Market Report 01.12.2023

What happened this week

This Friday marks the last month of the year. There are actually only 2-3 weeks left and then 2023 will already be over. It is unusual that at this point most of the planning up to the end of the year has already been done and tanners have covered their needs. The question now is whether the leather industry really wants to talk about the first few weeks of the new year before Christmas. With a few exceptions, the mood in the leather industry in Europe is very poor. And so you do what you have to do, you have to fulfil the orders you have, but activity and optimism look different. It can’t be mentioned often enough, but this is actually unusual for this time of year, as almost all companies are actually operating at a higher level in the winter months than in the summer. Of course, this does not necessarily apply to Asia and so it remained the case this week that the only really serious enquiries and business opportunities once again came from Asia, especially China. It was significantly less than in recent weeks and months, but at least there were still one or two things to decide on. Prices in Asia are also slowly coming under pressure, although of course it has long been the case that business there is almost exclusively focussed on the female and here on the cow hides. The last shipments to Asia, which are due to arrive before the Chinese New Year, are possible next week. There will then be a two to three-week break before shipments can resume. Due to the sudden change in weather and winter conditions, kills have increased as expected and we have the impression that the additional volumes are not finding a home in the leather industry at the moment. This leaves the alternatives of either salting or tanning and different choices are being made. Another major problem is the labour force, which is either not sufficiently available or is currently often absent due to illness. In principle, all of this would only be problematic to a limited extent if we could assume that the situation is short-term and will normalise again after the Christmas break. This would not solve the current problems, but at least there would be a prospect of improvement. In this respect, we are very sceptical, at least for the European market. The situation in Italy seems to be particularly difficult, and the large capacities are probably suffering the most from the lack of leather orders. It should not be forgotten that the situation appears to be particularly difficult at the moment, but the situation has been a cause for concern for some time. We must therefore also consider the question of what will happen to the companies next year and whether the financial resources will hopefully last long enough. Sales this week were below average and limited to a few containers of cow hides and cattle to overseas. Prices are not changing very much and before new sales prices are really discussed, the next and new purchase prices at the abattoirs will have to be dealt with.

The kill

Kills picked up significantly with the onset of winter and were only hampered here and there by road conditions. As was to be expected, kills of male animals in particular increased, as people are presumably already starting to stock up for the Christmas business. Farmers have also had to move grazing livestock into the barns quickly, and temperatures have risen because the conditions no longer allow for anything else and therefore feed stocks for the winter have to be drawn on early.

What do we expect

We are sticking to our basic assessment that the market for female hides is secure. There may be the odd price correction, but no major change is expected in the short term. In the same way, we remain sceptical about the price level for the male product. Without overseas sales of these hides, it will hardly be possible to sell the quantities in Europe in the near future. The hides are simply still too expensive for this. However, many suppliers and abattoirs are not prepared to take this situation into account and allow a significant adjustment. Fears regarding the valuation of stocks may also be preventing this. We therefore expect little official price movement in the coming week, but also insufficient volume sales.