This week: After a brief uptick in market activity from Asia last week, conditions calmed down again noticeably this week. This development should not surprise anyone who looks at the leather business with a realistic view. Regardless of which reports one reads, whom one speaks to, or which sector one examines, the number of companies reporting a lack of orders continues to rise daily.

This would be less concerning if the calendar did not already show the end of October, a point in time when the leather industry typically has a clear outlook for the winter season, which is usually the strongest production period of the year, apart from breaks around Christmas and the Chinese New Year. This is normally the phase when tanneries are running at full capacity.

At present, however, there is hardly a production region or segment where underutilisation and order shortages are not being reported. Even if precise figures are lacking and much is based on estimates or sentiment, it seems fair to assume that at least 20% to 40% of production capacity across most sectors and markets remains unused.

The optimists still expect improvement and interpret the situation as a temporary delay owing to general uncertainty, not as a sign that orders may never return. For now, order volumes clearly do not cover the available raw material supply. As a result, the industry must gradually but inevitably adapt to new conditions and trade flows for hides and skins. As long as meat continues to be produced, the by-products must also be utilised. That will remain the case. Other regions are already further ahead in this respect than Europe, for various reasons.

Meanwhile, the European Commission’s new proposals regarding the implementation of the European Union Deforestation Regulation once again triggered heated debate. This is yet another example that expertise and EU bureaucracy often fail to align. Once the bureaucratic machinery starts turning, it becomes nearly impossible to stop, and the focus shifts to principles and maintaining positions rather than practical solutions. The option to simply halt a well-intentioned but misguided approach is rarely on the table. We will see whether the EU Parliament, as a last instance, intervenes.

Sales activity in the hide market was fairly limited this week. With Asia remaining quiet and no new contract programmes concluded in Europe, trading was confined to occasional spot deals, either particularly cheap, highly specific or special in nature. None of these transactions, however, reflect the broader market situation. Prices remain largely stable, though there is currently little reliable data for a serious overall market assessment.

The kill: There were also no significant changes in slaughter numbers. Despite noticeably colder weather, volumes did not increase, and various explanations are being offered. Ultimately, it comes down to the fundamentals: livestock prices, meat demand and meat prices determine slaughter activity. Outlooks for the coming weeks and months differ widely. Many expect that the usual seasonal increase will be rather weak this year, yet few can answer the question of what will happen to slaughter-ready cattle if that is the case. We remain confident that slaughter volumes will still rise significantly before the year ends.

What we expect: Overall, we sense that pressure on the market and on prices is slowly building again. This may not yet be clearly felt in the next week, but with each passing week of weak sales and uncertainty over whether volumes can be placed before the Christmas break, the question becomes increasingly relevant: will price reductions truly be able to stimulate demand? In the end, only rising leather demand and a stable protein market can sustainably ensure sales.

Price Table

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