Market Report 18.04.2025

What happened this week

Presumably nobody can actually untangle the chaos that the American president is currently causing internationally. Our small sector, which revolves around a product as unimportant as leather, plays no role at all, which makes the assessment even more complicated. However, the events of the week are currently dominated almost exclusively by the events surrounding US trade policy and the reactions to them. No one can escape the consequences at the moment and every day that passes not only exacerbates the current problems, but also leads to ever longer-term distortions. First of all, the trading partners in China and the USA along the leather chain have to make their decision. Firstly, this means that the tariffs of over 100 % in each case must be processed in some form for current deliveries. On both sides, the supplier is then initially required to do this, and in most cases the customer will still be able to process the price differences. The larger the company, the easier this can be discussed. For small companies, the challenge is almost impossible to solve. In any case, more American hides are now being pushed onto the international markets in order to divert current contracts as well as to compensate for the lack of demand from China. The calculation is simple: any price that is better than the market price before 2 April plus the tariffs that have now been imposed is the better alternative. However, the weekly volumes that went to China can be quickly compensated for by other markets. In addition, these extremely large price changes pose major difficulties for the entire global system. The moment hides hit the market, they can quickly jeopardise ongoing and stable supply chains. International logistics may very quickly pose an additional problem. Without a quick solution, transport capacities will no longer be available at very short notice. This will not only have an impact on the route between China and the USA, but also on all international transport routes in the second stage. We don’t even need to talk about the predictability and stability of international logistics. Everything is still being analysed and assessed. In many cases, people are still acting according to the motto ‘wait and see’, although this is exacerbating the difficulties with each passing day. In business terms, there is not much to say. The market for standard cattle hides is more or less frozen at the moment. Here is not yet much need for action for the current month, but decisions will have to be made for the following months in the coming weeks. With the exception of specialities, niche products and special items, it will hardly be possible to escape the pressure that has arisen, unless the miraculous solution to all problems and agreements are found very quickly. The most interesting areas for us now are the possible new supply chains and the better quality materials that cannot simply be replaced. Despite all the pessimism and problems, new doors are opening where others may be closing without solving the one and only factor…global and total demand for leather as a material.