Market Report 04.07.2025

What happened this week

The usual summer lull in Europe is simply starting a little earlier this year. This does not mean that all leather factories are already closing and production has been halted, but rather that almost all planning has already been completed and the last few weeks before the summer holidays are now being managed. There is little to suggest that any new developments or surprise orders are still coming in at the leather factories. Nor are there any surprising early closures or unexpected reductions in production. Everyone seems to have resigned themselves to the fact that there will be hardly any significant new developments that could influence production and business until autumn. In Germany, the summer holidays have now begun in schools, and over the next eight weeks, closures will spread across the federal states. Unfortunately, in recent years it has become customary for almost all leather factories in Europe to close their doors from the last week of July to the third week of August, which means that there are fewer and fewer opportunities to make deliveries on a reduced basis to those businesses that are not closed. Even though slaughtering may be reduced, it is still necessary to find solutions for some of the goods during the summer months, which normally involves salting them. The annoying thing about this, however, is that many of the employees who are supposed to do the work also have school-age children and would just as much like to go on holiday during this time. As very little is happening on the market at the moment, everyone is waiting for political decisions that could potentially influence the business situation for the rest of the year. The focus here is, of course, on US customs policy, as the suspension of customs duties for the EU will initially expire next week. Either the customs duties will then take effect, or a solution will be found, or the suspension will be extended again. However, it would be presumptuous to assume that the nightmare will simply disappear again. Even though Germany is still unable to export to China at the moment because the ban due to the one case of foot-and-mouth disease has still not been lifted, the weak US dollar remains a problem. Compared to January, the USD has now lost around 15% of its value, and this, combined with the seasonally lighter hide weights, means that revenues in Euros remain under pressure. The market behaviour of many competitors does not reflect this, so it can be assumed that calculation margins have continued to shrink in recent months. In many cases, the collection and processing costs no longer cover the potential revenues from sales to leather factories, which is why the search for and flight to other alternatives has continued to increase in the first half of the year. As long as slaughtering remains relatively low, market equilibrium may still be achieved, but with increasing slaughtering, demand for hides would have to rise significantly again to prevent this from becoming a problem. We have little to report in terms of sales this week; the few sales that were made were mostly at unchanged prices within Europe.