What happened this week: The market conditions still remain fixed by the same determiners as before. On the one hand tanners are showing mounting resistance to the current price levels and against higher prices. On the other hand a certain amount of product still needs to be covered to keep production running. Therefore, this is still a supply-driven market.

During the week we saw the usual shift between the global key players once again. While Italy is now definitely increasing the pressure on suppliers and even reporting that their demands are satisfied through to autumn, the Asians, or better put, the Chinese have come back into the arena, and have been asking for offers and have even been bidding on product that is still possibly available for June/July shipments. This was not a great deal and only a few dairy cows could be offered. For some lots there was more than one interested party to choose from and customer reactions were mixed. Some thought that after the recent increase in dairy cow prices in the USA, European prices would be viewed as a bargain, while others were just busy trying to fill their needs. The result was that there was a wide discrepancy between price ideas, but for genuine sellers willing to close a deal, it was possible to find a buyer for everything during the week.

Dairy cows were at the forefront of sales. The slaughter of females is running much higher than expected for this time of the year and so there were a few lots on offer running until the summer holidays. The heavier ranges were taken by the Italians and the lighter ones by Asian tanners. Despite the fair chance of moving all of the product available, requests for price increases were in vain and to ensure sales it was necessary to accept steady levels. The dilemma was again one of whether to just book the sale or wait for better times—of which there is a fairly decent possibility at present with warehouses quite empty and no real pressure to sell.

Males and shoe leather hides remain totally in the hands of the slaughter. New sales are almost impossible to discuss and enquiries have to be turned down due to a simple lack of availability. So, a real market cannot be developed because, at the end of the day, without trading in volume nobody can know where the market really is and how far tanners need to go to keep their production running. We might eventually have a chance to figure out the real situation when the last longer-term contracts need to be negotiated prior to the summer holidays.

Anyway, we still believe that the market has certainly lost some of its dynamism and momentum if for no other reason than that tanners also need to analyse their future strategy for the rest of the year before considering the future of the raw material market too much. One thing is however true, demand for leather is slowing down and this is enabling tanners to stay out of the market and this means that we will not find the balance again for some time, although it only remains a question of time.   

The kill: Pretty much as in the weeks before, just lowered slightly by the holiday on Thursday. The problematic fact as far as a business as ours is concerned is the planning of fresh hide supplies and the continuing imbalance between males and females. Next week will be a normal production week again and this should offer a little relief before the weeks that follow which will again be influenced by holidays.

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