This week: Last week was a normal week in many respects. Not only were production and deliveries not interrupted by a public holiday, but most leather factories in Europe also worked through a normal production week again. However, working full days does not mean that full production capacity is being utilised. In many, if not all cases, tanneries in Europe are no longer running at 100%.

This would be less significant if we were not for the time of year; now is normally when leather production is running at full speed. Under these conditions, it is easy to understand why activities for raw materials are also dragging. We are increasingly getting the impression that customers have already finalised their plans for the end of the year. The likelihood that they will shorten the Christmas break again seems more than remote at the moment.

The order situation in the leather industry in Europe simply won’t improve. As a result, our focus remained on the negotiations for prices at the abattoirs. Prices fell, but by nowhere near as much as one would expect, given the current situation and the very likely future development. Why the correction was so small and is still being postponed remains a mystery to market participants. Momentum is also slowing considerably in Asia, particularly in China.

This is not all that surprising because the months of September and October were characterised by constant and regular sales opportunities and tanners in Asia have certainly replenished their stocks significantly. It can be assumed that they are now waiting for the outcome of online sales around ‘Singles’ Day’, 11 November, an unofficial holiday that has become something of a shopping festival.

Taking into account the Christmas break in Europe, the higher kill here and, of course, Chinese New Year in their considerations and planning for the first weeks of 2024, it is likely that, without speculative buying, there will be no large demand window before the New Year in China. If orders for finished leather are below expectations, stocks could easily last until the holidays.

Sales last week were limited to random deals. There were still opportunities to sell individual deliveries without any major interest in larger volumes or longer-term programmes. In Europe these were mostly male hides while in Asia cows remain the commodity of choice. The selling prices are crumbling somewhat and the asking prices are almost impossible to achieve.

The kill: Slaughter figures remain unspectacular. Normal weekly levels have been reached again, but no big seasonal increase has materialised. This only raises the question of whether postponed could possibly mean cancelled. In principle, this is unlikely, as the cattle that are ready for slaughter must be removed at some point. Within the next four weeks, we should have clarity as to whether there will be another significant surge in meat production and demand.

What we expect: Prices are unlikely to change much and if they do, the direction will continue to point downwards. The demand for leather is not recovering and where it may be possible to secure larger volumes, considerable price pressure from buyers is dictating this. Even if some try to paint a different picture, we remain convinced that the market is still a long way from equilibrium and this includes the semi-finished sector.

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