This week: Public holidays in many countries meant that market activity was significantly reduced last week. However, as we all know, in the modern age technology makes it possible to work at any time and in any place. Furthermore, one retains the impression that everyone paints the picture of the market in the way that suits them best and not according to the hard facts.

If you look at the activities of customers alone, there are certainly some facts that cannot be argued away. As much as there is a desire for stability in Europe, the lack of orders is weighing like lead on the mood and the market. Strategically, of course, hardly anyone is interested in this being reflected in sharp price corrections, but the economic realities of the price and cost of successfully selling leather cannot be ignored. As a result, business in Europe remains stuck at the level we have been seeing for some time and no one really has a convincing argument to offer for a recovery.

In Asia, the wind is changing, particularly among non-industrial key accounts. Northern China, which has carried us through the entire winter half-year with its constant demand, is now sending out the signals that we have so often seen and become accustomed to at this time of year. Why history always repeats itself remains a mystery, at least to us.

As nice as the return of business in winter was, the question of where all the leather in China was actually going to be sold, given the problems in the property sector and the reluctance of the Chinese consumer to spend, has always been asked. Now, all of a sudden, there are reports of too much stock, too few orders and, as a result, financing problems.

As always, there are some who think this is a story to push down prices and therefore consider it irrelevant, then there are others, including us, who believe that there is a kernel of truth in much of this news.

On the positive side, we can see that leather continues to gain ground in the fashionable sports shoe sector. One brand after another is digging out its seventies and eighties retro shoes and trying to place them on the current wave in the market.

Fortunately, they are not yet making them out of plastic, but at the same time, the price levels of the leather used for them are hardly compatible with European hide prices. Business is never at a standstill, but sales were limited to a few recurring routines.

The kill: Kills at this time of year are always affected by the disruption caused by the public holidays and the resulting consequences for supply chains. In the end, we are not necessarily in the strong beef consumption period in our region, so while the kills are not exceptionally low, the overall production figures for last week reflected the loss of one day. Weights are starting to fall and we do not expect any major changes in the coming weeks.

What we expect: As much as the market reports always focus on the sale of hides, development is more influenced by prices at the abattoirs. The increase in prices in the last month merely reflects the usual gimmicks that are common in this industry, but not the real market situation. Global demand for leather is not increasing and our hides are simply too expensive for the markets where they could be sold successfully. Everyone can draw their own conclusions from this, and it may also be the case that people believe that market developments will catch up with price demands in the near future. We still don’t believe this to be the case, but rather see difficulties and the usual problems of the second quarter in the coming months and hope that these will not be exacerbated by ‘nasty surprises’.

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