This week: Our markets continue to be dominated by the general chaos surrounding the tariffs. The financial markets are reacting from day to day to the changing news situation. There are currently many announcements, but nothing of substance has really changed in the last week. 

Tariffs between China and the US are still active and possible adjustments have not yet gone beyond the announcements. It is in the nature of active international trade that, despite all the complaints and public media reports, companies are looking for solutions. In this case, a solution means looking for ways around the tariffs, and that can only mean rerouting the supply chain via countries that are subject to significantly lower tariffs. It may also be a not entirely unproblematic approach, as no one knows how the dispute between China and the US will develop and whether circumventions will suddenly become unattractive again.

In principle, however, it is still the case that there are the same number of consumers worldwide and despite all the immediate, major problems, it is still only a question of how many leather products will be bought in the coming months. If the demand is there, then there is a way to manufacture the product and get it to the buyer. Other materials are no different at the moment and therefore the competitive situation is no different to the situation before April 2, Liberation Day. It’s just a question of how strongly those involved in the chain are affected and how resistant they are to the short-term, negative influences.

Prices in the US are beginning to take account of the tariffs for China, the corresponding price adjustments are slowly taking place and are also being reflected in other markets. Wherever raw materials are interchangeable, it is only a matter of time before this will also become noticeable for hides from other regions. For us, the reactions in the Chinese market are still more of a theoretical nature at the moment; we are still unable to make any new sales in China. Even though Germany is internationally recognised as being free of foot and mouth disease again, the Chinese have not yet reopened imports for our hides.

In terms of sales, this week has also been rather quiet. Buyers in Europe are still waiting and there is currently no immediate need for action due to existing contracts. Internationally, there is no denying that the Indian subcontinent is becoming increasingly important. This also began before April 2, but the momentum is now continuing to increase. This is particularly noticeable in the footwear sector, and if the right goods can be made available to shoe manufacturers, new opportunities and sales channels are certainly opened. The price pressure from America has not yet fully reached us and therefore prices, if you wish to sell, have weakened slightly. The big truth for the market will probably not be known until the beginning of next month.

The kill: The kill is significantly lower than in the first quarter. This certainly has to do with the Easter holiday (April 20), but on the one hand the supply of cattle is relatively small and on the other hand the public holidays also play a role. Volumes will also be reduced again next week, as the public holiday on Thursday, May 1, will cut production by more than just one day.

What we expect: We continue to believe that forecasts at the moment are like rolling dice. The situation is difficult in the short term, sentiment is depressed and it is still completely unclear who will use which solutions. At the moment, the mood is being pushed around on a daily basis by the events and news of the day, and this is likely to remain the case until a certain level of confidence in the political situation perhaps emerges again at some point. The negotiations on a ceasefire in the war in Ukraine are probably just as important as the erratic decisions on trade policy by the US president. Under the current conditions, we maintain that there is a need for adjustment in individual main categories, and in our opinion this is more likely to be downwards. The defence of stability could become a challenge.

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