This week: Everything seems frozen, probably owing to the fact that neither the hide suppliers nor the tanners have a clear idea of what developments we are likely to see in the coming months. Opinions vary and are shaped by interests and individual situations.

In truth, the situation is relatively normal for the time of year. Very often, the first quarter is characterised by great confidence, good demand and high production. As a result, raw material stocks usually clear, and the more the stocks are emptied, the faster confidence about the market increases among slaughterers and suppliers. With the end of the quarter and the rise in temperatures in the northern hemisphere, confidence disappears in many places and the markets take a different direction.

This also applies this year.  The big difference is that stocks were not continuously reduced in the first quarter. This may not have been the case for all goods, but across the board inventories probably rose rather than fell. This is not only true for many hide suppliers, but also for tanners; one has the impression that stocks of semi-finished and finished leather are significantly higher than desired.

Sales talks last week were very slow. Only isolated and selective enquiries came from Asia and in the end only better qualities could be traded, and even then at discounted prices. The weaker US dollar did not help. Price reductions are still within narrow limits, but every day one hears new rumours about sellers who have become much more price-flexible than recently.

Tanners in China also seem to be suffering from a lack of orders and are reacting in a different way from what we are used to. Normally, price is the Holy of Holies and,  as long as material is cheap enough, people will buy. At the moment, however, it looks like even cheap prices are not leading to more sales. This is unusual and, if we are correct, it reflects the uncertainty about leather orders in the coming months. At the same time, many report that large wet blue inventories are also weighing on many tanners in China.

Otherwise, talks about the regular monthly programmes in Europe are starting. Here, too, the talks are not easy, but here, too, most tanners are obviously lacking corresponding leather orders across the entire range. One can feel that price is important, but also not the core problem in the current situation.

The kill: The kill continues at a stable pace. In the next two weeks the quantities will certainly decrease significantly, because the holidays for Good Friday on April 7 and Easter Monday on April 10. This will automatically reduce the quantities. In addition, the cold stores are well stocked at the moment and apparently they are taking the opportunity to reduce production a little, because the meat that the supermarkets need can be delivered from the warehouse without any problems. Perhaps they also want to try to reduce livestock prices with the reduced kill.

What we expect: It is no secret that we are not particularly optimistic about the second quarter. It is possible that prices will bob along for another month with little change, but the pressure to make a general decision before the summer is mounting. As long as no one gets nervous and there is no emergency, no one really has much interest in prices changing significantly, despite the tradition that seller always want them to go higher and buyers want them to go lower. Even though wishes for the hide market have almost never come true, a controlled and slow decline in prices over the next few months would probably be in everyone’s interest.

Share this story: