This week: Market activity picked up significantly last week. Many enquiries were received, especially from Asia, and not only from China. All other sales markets also enquired about offers and prices. It would not be worth mentioning if it had not been so quiet for so long. However, we can say that with the recovery of demand and the return of especially the Chinese tanners to the market, confidence that the long period of uncertainty for sellers has come to a momentary end.
The question is still open at the moment whether this also reflects a recovery in leather demand.

It will only become possible to answer this question in the coming weeks, especially following the Lineapelle exhibition in Milan (February 21-23), which will play an important role. At the moment, it still seems that, in most cases, demand has come because of a combination of relatively low prices and restocking rather than from any sudden improvement in demand for leather in general.

It is true, however, that a good part of the leather production that was taking place in China for export markets has moved out of China to other countries and China is now trying to recapture this market share. Of course, this cannot be done without raw material and since the delivery time from purchase to arrival takes two to three months, there was no time to lose. However, the hides sold do not at the same time mean a corresponding increase in leather demand.

One can only hope that domestic demand for leather consumer goods in China will recover quickly after the end of the covid-19 restrictions, so that local demand can compensate for the possible export losses to a good extent. In any case, the continuing impressive demand for raw material from the collagen and gelatine sector is also helping at the moment. This also applies to China.

It is easy to see that demand from there is driven by revenues in collagen and gelatine. Either the hide is so cheap that almost all of it can be used for this purpose or the revenues from the split and the by-products reduce the cost of leather so significantly that any risk is considerably reduced.

Sales this week focused on low grades or in isolated heavier categories that promise a good split return. Only these made sense and prices could be increased by a small margin. For the rest, sales were again not particularly impressive. On the one hand, there was no agreement on prices. On the other hand, it was a matter of hide types, which sellers want to discuss with regular customers in Europe at Lineapelle before thinking about overseas business, which is much more time-consuming to process. 

The kill: The kill dropped significantly again and is certainly due to the approaching carnival week. We also expect reduced numbers next week and only then can we expect an improvement or normalisation.

What we expect: Sellers, and thus of course the meat industry, are slowly gaining confidence. A still relatively low kill, stable demand for the better European raw material and the trade fair in Milan means no one will expect major sales problems for now. The usual reflex is to raise the asking prices and that will mean very intensive talks with tanners in Milan. Whether it is a good idea to turn the price-screw in the current environment will only become clear later; for the time being we will have to wait for personal meetings and their results next week.

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