Osterhorn, Friday, 02.06.2023
The US $ in EURO 1,0755
As is actually always the case in our latitudes. When the sun rises and so do the temperatures, then the difficult time in our business begins and with every day the awareness increases that summer is the most difficult and dangerous phase for the market. why people always forget this from April to April, we don’t really understand. In years when leather demand is strong, it is not particularly noticeable that summer is also the time of low slaughter. As a rule, in late spring, outside the holiday weeks, the demand for fresh, chilled hides can usually never be fully met and this keeps prices up in many years despite a rather reduced demand. In other years, however, it is completely different. Slowly, the trade is beginning to realise that this year could be one of the most difficult ones. We have been seeing reduced demand for leather for many months now, which has led to a significant increase in stocks of raw and semi-finished hides over the time. This may vary from company to company, but basically nobody disputes this situation any more. After months in which the situation was always described as much better than it actually was, people are now slowly but surely beginning to come to terms with the realities. We are now at the beginning of summer and reduced production, and this is hitting excessive stocks in many places. Even lower prices would probably not boost demand at the moment, with the one and always valid exception of speculative buying from Asia. However, hardly anyone believes in a very quick and significant recovery in demand for leather, so expectations of a quick trend reversal in demand for raw materials are also relatively low. After all,
stocks would first have to be cleared before a sustained improvement in prices could really be expected. It would not help anyone and it would not make any sense to discuss now to what extent the behaviour of the last months was helpful or not. Of course, everyone would be a bad salesman if they portrayed the situation as worse than it actually is. Whether it really helps or has helped anyone in the end to portray things as rosier than they actually were is something everyone can decide for themselves. One thing can be said with certainty. At least for our part of the world, we are in a very uncertain overall situation. Business this week was again very quiet. At the beginning of the week we saw quite a few bids for cowhides from China, but most attempts to seriously negotiate prices quickly failed and by Wednesday at the latest almost all possible interested parties had actually withdrawn from the market again. The difference between the asking prices, and this is true despite the fact that the US dollar has strengthened in the meantime, and the prices that the customers wanted to pay were not really bridgeable. It may well be that we will still be angry about the missed opportunities next month, but that will be a different story. Thus, sales this week were again rather limited to random transactions and individual enquiries, because something is always happening somewhere, even if this cannot be described as representative of the market situation. There was little change in prices, but a few transactions do not necessarily represent the market and what is actually happening.