This week: There has been nothing really new to report about the hide market for weeks, perhaps for months. The dynamics, the rapidly changing conditions that came out of speculation, changes in demand, changes in supply or other events that influenced the opinions and actions of market participants are, at least for the moment, history.

Depending on the quality and availability, every supplier has a certain basic load of business with regular customers at the moment. Much also depends on the extent to which one is prepared to accept the prices in the market and to put the outflow of goods before price. The ranges have become wide and many try to hide what they have done. Every company decides this for itself.

Whatever the reasons, it is certain that the total supply of raw material has not been covered by the total demand for leather for a long time. The conclusion from this does not necessarily have to be that all producers and suppliers are necessarily sitting on unsold stocks. It is indisputable that there is less raw material waiting for customers in the warehouses, but it is semi-finished goods that are increasingly burdening the market at the moment. For a variety of reasons, market participants have decided either to produce goods to use production capacity, or simply to be able keep them in stock for a longer period of time, to profit from split returns, or simply because they expected a stronger market recovery in the medium term and therefore did not consider stocks to be an extraordinary burden.

The demand for leather has simply not developed homogeneously. Yes, there are areas and niches where the decline in orders is very small, but in total, at least for Europe, one can assume that production has fallen by a clear double-digit percentage. If you leave out the niches, it doesn’t really matter who you talk to, but basically the figures that are currently being talked about are a decline of at least 20%. Of course, the timing is also very unfavourable. We are now at the end of May and this is certainly the beginning of the quieter summer season.

The last people who are still clinging to a certain optimism are talking about the fact that, in the wake of consumer restraint, stocks in the supply chain are being reduced by too much now and that a strong recovery is therefore expected from September onwards. Everyone can decide for themselves how likely they think this is, but from today’s perspective it feels more like whistling in a dark forest to keep fear at bay.

Business this week was similar to previous weeks. There is always someone looking for very specific hides and, when the opportunity arises, to sell and deliver goods. The low slaughter levels are still not building up extreme pressure, but some customers are already preparing us for further production cuts in the coming weeks and months. Whatever colleagues decide, we have decided to accept reductions in individual categories in order to ensure delivery to reliable customers in the coming weeks.

The kill: The kill remains low. Both from the political side and from general demand, the meat industry continues to face a cold wind. This is especially true for pork, but overall it is not much better for beef. Capacity utilisation and costs do not fit and this has led to the first decisions to close facilities.

What we expect: How strong the further pressure on our market will be will probably depend on the kill. Despite all the difficulties, a certain basic supply remains essential for the leather industry. But it is of little help if the kill is 20% lower and leather production 40% lower. And these are the figures that – if one is honest – will probably have to be seriously grappled with for the coming weeks and months. The only unknown, and therefore also hope, remains a sudden recovery in demand from Asia, which could then provide support over the summer. However, it gives the impression that they are also fighting for contracts and are well aware of the opportunities that may present themselves over the summer.

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