Market Intelligence—14.10.25
The past two weeks have felt like a brief breather. In Asia, the autumn holiday slowed down many decisions; conversations continued, but much was postponed. At the same time, the global political backdrop remains tense, even if there are isolated glimmers of hope. For Europe’s leather and hide industry this translates into muted demand, hesitant orders and more uncertainty than this time of year usually brings.
On October 10, the calm shattered again: President Trump signalled extra tariffs of 100% on imports from China unless a satisfactory deal on rare-earth minerals is reached. The period of relative quiet is therefore over; uncertainty around US–China trade and pricing has returned. For the leather chain this matters immediately: raw hides moving from the US to China and finished goods flowing from China to the US will be squarely in the line of fire. The risk is not just higher duties, but volatile costings, re-routing and compliance checks that can stall shipments and force last-minute ‘tariff engineering’. Expect some buyers to front-load bookings while others pause, and for negotiations on specifications and delivery windows to harden until there is clearer guidance.
On the ground, the effects are tangible. Across day-to-day business, orders that are normally placed in October, or at least seriously negotiated, are, in many places, still missing. The longer this persists, the harder it becomes to secure basic plant utilisation and avoid downtime. Traditional tanning regions report lower output, rising work-in-progress and projects stuck in limbo. It is not uniform, but broad enough to qualify as a genuine trend.
A key backdrop is the automotive sector. Globally, more vehicles are being sold, yet in Europe important manufacturers, especially in the premium segment, are losing ground. At the same time, the share of models and trim packages that use less leather, or highlight alternative materials, is growing. The old equation “more cars equals more leather” no longer holds. What matters now is which vehicles are sold where, and with what interior mix. For the leather sector this means greater dependence on exact specifications, from seat covers to door trims and steering wheels, as well as on the timing of model updates.
On the raw material side the balance is also shifting. More buyers are purchasing hides for purposes other than making leather; the aim in these cases is to extract protein, gelatine or collagen. This ‘protein pathway’ is no longer a side topic; it is a firm market. It effectively sets a floor under raw hide prices, because sharp price drops only accelerate diversion into this use. For European tanneries that is creating new pinch-points: certain splits, sought after for suede, are harder to secure or no longer fit familiar costing models.
In practice the change is very concrete. Many firms are relocating parts of leather production to countries with cheaper energy and fewer regulations. This brings costs down, but it also reduces flexibility. Journeys are longer, coordination is trickier, last-minute changes are harder. Projects can fail if a single document is missing, or because of an apparently minor specification rule or because of details in the paperwork. These details sounds trivial, but the consequences are real: delays, extra costs and, in the worst case, lost orders. At the same time, quality is being sorted more tightly by end use. Sorting is different for automotive seating, for bags or for footwear. Audits and checks on chemicals, provenance and emissions are important for trust and traceability, but they add to the work load and cost time and money.
There is also a structural problem in the chain. At several large brands the decision-making and technical competence in leather purchasing is clearly eroding. Collaboration becomes harder when specifications grow needlessly complicated, approvals are delayed or altered at the last minute, and rounds of questions spiral without a clear aim. These frictions multiply across the tiers and ultimately hit production, precisely where time-windows are tight and errors are costly.
Logistics is another area that is often underestimated. Costs and lead-times are gaining weight, and many plans still neglect adequate buffers. Because of production being moved around, flexibility is, if anything, decreasing. It feels like this reality is still not fully priced into many costings, especially when several steps of the chain cross borders.
In Central Europe, the meat industry is likely to see shifts and further consolidation. Slaughter numbers have been rather low, which has helped keep raw material supply in check. Many observers, however, expect rising volumes in the coming months. If that wave meets a leather industry that is not yet back to full utilisation, the pressure builds. Price alone will not automatically balance things, because the protein pathway pulls at part of the raw material and sets a lower limit.
Internationally, China and Vietnam have booked unusually large volumes of US hides in recent weeks. Buyers seem confident that orders will materialise and that the finished leather they produce will be taken up promptly. This contrasts with a marked decline in footwear and leathergoods shipments from China and Vietnam in the third quarter of the year. The raw-material purchases nevertheless imply expectations of firmer orders and sales ahead, lean inventories, and no assumption of further price declines. With trade frictions rekindled, that cautious optimism could quickly be undermined. The next few weeks will show what actually unfolds.
Running through all of this is a basic question: leather must not be forced into becoming an interchangeable industrial commodity. Leather’s natural strengths are clear: breathability, which improves seating and comfort; form adaptation, as it settles ergonomically with use rather than sagging early; and durability, which, with proper care, delivers many years of real service. Add to that the haptics, ageing and character you can feel and see.
All told, the structural crisis of Europe’s leather industry continues, if anything with a tendency to intensify. Competitive advantages now lie mainly where proximity to better raw material, closeness to downstream customers, selective technological edges or creative development strength apply. If you reduce the competition to production conditions, bureaucracy and regulation alone, the negatives outweigh the positives. The parallels to Europe’s automotive industry are obvious: strategic trends were ignored for too long; hope trumped sober expectations. Counter-measures are under way, but whether the course correction comes in time remains to be seen. What is clear is this: the leather industry must once again present the material with confidence and cast off the self-imposed restraints that keep it from doing so.
More urgent than anything else is time. The window in which Europe can still play its remaining strengths (customer proximity, development speed, know-how, design quality) is closing. Every delayed decision, every extra month at half-utilisation, every production step moved overseas for cost reasons makes a return to former levels less likely. With each relocation, established teams, supplier relationships and know-how ebb away. What looks on paper like a temporary cost advantage can add up to a lasting drain of competence that is hard to rebuild. Above all, leather must not be pushed into a template that makes it a commodity.
The clock is ticking. Without swift clarity in sourcing, specifications, logistics and communication, a slow erosion looms. The end will not be one dramatic cut, but the sum of many small changes. If Europe’s leather industry is to hold its place, it must step forward now with clear messages that explain the material’s value, and with processes that can withstand higher costs, longer lead times and reduced flexibility.
In lamb, sheep and goat skins, very little has changed in recent weeks. Even though the catwalks in Paris and Milan featured a great deal of garment leather, it will take time to see whether that actually filters into mass-market ranges. Prices for sheep and goatskins moved little; for now, only selected niche products deliver workable returns for suppliers.
The split market remains dominated by protein extraction and suede. While the suede split is presently in serious short supply, usage of the raw material is shifting further towards protein outlets. Hide types and grades that cannot find sustainable margins in leather are being redirected accordingly. The central question is whether growth in protein markets can genuinely absorb the impending increases in bovine hide processing capacity. Producers appear confident: new projects are being planned or are nearing completion in multiple regions. Feedstock would certainly be available, at least for as long as leather fails to achieve remunerative prices.
Looking ahead to the next two weeks, we do not expect major changes. Any renewed US-China trade confrontation would have material effects on the leather supply chain. Beyond that, it injects increased uncertainty into the wider world economy. Thus far, each bout of turbulence triggered by the US administration has been unwound relatively quickly. The coming weeks will show whether that pattern holds again.
