What happened this week: In previous years, this period of the year would have been a really busy one, with high slaughter numbers and the tanning industry generally running in high gear. Although the tanning industry may be performing in a way that is relatively close to normal, the kill remains far from normal for the season. The daily activity and general speed of the business is also well below average. Business as far as hide sales are concerned has been reduced simply due to the limited availability. Despite all of the favourable reports from the other global hide supply origins we are finding that Europe—for the reasons stated above— is pretty quiet.

It appears that there is much more activity overseas than in this part of the world. Let’s try to be more precise: from what we can see and what we have heard, the driving force behind the markets remains the side leather business. The standard buyers for upholstery hides and garment leathers in the Far East appear to be sitting on the fence rather than taking any part amongst the players. An interesting fact to note is that they are increasingly being substituted by traders and importers in the local region. One assumes that this is because it solves the difficulties facing tanners in importing raw materials into the country–to some extent at least. One way or the other it seems that the effects of the Chinese customs book policy are finally showing, for some tanners at least.

Dollar affects business

The mainstream business in global standard materials between the big players continues to charge ahead while the smaller side line materials and ‘add-ons’ in the leather producing industry continue to show signs of fatigue, for different reasons from those mentioned earlier. For the European industry, the descent of the $ is also starting to become a problem again. This week’s decline was the largest in five months and the effect of this that is hitting raw material calculations immediately, is also weighing heavily on the finished products further down the line. It appears that this present direction is also likely to become a trend. On the tanning front, very little information is filtering through the pipeline and it still appears that all the available information and standpoints that have been exchanged in recent weeks remain unchanged. Consequently, everybody is now putting their feet up and waiting to see the direction of raw material price levels and finished leather price levels. At the moment it seems that many people are comparing the situation to that of a train without a driver–nobody knows what is going to happen and the passengers have to continue on the journey, just waiting to see if it will crash or will simply run out of steam.

Apart from these philosophical considerations, little business was concluded and almost all of the sales that were made went to non-regular customers in the Far East. Almost everyday there are opportunities for the few disposable lots to be placed, but the weaker $ has absorbed more of the fractional gains that had been obtained here and there. However, it cannot be called regular trading or market conditions.   

The kill: One cannot be surprised by the reduced numbers. Recalling the increased slaughter we had in the first half of the year, the low levels had to be expected–it just goes against everybody’s experience in the past. Most butchers are either complaining about restrictions on cattle transport due to bluetongue controls or are simply unable to find enough cattle, mainly males, to buy. 

What do we expect: We fail to see any factor that could change this market, apart from a swing in the currency market or a sudden change in leather demand perhaps, but we do not consider either really likely to happen. So, we cannot expect any change in the coming week and possibly not even until the end of the year, and this will certainly lead to increasing tension in the market.