By the second day the mood had started to change slowly, although the fundamentals were still the same. The confidence about leather orders and the future demand for leather started to increase and tanners had to be realistic about their need for raw material for the coming weeks and months. Sellers’ concerns about facing greater resistance and insufficient hide sales faded by the hour. We do not believe that sellers were always able to achieve the prices they wanted or needed, but enough volume was certainly moved to erase most market concerns for the near future.

However, not everything is perfect. While the fashion for leather in bags and shoes is intact and benefits strongly from the positive outlook of the global economy in general, the upholstery leather market continues to suffer from structural difficulties. While the top quality end is also benefiting from the spending economies and wealthy people, the rest of the market is still facing huge profitability problems. Leather furniture has become a commodity and retail prices have been destroyed over the years. The rise in raw material prices has never been compensated for in finished product prices and the chain is really suffering from profitability problems which are being discussed more than openly. As a consequence, cash is becoming more and more of a problem in this segment and the problems are already clearly visible around the globe.

However, the main concern here is that the volume tanners in the upholstery industry see little prospect for improvement in the near future. As long as the side leather tanners are enjoying such strong business the chance for short term raw material reductions are limited. Sales during the week were reasonable and prices are steady to slightly firmer in some grades. Cows were unable to benefit and are finding strong resistance so far in view of the problems in the upholstery segment. 

The kill: The kill is rising as expected. Nothing particularly special, but it is seasonally normal. The weights are also rising and last week the proportion of heifers also suddenly increased. The good season has finally started as far as the numbers are concerned at least.

What do we expect: We have made another step forward for males up to mid October and have reached a new level. Cows are still capped due to the fierce competition in the market and the concerns about the rising risk potential are still high. Anyway, with the week’s sales results the likelihood of any further market movements remains pretty limited. A bit of the pressure has been lifted, however, due to the increasing kill, and the supply and demand balance is in a more relaxed state which should keep prices under control.

Share this story: