This week: In Europe, we are now in the holiday phase and only a few contracts remain open, which will possibly cover deliveries into September. However, there will be long interruptions in August. European tanners are demonstrating an almost historic level of composure.

Rumours that there are larger slaughterhouses already announcing rising prices for the period after the holidays are met with incomprehension on the one hand, but with a certain ignorance on the other. People look at their order situation and in the end it speaks for itself. You realise that you have to buy what you absolutely need, but if you think ahead, it is already clear today that without a significant improvement in the order situation, the pressure will probably be on the suppliers again in the last quarter. Of course, one still wonders what could already be driving some people to build up such scenarios today. Whichever way you look at it, you always come to the same conclusion that it has to be the protection and defence of stocks along the supply chain. In the end, this concerns everyone and also applies to many tanners worldwide. However, it also means that without a significant upturn in leather demand, there is no solution.

Raw material prices have had very little impact on demand for some time now. That was the negative impression one took away from the talks in Europe last week. In Asia, the week was much better. Interest came mostly from tanners producing higher-quality furniture leather. It remains unclear how leather orders are doing and whether customers really have positive expectations for the rest of the year. Nevertheless, one increasingly gets the impression that Asia has been waiting for the holiday season in Europe, certainly in the hope of being able to push through lower prices once again. This has failed almost everywhere and resulted in a really intense struggle in the price negotiations. Sometimes it went back and forth for days and all known tricks were tried to get the bidding price accepted. In the end it was, as so often, having to say ‘yes’ at some point if you wanted to sell, or put things off for the future.

Basically, you can say that it was almost always $4 per piece that separated us from the ideas of the customers in China. In the end, as so often, the truth lay in the middle and still neither side is really satisfied with the result. This is especially true for us, because the US dollar puts an extreme strain on revenues.

Now everyone has the opportunity to pick and choose what suits them best. Better demand from Asia could mean positive expectations for the rest of the year or it could mean higher prices, or weak leather demand, which could lead to high inventories and little prospect for sustainably higher prices. It is obvious that business strategies at the moment are almost exclusively driven by the individual position and situation of market participants. Often, it gives the impression of acting according to the principle: what should not be, cannot be. If there is any truth in this assessment, then the next weeks and months promise very interesting developments.

The kill: There is little to say about the situation in the beef industry. Business is bad, the holiday season is weighing on demand and there are really no reasons to think anything can change in the next few weeks. Here, too, people are trying to get through the summer, hoping for an improvement from September onwards, but nobody really knows where it will come from.

What we expect: In Europe, hardly anything decisive will happen in the next few weeks. The last negotiations still have to be concluded in Europe and even these will not be very easy. More and more tanners are trying to use the summer phase to influence price and supply in their interest, knowing that many suppliers do not have much of an alternative, except possibly to produce semi-finished goods themselves. The interest now is in Asia, where it will become clear whether demand is strong enough to push through higher prices in the coming weeks. The price level itself is very low and therefore, if demand is good, decisions to buy or not may come down to the odd dollar here or there. If higher prices can be enforced in the coming weeks, this gives cause for a certain optimism. If customers withdraw completely from higher asking prices, then it can be assumed that until now they have only bought production cover, but do not really expect better leather orders.

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