This week: Little has changed in the overall picture of the market, at least for us. For the current delivery weeks, the sales have all been made and thus the slowly rising volumes are largely covered. So far so good, and those who are happy with this may have a different view of things than those who are looking further ahead.

Basically, there is agreement that the top-level sector will still have sufficient orders and demand to absorb the accruing quantities of high-grade hides, at least for the next few months. As everyone knows, this is only a small part of the total quantity and only helps suppliers and tanneries that work with the high-grade raw material and are part of the supply chain to the luxury goods industry or the automotive sector, which is also described as normal, at least in Europe. 

If one looks realistically at the sector as a whole, it will not escape the attentive observer that this is by no means true for all companies in the same way. If we look at all the major producers together, we estimate that production is noticeably lower than it has been in the past at this time of year. Here, as in all other sectors, there is a big difference between demand and production for different quality levels. For the rest of the leather market in Europe, the confidence that came out of the summer holidays is slowly but steadily giving way to fears. The problems that are burdening everyone in Europe (energy supply and energy costs in combination with other rising costs) make adequate planning and calculations almost impossible. The whole thing mixed with declining consumption makes for a very problematic cocktail. In Asia, the October holiday lull slowly but surely came to an end. This meant that there was interest here and there and the odd sale was possible, but the volume was nowhere near what one is used to at this time of year.

Sporadic and coincidental probably describes the situation better. It can hardly be explained in any other way. Chinese customers in particular want to wait until the end of the Twentieth National Congress (October 16-22) to get a better idea of their government’s strategy for the next few years.

In the past, such a market situation would normally have led to considerable dynamism in the hide market. These times are over for the moment and therefore concerns and hopes are scarcely reflected at all in prices at the moment. However, one may have some concerns about the quality of the officially published prices. In some categories, one can certainly ask oneself to what extent the published prices are real or whether the quantity they represent can be considered representative. In the end, however, it hardly really matters. For market activity it is more a question of whether they are able and willing to place the production volumes that arise.

In terms of sales this week, demand was concentrated on speciality items, low grades and, surprisingly, male goods from Asia. However, the price expectations of buyers for bulls among Asian customers were so low that serious negotiation and possible compromise were not possible. However, if one expects prices to fall significantly in the next few months, then larger deals would have been quite possible, which in itself could be a positive sign. However, it also shows that male goods that do not qualify for automotive leather production remain overvalued in the international market.

The kill: The kill continues to increase, as expected. The increases are slow but steady from week to week. We have not yet reached the numbers one would expect at this time of year. However, if the trend remains intact, then we can expect significantly higher production figures by the end of the month. It is highly likely that this will continue until a few weeks before Christmas.

What we expect: We do not expect any major changes in the course of this week. As has been the case for months, demand and supply lack the decisive pulse that could give prices a major push. The pressure is not yet great enough, but that could change. In addition to the question of how far supply and demand are balanced, we also have concerns about financing. It varies from country to country and from region to region, but the massively increased costs with possibly falling sales do not make for a good basis for liquidity.

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