What happened this week: Also this week business was decently stable. Remarkably was the shift of activity from Asia to Europe. While orders from overseas customers were diminishing, interest from the traditional European markets picked up. Side and automotive tanners continued their normal purchasing activities while sole leather tanners and finally also Italian upholstery were slowly but surely returning to the market.

Despite normal volumes sold, a lot of negotiations have been carried over into next week, because sellers and buyers ideas are still apart. It seems that worldwide we are in a similar situation in most markets with tanners in need to buy 3-5 % below present levels and sellers so far not yet willing to give in and to accept. However, with the gloomy outlook of the world economy and the unclear situation in the Middle East, finished product buyers do not seem to lift their price ideas and consequently also tanners find a concrete wall to fight against. With the raw material prices in avg. having increased sharply since the beginning of the year, there is finally a need now for adjustments either of the leather or the raw material prices. Considering the level of raw material prices we have reached already, considering the uncertainties of the global economy and in particular in Europe a moderate adjustment would be what the market needs.

Considering, that generally the global leather business is reasonable a small reduction would be of great assistance to keep the ball rolling and to support the leather orders for the next season. It cant be of nobody’s interest to eventually reduce the leather production or demand by inflating the raw materials too much. However, knowing all this it will not change the fact, that butchers will never have a political pricing.

The kill: The kill is steady and remains well below seasonal numbers. Weights however, continue to improve. Butchers complain, that cattle prices are high and rising while beef business remains difficult. Due to favourable weather conditions farmers may hold out for some more weeks, but the numbers can only go up in the future.

What do we expect? Butchers will not allow prices to fall significantly and tanners will not allow the prices to rise significantly. The markets – for the time being – are still in almost equilibrium. Consequently still stable. However, as said above, the pressure from tanners side on prices has to grow and as soon supply is getting better it will reflect in some grades, but not yet in the next week.

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