What happened this week: As expected business continues to be lethargic. Each week starts with hopes for improvement and this time a positive turnaround is in sight. The grip of leather prices still controls the market and, at least for the time being, tanners avoid buying more than necessary and only for a very short term. This applies mainly to customers from abroad buying salted material. Market conditions and the business environment are currently adverse, at least in upholstery leathers, and excess production capacity gives leather buyers the upper hand in price control. The most common comment in the trade at the moment is: “Prices have to come down. My customer wants to spend less.” None of this is new and it is also behind the current market situation. Prices of upholstery leathers are no longer stimulating demand and some believe that the price erosion of finished leathers has also resulted in a falling demand. In the current situation we have to recognise the fact that the demand for economical hides is not strong enough to absorb the global offer. This would have been hard to imagine several months ago when price pressure shifted the demand into more economical sources, absorbing most cheap material available. This does not seem to be the case for the time being and tanners are struggling to find profitability. How difficult calculations and business are at the moment is best seen through the increasing number of market and petty claims. Here clients are testing how much they can squeeze out of a supplier without damaging the relations or looking too foolish. This is an obvious symptom that shows tanners do not have enough business and that calculations are tight. Side leather customers are still delivering more excitement and the segment claimed most of the isolated sales last week. Light and extra heavy materials were the only ones in demand last week but volumes were poor. At the end of the week the firmer dollar trend made price offers for overseas exports more attractive but it also put buyers off. Asian customers are currently in a “stand by” mode, anticipating the arrival of visitors to the APLF in Hong Kong. It also seems that the side leather business is faring better in Asia than the upholstery sector.

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