In past years, some production shifted to contract tanners so that at least a limited number of chilled hides had to be delivered instead of being salted. So far, not many have indicated that they will be using contract tanners during the summer break this year, because they are lacking leather orders that need covering.

It might still be too early to draw a final conclusion, because there is still hope of an acceleration in the supply pipeline that would allow manufacturers to rebuild some inventory. In particular the automotive industry remains uncertain and fragile. Even when we consider the negative impact of the coronavirus situation, we have to believe still in several positive factors that could quickly still stimulate demand: new car models, a backlog of existing orders and the slow return of consumption, for example. However, under normal circumstances, this would be unlikely to compensate for the massive decline in production we have experienced over the past three months. It has also been Interesting to see studies predicting a strong performance in vehicle sales in response to the substantial decline in air and train travel and in public transport use. Anyone looking at traffic jams on city streets at the moment, despite all the working from home and reduced business activity, may be drawing the conclusion that this could indeed be a trend already. Whether or not this will lead to an increase in leather consumption is another story.

In Europe the reopening continues at a very rapid speed now. Country after country is easing the restrictions and this can be felt all over. Borders are open, most travel is possible, although too late for most package groups and charter flights, but it will certainly push local, in-country tourism. This will be good for some and bad for others. Among all this, there are still very good options for leather. Trekking and hiking and more outdoor activity in general, new investment in the home, including furniture, a greater focus on natural and sustainable products and materials all offer plenty of opportunities.
We all know, however, that the economy is also about psychology; new coronavirus outbreaks in China and Germany and the uncertain trend over the summer will have a massive influence on consumer reaction.

Business this week has been hit by the new cases in Beijing. Chinese buyers have been buying, but this is based on price and on speculation and is not to cover real leather orders. Consequently, they step immediately away the moment negative news hits their hopes. In Europe tanners continue to plan from week to week and are running at the same levels as before. Nobody is willing to build up inventory in the build-up to the holiday break. Price is secondary, because price does not stimulate demand. The price of hides remained unchanged.

The kill: The kill remains stable but the massive outbreak in one of the largest German processing plants has put production there on hold. This will affect slaughter units too, but it is likely that the supermarkets will be able to cover their requirements by working with the competition.