This week: It is not unusual for things to slow down at the end of the year, but this year it is much more pronounced. In Europe, it is extremely difficult to get reliable information about the planned production of the leather industry in the first quarter of the new year. It seems that almost all the energy in tanneries is focused on discussing current stock levels. Many companies are saying that they are very worried about accumulated stocks and the dampened business outlook at the same time. Perhaps they have relied on hope for too long and, now that the planning discussion is about next year, are being forced to make decisions.

This does very little to help sales of raw materials. It does not seem at the moment that leather manufacturers in Europe will start the new year with full production. This leaves most hope focused on what is happening in Asia. In China in particular, the restrictions and limitations associated with the covid-19 policy are being eased at a breathtaking pace.

Companies are, of course, delighted to see this, but at the same time report that this decision is coming too late for business in the consumer goods industry. Global business for the Christmas holiday and the orders for the consumer market in China are lost for the current season and cannot be made up for, so it is of little help in the short term and many companies are sticking to their decision to close production in the short term and only reopen after the Chinese New Year holiday towards the end of January.

At the same time, however, this means that we might very quickly hear much more positive news for the second half of 2023, although this must always be subject to the further development of the infections in China. In the short term, the outlook remains difficult and rather negative, and we will have to be patient to see whether the end of the downturn will really be reached in the course of 2023.

Looking at the sale of hides and skins in the immediate term, we can look back on another rather quiet week. Plans and deals for the start of 2023 have not yet been finalised and we will probably have to wait at least another week to get a clear picture of the situation for January. Asia was also very quiet this week. In view of the considerable changes in China, which of course also have an impact on the entire region, this was no surprise. We must wait to see how things develop.

Business was again very sporadic. There are always individual deals. This week it remained the case that customers in Asia want to experiment with higher-quality articles, in the hope that this will lead to higher added value. There was relatively little change in the market situation, both in terms of prices and currency, and if corrections were necessary, they were generally directed moderately downwards.

The kill: The kill is declining very significantly. Supermarkets seem to have covered their biggest needs for the holidays for now and the slaughter wave is thus coming to an end. We are already hearing that some slaughterhouses are thinking about possibly closing for a few days or completely over the holiday weeks to save costs. We are therefore assuming an overall decreasing and lower volume of hides for the remaining weeks of the current year.

What we expect: Next week the open repetitive contracts with the European leather industry should be finalised and this will then give a clear view of the situation to be expected at the beginning of the new year. We are not particularly optimistic for Europe. We do not believe that customers in Asia will immediately increase their purchases because of the changed situation. All experience suggests that they will wait and see how the situation and the political decisions develop. Looking at the calendar, however, it would not be surprising if activity in Asia were to increase again in the coming weeks, as people there have to start to think about the supply of raw materials for the period after the Chinese New Year. However, we do not expect any significant price changes until the end of 2022, without drawing conclusion about the volume of business.

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