Actually, one can save on reports.  If one is honest, very little or actually almost nothing has happened in our business since the end of the holiday season. The industry is working in routine mode at the moment and is taking care of the orders that, with a few exceptions, already existed before the holidays. Otherwise, the activity in the different markets is extremely dependent on the different situations. In China, a certain paralysis continues to dominate, resulting from the handling of the pandemic. Recurrent lockdowns are hampering business activity, and this is compounded by the weak property market and general caution in anticipation of the major Chinese Communist Party congress. All this together has simply led to a very wait-and-see position in the world’s second largest economy. In Europe, everything revolves around the energy supply for the coming winter. In most European countries, energy prices have risen massively and are only influenced by various government interventions. In addition to the price, the uncertainty of the energy supply is a burden and where this is not enough there are still supply bottlenecks in the most diverse products and for the most diverse causes. The only positive thing to note is that sea transport costs have been falling again for some time and thus represent at least a small compensation here and there for the otherwise so sharply increased costs. In our sector we have seen a typical week, as we unanimously see almost always before the Fair in Milan. Even in normal years, the fair is a very strong indicator for the business development of the coming 6-12 months. This is certainly more true this year than ever

before, because decisions for the next season must and will be made, and where this does not happen on spot, visitors definitely take home a relatively clear impression of the overall situation. And so, once again, there was this week only interest from specialists and niche suppliers. In the industrial sector, the current deliveries are being processed and the next decisions on quantities and prices will actually only be made in the coming weeks. Of course, the results and impressions of next week’s fair will have a great influence on these. Since the volume of sales is so small, the prices mentioned and achieved here and there can hardly be considered representative and this of course opens the door to all kinds of price information, the quality of which, however, must be viewed with caution and individual transactions cannot be considered representative of the entire market situation. Once the current programmes have been settled and the renegotiations on regular deliveries of larger quantities actually take place, we will probably get a clear picture of the actual price situation for the first time since July. Whether, and how long, we will have to wait for the next major round of sales in China also remains uncertain. As far as we can tell, it will probably take a few more weeks. Probably the most important subject at the moment is good information about the relocation of leather production. The greatly changed cost situation, sanctions, the demand for leather products and their prices, the development on the market for collagen and the regionally different consumer behaviour will in aggregate and all likelihood have the major influence on the market development in the coming months.

The kill

The kill is increasing exactly as expected and the volume development is almost textbook. However, the development of meat prices and buying behaviour in the supermarkets must be watched very closely. The cost situation for farmers and slaughterhouses is threatening in many cases and whether it will be possible to sustain corresponding meat prices with consumers is at least very uncertain and can change very quickly and a lot on the livestock market with corresponding consequences for slaughter activity.

What do we expect

It is probably not very serious to make any forecasts before the fair in Milan. However, the probability that everything will suddenly change for the better in the next week is not particularly high. There is no question that the luxury sector and specialities should continue to show a much more stable development and this might be confirmed also in Milan. The big question mark that we would like to have answered next week lies in the mass products and to what extent the leather industry can successfully pass on the increased costs without having to accept too large a drop in volumes.