What happened this week: This week is not really worth mentioning. Much of the trade was out in India at the leather fair in Chennai and the rest took it easy because of the holidays in Asia and the ongoing abattoir negotiations in the country. Business was, as a result, not very active which everybody had expected. There were still the usual bits and pieces from all over the place, and those short of light material tried to take this opportunity to sniff around and see whether any sellers could be convinced to move by the reduced activity, having found some unsold stocks somewhere. It doesn’t seem that any of them were very successful, apart from that a few sales were generated as is always the case. European and non-Chinese oriental buyers were prepared to make some purchases, so sales at the end of the week were better than people had expected at the beginning. The reversed trend of the US$ towards the end of the week also made business easier—at least when it came to exports. There is still a strong cap on prices on the upside, but with the consistent demand seen from the leather industry for quite some time, and not many clouds in the sky for the near future, the market is not running any particular risk at the bottom end either.

It seems that the market for hides and skins is finally preparing for a fundamental shortage of material in the average quality standard grades. This would create a similar situation to the one already seen in many other commodities. The only elementary difference is that leather is not really an essential, but the fundamentals of supply and demand still apply. Almost all the prospects for leather demand for the current year are positive. It seems that only geopolitical incidents could actually reverse the positive outlook. If the current political tensions ease, there is a fair chance that the present shortage of material in niches could eventually support the demand for the less preferred articles. This wouldn’t come as a surprise since it would be the one and only solution to the problem of insufficient supplies of particularly light material. The last thing the leather industry wants to hear at the moment is increasing prices, but it might be better to think about the possibility rather than to ignore it.

Share this story: