are supporting this. However, only the autumn will show whether this is sustainable, as it requires a clear improvement in demand for leather. At the moment the market is price-sensitive in both directions, as are many other raw materials markets, and both sides hope that the trend will continue and consolidate in their direction.

This week’s business and sales were again rather random. What the tanners want to buy at the moment is largely already planned and sold for the next few weeks and what the sellers would certainly like to place is not really in demand at the moment owing to the price problems. This means that business is again very much limited to specialities and niches. To be honest, this is not really negative, because even these rather irregularly available materials still have to find their customers in the end.

This was especially true last week for lighter goods in the 12-24 kilo range, where the impression is that this sector generates the most reliable demand in the market, both for leathergoods and shoes. Prices remained very stable last week; with the help of the euro the pressure is slowly decreasing without making it possible to speak of any real turnaround. There is still a long time before the summer ends.

The kill: To be honest, we could just skip statements about the kill for the moment. Numbers remain at about 70% of the normal average level and nothing is changing at the moment. More and more federal states in Germany are now starting their summer holidays and until mid-August we don’t know what could change the situation.

What we expect: In order to trigger a real improvement and change in the market, there needs to be a reliable improvement in leather demand for a sustainable and real increase in the demand for raw material. Short-term fluctuations and currency influences may help from one week to the next, but in our view these are not the turning point towards a sustainably better situation. For now, some of the pressure has been taken off the market for cowhides, and it remains to be seen how male goods will settle in the coming months without support from Asia.

Share this story: