This week: Towards the end of the year, the market for bovine hides remains quiet. Most participants have finalised their planning for both the remainder of this year and the beginning of 2026, leading to a continued decline in demand and very limited activity. This slowdown is typical for the season, as many buyers prefer to avoid taking on additional inventory at a time when processing schedules are uncertain and holiday periods interrupt production cycles. As a result, transactional interest decreases significantly, and the market increasingly shifts into an observational mode.

Tanneries in Europe still lack reliable production and order schedules for the first weeks and months of next year. There is cautious hope that the situation may improve from February onwards as order intake increases, which historically has often been the period when the automotive, upholstery, and footwear sectors restart their procurement after the winter break. However, many tanners remain hesitant, as their visibility into the coming months is limited by slow retail sales and cautious order placements from downstream manufacturers.

At the same time, there are growing indications that further production sites in Europe could close during the first quarter. Energy and labour costs remain high, while margin pressure continues to intensify, making production for some facilities increasingly unsustainable. In addition, it is increasingly evident that parts of the global leather industry continue to shift towards Asia, where cost structures, proximity to growing consumer markets, and government incentives have encouraged expansion. This trend puts additional pressure on European competitiveness and may reshape supply chains in the medium term.

As market activity remains limited, there is slightly more time to observe developments on the consumer side of the leather market. It is noteworthy – and somewhat encouraging – that several newly introduced European premium-segment vehicle models presented in the media are once again equipped with leather interiors. For several years, the industry had observed a clear movement toward alternative materials, driven partly by cost considerations and partly by marketing strategies oriented toward sustainability narratives. The recent shift in presentation models may indicate that the previously observable trend among premium automotive brands to reduce the use of leather could be slowing or even reversing.

Manufacturers appear to rely again on leather to enhance the attractiveness and perceived exclusivity of models outside the traditional luxury segment, possibly in response to declining consumer enthusiasm for minimalistic interiors or synthetic substitutes. Early feedback from dealerships suggests that buyers still associate real leather with durability, comfort, and higher long-term value retention, factors that could influence strategic decisions in product design.

In parallel, steadily increasing volumes of hides are being diverted into collagen and protein applications, further reducing availability for the leather sector and reinforcing existing structural challenges. The growth of these alternative markets is driven by rising global demand for gelatin, collagen peptides, and technical proteins. For many processors, supplying these industries offers more predictable pricing structures and lower quality-risk exposure compared to the leather sector. This trend is expected to continue into next year and may result in a smaller supply base for tanners, particularly for lower-grade hides that no longer find viable buyers within the traditional leather value chain. These developments could contribute to a more balanced market situation next year.

Reduced raw material availability, if sustained, may help stabilise pricing structures, especially for higher-quality selections. For now, however, several price adjustments still remain outstanding. Many market participants appear to have resigned themselves to the current situation and are waiting for the year to end before addressing the challenges of the new trading period. Some buyers are deliberately postponing decisions until they have greater clarity on consumer sentiment in early 2026, particularly in sectors where discretionary spending plays a significant role.

Activity in Asia was also subdued this week. Buyers currently show little interest, as new shipments will only be possible again in January, with arrivals expected after the Chinese New Year period (from February 17). Processing plants prefer not to stock additional quantities ahead of the long holiday break, during which factories shut down and logistics operations slow considerably. Export volumes from other regions into Asia have also decreased significantly.

It is particularly noticeable that in the Americas an increasing share of hides is no longer being preserved for use in the leather industry. This reflects both supply-side adjustments and the growing economic relevance of non-leather applications.

Prices showed very little movement this week. This was not due to a genuine balance of supply and demand, but rather the result of isolated transactions that cannot be considered representative. Many market participants expect that meaningful price signals will only emerge once trading resumes in January, by which point new production schedules, fresh order books and clearer inventory positions will allow for more reliable assessments.

The kill: Slaughter activity remained at the usual seasonal level again this week. As noted in recent reports, the typical seasonal peaks in slaughter numbers did not occur this year, yet the current volume remains unusually high for this time of year. The industry is now entering the final weeks of larger-scale production before the Christmas holidays, and slaughter numbers are expected to stay relatively elevated, supported in part by the retail sector’s tendency to build inventories ahead of the festive period. Prices for live cattle also remain at or near their recent highs, and it now remains to be seen how consumers will ultimately respond to the significantly increased meat prices observed in recent weeks and months, and whether traditional holiday meals may be replaced with more cost-effective alternatives. Overall, we anticipate that slaughter numbers will remain relatively high in the coming weeks before declining noticeably during Christmas week and the first week of the new year, driven primarily by the holiday schedule and reduced operating days.

What we expect: What has become increasingly evident over the past weeks is that most market participants no longer have any interest in engaging in extensive discussions or disputes regarding price adjustments. Against this backdrop, it must be assumed that the general paralysis in the market will persist in the coming weeks. There is little indication that tanners will undertake any significant activities at the current price levels or out of an immediate need for raw material supply. Instead, the focus is now shifting towards an extended holiday period during which the market is expected to remain largely inactive. It will only be at the beginning of the new year that the market will need to confront the prevailing realities, draw the necessary conclusions, and reorganise accordingly.

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