What happened this week: There is still absolutely nothing stimulating this market. Tanners in Asia are only slowly returning to their desks and do not appear to have any great interest or intention to buy. Consequently, this week has again not revealed any great indications over the near-term trend.

While buyers/tanners are not producing much activity or news, part of the hide processing industry has now stepped into the limelight in terms of initiative and is displaying quite a bit of optimism and activity. Abattoir buying prices in some regions (south) have been raised — only moderately, but this totally against the trend that is presently considered to be ‘the market’. Looking at the selling prices that are currently circulating one has to wonder how the calculations are being made. As a result there are still rumours and doubts about the real motives for these activities and it wouldn’t be a shock if this story ended with a surprise — as we have seen a number of times in the past — or better said, one should not start to believe in miracles yet.

Returning to the hide and leather market, It is hard to really find anything positive in Europe these days. Vegetable tanners are working at low levels and upholstery tanners are reporting that their order books are not filling up. Many upholstery manufacturers have been posting declining orders since November and order books have been shrinking rapidly since beginning of the year. Shoe tanners say that they are getting positive indications from their buyers for the next season, but these have so far failed to be converted into solid orders. For the shining star of leather demand, leather goods and handbags, questions are now being raised as to whether demand could slow. Markets could be saturated after the boom of previous years. And, last but not least, we have seen a strong shift from bovine to ovine over the last season. All this has become a problem for demand and is being exacerbated by the financial problems and aggressive environmental policies in China.

So, a lot of doom and gloom is still hanging over the market at the moment. The only arguments left for a positive outlook are the lower kill and — besides the trouble — a global economy which is still pretty robust in many of the emerging markets. Whatever happens, leather remains a seasonal product. The peak production season is quickly coming to an end and we are going to enter the slower season pretty soon. Those who are sitting on salted stocks also have to consider that the cold season is going to end pretty soon and storing material is not going to be any easier. So, at the end of the day, we are about to enter a decisive period over the next quarter and the people betting on a market recovery will need some luck in the weeks to come.

As far as sales were concerned this week, we couldn’t trace many. Asia hasn’t really been back in the market and the decline of the US$ didn’t help either this week. Europe was again in the doldrums and consequently sales were limited to regular programmes and coincidental sales. The focus was again on dairy cows and low grades but not in any kind of larger volumes.

The kill: After the end of the carnival season the kill increased a little. Numbers have returned to slightly more workable levels, but are still lower than what they should be. For the weeks to come not much change is forecasted.  

What do we expect: We still fail to see any trigger for improvement. Without a sharp increase in demand, a substantial recovery of the market is not in (our) sight. In the coming weeks we have to wait and see what the needs and interest from Asia are like because we can’t see much light at the end of the tunnel in Europe at the moment. So, for the coming weeks we believe that the market will continue to sidestep before it can move again.

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