Market Report 09.08.2024

What happened this week

Not much new this week either. The European tanners are almost completely on holiday and the customers in Asia, if they show up at all, are trying to massively lower prices again and are obviously checking their chances of success everywhere. In most cases, this means that sellers are shrugging their shoulders, because on the one hand the bids for poorer ranges and in some cases for cows are hardly covering costs and on the other hand it can be assumed that in the worst case these low prices can still be realised in a few weeks‘ time. With the price levels that have now been reached, the only question is whether the demand for leather in the last four months will still be sufficient to absorb the amount of raw material and still generate a cost-covering yield for many hide types, or whether at least parts of the product range will then be seen as a disposal product again. Of course, this only applies to some of the goods and the male types are not yet threatened by this, but the scenario still needs to be considered. Even if it is only an option, many are obviously not yet prepared to consider this possibility. On the seller’s side, the hope that prices will recover with the end of the summer holidays and the seasonal upturn is still persistent. Everyone immediately follows their hopes and by October at the latest we will know which of them will be realised. After the relatively high numbers in the first five months of 2024, the summer kill is now very low. This also supports sellers‘ hopes that prices will rise again. In our view, however, the key mistake being made with this idea is the fact that leather prices will certainly not rise again quickly and the share of production costs has risen further, leaving a correspondingly smaller share for the raw material. To complete the reality, however, it must also be mentioned that for many leather factories the price of raw materials is still not the central problem, but rather the order situation, and this is also reflected in the calculations. As has been the case for a long time, sales this week were again rather random and sporadic. Bids from Asia for cows were once again very ambitious and therefore not really acceptable. If you don’t necessarily want to liquidate stocks, you will still be able to find buyers in a few weeks at today’s prices. Due to the low level of the kill at the moment, there is no increased pressure to sell and therefore, in addition to the summer rest, the principle of wait and see continues to be the programme.