What happened this week: Another week is ending and almost nothing has changed. The demand remains steady, the leather industry complains with a full order book in hand and the performance of the different market segments remains entirely different. This would make a difference when this would meet a raw material market with stocks, but without any inventory it doesn’t make any difference at all for the market. The sales were again decent and what is produced finds a buyer. Despite the colder weather the kill remains well below expectations and as far as the butchers are concerned there will be no ‘seasonal’ kill this year anymore. True or not, since we have only about 7 weeks to go before the Xmas break it wouldn’t change anything, anyway  anymore. Prices couldn’t benefit too much this week, but some grades are still adding a fraction here and there.  Superficially everything looks fine, but still it hard find anybody who is really happy as far business is concerned. Taking a deeper look it is really a bit worrying and mainly those who are longer in this business are the ones most concerned. The tanning industry was or is not prepared for the raw material levels we have reached in the meantime

and those with a long memory worry. The others are more positive and explain, that time have changed with new markets developed and a rock solid global economy. Consequently for them  the focus on the ‘old economies’ is the reason for the concerns and the wider perspective the explanation for the present situation. No matter who is finally right, high price levels have always weighed heavily on margins in the industry and this has never been without consequences. Looking at the edges of the raw material markets the first voices are heard, that lighter weight calf and kips are facing some more price resistance as a result of article decisions taken by manufacturers. In their attempt to reduce and protect against leather prices. Some leathers have been shifted to other more ovine raw materials. If this is true one has to see if this is compensated by general growth or could have an effect on the market. One thing is certainly true, in this segment the use of various leather types is much more flexible.  Locally the market at the abattoirs is still pushed by some obscure movements. Either we have shift in the key players for automotive tanning or established ones are trying to hide

their real ‘need to buy’ away. Prices paid and roads taken for the specific raw materials dominating this production do not correspond with the messages sent out from the industry for a while and so there must be a reason. Asia was sniffing around during the week for hides which could substitute the US standards, but was reasonably quiet as far as cows were concerned.  Most buyers are mainly trying to find cheaper substitutes for their standard products. The kill: As already mentioned the kill is not really improving. The weather is now pretty cold and should normally support the kill and beef consumption. Most are not expecting anything big anymore and may be we have already slaughtered most of the annual kill in the first half of the year. At least weights are rising still. What do we expect: If one likes it or not, but the tensions continue to rise. ‘One tanner per week’ is starting to take an opposing position against the market trend. Not much success yet, but the pressure is mounting. The weekly market remains trapped in the present situation. Solid, with little upside potential only for a few selected grades, but little downside potential either until the unforeseeable happens. And this will persist until the pressure is getting too high.