This week: Since the majority of people are still on holiday or in a holiday mood, business activities this week have been more concerned with administrative, maintenance and organisational issues than with discussing the hide market.

However, those who do not want to take a few days or weeks off from business now have to deal with the changing environment very quickly. Calculations have to be reconsidered; at least in Germany, energy costs will rise considerably for at least the coming year.

In the case of electricity prices, it will hit everyone sooner or later; in the case of other energy sources, it depends to a large extent on which one is chosen.

The problem for today’s business is that the hide market’s prices are dictated by the global market. Along the value chain from slaughter to the finished product, there are sometimes very energy-hungry processes built in, which make a reorganisation of pricing urgently necessary. The different prices for energy in the various countries will almost certainly be a specific criterion for the business development and competitiveness of many productions. In the short term, problems of water supply remain in many countries. It remains to be seen how quickly the leather industry can resolve the problems caused by a lack of rain in parts of Europe and in China.

It is not yet clear what decisions consumers will make about their spending as a result of rising prices for energy and food. According to initial estimates, however, the furniture industry in Europe, for example, will be hit much harder than some other sectors such as holidays and hobbies. Reduced purchasing power cannot but affect global demand for leather.

Hide sales were also at a very reduced level this week. However, it is clear that leather demand is already being diverted to other producing countries outside China. Major brands and retailers are shifting some of their business to other manufacturing countries. The extent of this will only become clear in the coming months, when other factors besides logistics costs and transport times have been fully analysed.

This week’s sales were essentially only for poorer qualities and it will take until the coming weeks for the market will pick up enough to make a somewhat more accurate assessment of the next trend. The low kill is still supporting the market, but an increase would shift the balance relatively quickly.

The kill: This week, too, there was little change in the slaughter figures. The level remains extremely low but an improvement can be expected in the coming weeks. The school holidays are slowly beginning to come to an end and the phase of extreme heat in large parts of the country has taken a break and the very fact that we are near the end of August means the heat will not come back as intensively. We therefore assume that the lowest slaughter levels have now been reached and that we will see a slow increase in production over the next few weeks.

What we expect: We are sure that there will be very little stimulus to the market next week. Certainly not from Europe and frankly it is hard to find a reason why Asian customers should suddenly develop a lot of activity in the next week. From this point of view, the regular programmes and the stable supply chains will probably talk and negotiate with each other, but we can’t see any demand beyond that giving any impetus to the market anywhere at the moment. This basically means that there is still a little bit more raw material being produced than the market is willing to absorb at the moment.

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