Market Report 05.04.2024

What happened this week

A very quiet week comes to an end this Friday. This is not particularly surprising when this week was shortened by public holidays in many countries. On the one hand, Monday in the Christian countries and Thursday and Friday in Asia, so there was not much time left to actively organise sales of hides and skins. The start of the second quarter is often accompanied by a significant slowdown in activity in the leather industry. In Central Europe, not only does spring begin after Easter, but also a longer period with a large number of public holidays. This is certainly good news for employees, and so-called bridging days are often used to create extended weekends. For businesses, production and logistics, however, it is an additional considerable burden. Planning will become more difficult, both in terms of production in the slaughter industry, but also in terms of which tanners might also close their factories. Logistics is a major problem because lorries and therefore the delivery of containers to the ports can no longer be reliably planned. The constantly changing departures of the steamers and the constantly changing delivery dates for the containers in the harbour have been a problem ever since the attacks in the Red Sea, but in times of interrupted weeks due to public holidays it becomes even more difficult. In this respect, we can perhaps look forward to the warmer days and spring, but it will be a very challenging phase for work processes. There was little news from the leather business. There is still a very pessimistic mood in Europe. This is actually only interrupted by the tanners who produce either for the high-quality luxury sector or for niche products. They can benefit from the reduced raw material prices and are satisfied with their order situation at the moment. Problems in the automotive and furniture leather sector remain and, if the reactions of tanners from this sector are to be believed, there will be little change in Europe in the coming months. The situation is mixed for the remaining shoe leather tanners and in the leather goods sector it depends on who you work with. As far as the hides business is concerned, price negotiations with the abattoirs are currently the main focus. In Central Europe, there are isolated cases of competitive unrest, which naturally encourages slaughterhouses to flex their muscles again. Anyone taking a realistic look at the market situation can hardly come to the conclusion that price increases can be implemented in the markets or that they could even be a good idea for the coming weeks and months. The few sales and negotiations in Europe this week were therefore very close to the prices recently agreed. Demand from Asia was very quiet this week and it will become clear next week whether this is due to holidays or actually a decline in demand going into the summer.

The kill

Kills are currently reduced due to the public holidays. The shift towards poultry and pork for the barbecue season is already clearly noticeable without any significant decline in cattle kill yet. As soon as the weather improves, we will see whether the return of grazing cattle to the pastures will have a greater impact on kills or whether little will change.

What do we expect

At the moment, we see no reason at all for any fundamental price changes. Increased price demands from the beef industry would certainly not be a particularly good signal and, in combination with falling hide weights, would make the calculation even more difficult. It will be decided by the end of next week how the negotiations will end and whether the difficult overall situation will be taken into account.