This week: At the moment, we are more concerned with the prices at the abattoirs and less with the situation on the sales markets.

For those in this world who only have to market the by-product of meat production and do not have to worry about cost prices, this is of course irrelevant and their focus is therefore exclusively on what happens to prices in the leather industry. For those who still act as independent intermediaries on all by-products between the beef sector and other industries, the situation is certainly much more complicated.

The situation in the sales markets is relatively clear and easy to describe. In northern China, people have switched to spring-summer mode, which is so often the same. ‘Suddenly’ they realise that there are not enough leather orders, that customers are not buying enough leather and that cash flow is becoming a problem. Much of this will be true, even this year, but the question always remains as to what was not already clearly recognisable a month or two ago when you were still actively buying.

If doubts were expressed owing to the situation in the property markets, weak consumer demand for furniture and leathergoods, they were either not commented on at all or simply ignored.

Nobody wants to bring problems into their home, but a certain degree of realism is helpful when it comes to price trends and market assessments, and it is advisable to look beyond the day-to-day. Foresight doesn’t change the market situation, but it would probably smooth out price developments somewhat and help the flow of goods.

As things stand now, history is repeating itself. The excessive stocks in Hebei not only have to be sold, which is not so easy at this time of year. The volume pressure also leads to pressure on leather prices and thus the stocks and the value have to be reduced for the next season. So, all the usual levers are now being pulled to push down prices, which can be seen in the low bids for cowhides. The situation in China is unlikely to change in the near future, which is why the focus is shifting back to alternative markets.

The market for bull hides in Europe also remains difficult. The major suppliers are using every means at their disposal to defend prices and recently there has even been talk of asking for price increases. The balance of power is different for just-in-time deliveries of chilled goods in Europe.

While suppliers have a stronger position in price negotiations than overseas, the volume discussion remains and it is unlikely that the reduced production of the leather industry has absorbed or can absorb the increased kill of the first quarter. This means that goods will probably be moved into other channels, such as semi-finished products.

The description of the market situation is relatively simple: few sales with price pressure from overseas and a standstill in Europe because the slaughterhouses’ new prices need to be secured first. Overall, the ‘official’ prices have only reflected a small proportion of sales for some time and do not reflect current volumes. The price range of all sales to all the various markets is wider than ever before.

The kill: No news from the kill. All producers are complaining that the supply of livestock is too low and prices for live cattle too high, although it is not clear whether more beef could be sold in any case. Volumes will be reduced again owing to public holidays. All in all, the situation remains completely normal for the time of year.

What we expect: As much as market reports always focus on the sale of hides, development is more influenced by the usual problems of the second quarter. We must hope that these will not be exacerbated by ‘nasty surprises’.

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