RE070122a

Osterhorn, Friday, 15.07.2022
The US $ in EURO 1,0070

What happened this week

If the whole world were not in such a phase of maximum uncertainty, the situation on the hide market would actually be quite normal and unremarkable. We are now in the last days before the long summer break and this has always been a time in Europe when little, let alone anything very interesting, happens. The tanneries are planning their holidays, doing what still needs to be done and wherever investments or maintenance work is planned and necessary, they are preparing for it. So far so good. This year, however, it is a bit different also not comparable to the past two years. We still remember the year 2020 and thereby the summer was the peak of the corona epidemic. No one knew how bad things would get, commodity prices had reached historic lows, personal health was paramount and economic developments outside China gave little cause for optimism. Last year, the situation was rather reversed, as most people were convinced that the end of the pandemic was in sight and a war that would turn the world order upside down was hardly expected by anyone. So people went into the summer holidays optimistic and with cautious, but positive expectations for the future. This year, people have come to terms with the pandemic, know the risks and the maximum that goes into the planning of companies is an overall increase in sick leave, but no fears of quarantines or government-imposed closures – at least outside China. Still, the outlook is quite bleak in many respects. Inflation is taking away a lot of purchasing power, the political situation is unstable, there is a shortage of labour almost everywhere and it is hampering normal operations, not to mention the never-ending difficulties in transport logistics. All this weighs heavily on the mood of

businesses and consumers. At the beginning of the summer, the impression is growing more and more that the market assessment of many in the last few months was further apart than one might have thought. Rumours of quite significant stocks along the supply chain are intensifying, without us being able to confirm or rule them out. As is so often the case, however, there is usually something to it. It seems that, on the one hand, some of the suppliers have done everything to market their production successfully and have perhaps made price concessions here and there for a while. At the same time, however, one gets the impression that there were others who preferred to  refrain from sales in case of doubt and thus built up respectable stocks of unsold goods. At the same time, there is talk of similar situations at the leather factories, where on the one hand people have stocked up very adequately with the falling prices, or on the other hand they have seen the weakness in demand as the most important basis for decision-making and have therefore tended to buy below average. Consequentely you find overstocked players as well as ones carrying low inventory. Not that this is normally worth to mention, but this year it looks far more pronounced than in normal times. This week was very quiet for us and was actually only characterised by the planning for the summer phase. We have no sales to report apart from the random transactions that always take place. At the moment, the focus is once again on purchasing, as there is currently very little happening on the sales market. In the next few weeks, one probably has to focus exclusively on Asia anyway, because it is almost impossible to expect much activity in Europe.