What happened this week: After February was affected by various holidays, operations are back to something that can be called normal. Indeed, activity was back to levels one would expect during normal working weeks. Not all Chinese tanners were back to work and in particular in the north it seems several operations are taking extended vacations. However, it is fair to say that production will reach normal levels pretty soon.

We have to bear in mind that not all tanneries have enough orders to run their factories in full. In particular the upholstery tanners seem to be falling short of the orders they should have at this time of year and a number of the smaller operators in China are not happy with what they see from their customers.

Another factor which is worrying is the fact that payments and letters of credit are still not coming quickly enough to make us believe that the financial situation is strong enough after the holiday break.

Fortunately, the market has not moved much in the past weeks, but there is a real threat that customers could look for excuses not to take what they bought in January.

The risk that something is going to happen soon is limited by the firmer tone many suppliers around the globe are trying to display, which we see frequently in the weeks prior to the Hong Kong leather fair. With almost every supplier travelling to visit the customer base in Asia in the coming month it is pretty common to pave the road for sales with a firmer undertone.

As far as the hide market is concerned, it is increasingly difficult to make a real judgement because of the situation in the currency market. What looked cheap or expensive yesterday might be different today, and we have seen just this week the euro sliding by another near 4%, which makes a hell of a difference in the raw material business. Depending on the policy of sellers it can make or lose significant amounts of money. Everybody is now betting on an additional decline and parity between the euro and the dollar.
In such a trend, business for exporters is becoming increasingly simple. German or European hides remain an attractive buy. Many sellers will still remember when it went the other way around so one should appreciate it as long as it lasts.

Sales during the week have been not been extraordinary, despite the favourable conditions. Numbers were just about normal.
What we find interesting is the fact that the demand for hides has changed by quite a bit since the beginning of February. Interest for dairy cows, which had been dominant for a long time from Asia, is significantly down and interest for males has significantly increased.

Sources are relating that to the fact that leather producers in China are trying to upgrade and with the relatively high prices in the US, European males are becoming increasingly attractive at the present quality-price ratio. Currency helps, too. The total number of sales has been pretty much matching production and so we have moved another week further without any significant change in the general position.

The kill: The kill has been again a fraction better and the numbers for the time of the year are not particularly bad. Hide weights for females have gone up and are now about what one would expect for this time of the year.

What we expect: To make a judgement on the hide market is difficult, because we have to watch the currency market. While we expect US dollar prices to remain stable wouldn’t be surprised if asking levels for prices in euros rise. How the EU tanners are going to deal with that and how the US market reacts is certainly one of the biggest questions.

Share this story: