What happened this week: A lot of last week’s enthusiasm proved to be false. The interest which had been seen in the previous week, and which was supposed to be carried over into this week, faded, and quite a number of bids and enquiries disappeared or were lost during the week. In most cases it was a price issue and when tanners thought twice about the price they wanted or were able to pay, they decided to walk away and bide their time for the moment. Consequently, sales were rather coincidental rather than the result of any coordinated and rational purchasing activity. Isolated orders and bids were available and concluded, but nothing in any volume. Tanners were buying for specific reasons and this was more gap-filling than a convincing programme of raw material procurement. The destinations were as coincidental as the sales themselves and so there was also no logic in the structure of the destinations or markets. All of the main markets participated a little, from Europe, the Middle East, through to the Far East. Almost all hide grades were covered, some cows, and some bulls and heifers as long as they were available.

The interest for lighter weight, standard cows was again under-represented and this might underline once again that business in China is not as good as many are claiming. The constant rumours about the change in the import policy and the VAT rules of the Chinese government may also be playing a certain role in the fact that the market in China does not seem to be performing at present as it should be. The US$ did not help too much either as although it remained at favourable levels, all attempts to break the €1.1650 level failed this week and today’s news that the euro zone might have to prepare for an interest rate hike continued to support the euro for the few remaining hours of the week.

Exactly how difficult tanners are finding business is also easy to see, with the number of complaints over quality and the attempts to squeeze money out of suppliers and anywhere else where there is a potential to save. There is still very little acceptance that hides are not actually manufactured by machines and do not carry built-in guarantees for production results. However, when tanners spend more time worrying about other sources for making money rather than from their business it is a clear sign that things are not too easy in the leather business at present. We are now quickly heading towards the end of the year and with the Chinese New Year holidays starting at the end of January, the holiday issues will become a determining factor again. In Europe, the Christmas break could be pretty short and production facilities could remain open between Christmas and New Year as only Monday is a holiday this year. It all depends, however, on business and whether tanners think it is more worthwhile keeping the drums rolling or if it is better to take a chance and send staff home for a week. How this is handled by individual companies will be known in the coming weeks and it will reveal quite a bit about the leather business in Europe.

The kill: Still moving a bit higher, as the nights are getting pretty cold now and the first frost this winter has been seen. While farmers kept their cows in the fields until last week, they will now rush to get them in and this will bring some additional kill in the weeks to come. Farmers in our area had a good summer as far as feed for the winter is concerned, so we do not expect a surplus of kill for cost reasons.

What do we expect? Things have calmed down again and it seems we will go back to the same, almost steady levels we have seen for some time. Most interesting to watch in the coming weeks will be developments in the currency markets as everything else is pointing in the direction that there is little reason for massive prices changes until Christmas.