Market Report 08.03.2024

What happened this week

Even if it may seem boring to the reader, there are actually no major events to report at the moment that could have any significant effect on the market or provide decisive new impetus for development. Over the past few weeks, all the facts and information about the current situation in the leather industry have actually been exchanged. To summarise once again, production volumes in Asia have been slowly increasing since the end of last year, although business is almost exclusively concentrated on low-priced mass-produced leather. In Europe, on the other hand, production is shrinking and a large number of reduced capacities have been reported since the beginning of the year. As this mainly affects the higher quality and more expensive leathers, this is of course particularly reflected in the market for the more expensive raw hides. To summarise in a few words, this ensures a stable price situation for the lower-priced hides and constant price pressure for the more expensive raw materials. As always, it should be noted that this has not yet really affected the luxury goods sector. The opinions and views of the various interests and suppliers are then derived from this situation. Even if the number of optimists is slowly dwindling, there are still enough of them who hold the fundamental view that this is only a temporary phase, with falling interest rates and an improved economic situation and consumption, demand and business will recover in the course of 2024 and prices for the better hides will rise again as kills fall. The pessimists tend not to expect a rapid recovery in consumption, citing the cost problems and, above all, the still unresolved stocks of semi-finished products. One of them will certainly be right and it may be that, as is so often the case, it is not a question of if, but rather when. In any case, there is little chance of a short-term recovery in Europe at the moment and in the second quarter. Surprising growth in orders in the second and third quarter would be more of a miracle than actually realistic. The mood may indeed improve for the period after the summer holidays, but the effects of this will certainly not be seen in the coming weeks or months. The volume of orders and the problem of costs will certainly not be solved for Europe in the near future. For business this week, this meant that things tended to be a little quieter again. However, it is also true that there was a certain amount of interest in China if one was prepared to make appropriate price concessions. It was therefore possible to make some sales of male goods to Asia if you wanted to, with the weaker USD also beginning to mean something. Otherwise, business was limited to the renewal of the programmes in Europe with reduced quantities and the trade fair in Hong Kong is slowly beginning to cast its shadow from Asia. Suppliers are expected either before or at the trade fair to get an idea of the market situation before the next purchasing decisions are actually made. It is still not the case that any tanner fears that they will be undersupplied in the coming months and the concern if the order will be sufficient.

The kill

Kills remain at the level we can expect for this time of year. Statistics show no signs of a significant reduction and all predictions of a significant drop in volumes have proven to be wrong for the first two months of 2024. In our estimation, this will not change significantly in the coming months and only the cattle census in May will give us a reliable impression of what we can expect for the next 12-18 months.

What do we expect

Nor can we think of anything really significant for next week that could actually get the market moving. The mere fact that a large part of the leather industry is meeting in Hong Kong again the following week suggests that very little will happen before then, at least officially. Those travelling to Asia early to visit their customers will certainly arrive at the fair with impressions and possibly new convictions and, as is so often the case, on the second day it will be possible to develop a feeling for the mood with which the industry will enter the second and third quarters of 2024. We are in expectation.