Market Report 19.04.2024

What happened this week

As was to be expected, deliveries this week have been very difficult and very slow. Of course, interest is never zero and as long as tanneries are producing, they have to work continuously to meet the available supply. Nevertheless, the negotiations are very tough and the reluctance is increasing, especially in Asia. This is justified by sufficient stocks and unsatisfactory orders for leather. At this time of year, this is again particularly surprising and unusual. The question they are asking, however, is what the situation is regarding leather orders for the new season, which does not start until after the summer holidays. In any case, not a single tanner in China will have to think about additional purchases in the next six weeks to secure their production. What is not already covered by raw materials is then in any case secured by local stocks of semi-finished goods. With falling prices in many competing provenances, the negotiating position as a seller in China is also becoming increasingly difficult. Although many suppliers are still officially reporting what they claim, the truth is that customers currently have a sufficient choice of options and are always able to find suppliers who are prepared to make price concessions if necessary. This is not leading to a collapse, but the price trend, which was stable until a few weeks ago, is now slowly starting to point in the other direction again. The pressure is not only coming from the alternatives in Europe, but overseas suppliers are also preferring to accept price concessions at the moment in order to secure the real deal rather than possibly hoping for better times. Business in Europe is particularly characterised by the difficult situation in Italy. As the largest European market, it inevitably had the greatest impact on the overall market in Europe. Hopefully nobody wants to hear that the order situation in Italy is not improving and only a few specialised companies can fall back on a reasonably normal order backlog. The rest are thinking about who should respond to the insufficient orders. All actions are being considered and played out and it is particularly worth remembering that we are only in mid-April and there is still a long time to go before the seasonal recovery in September or October. Due to the stupidity that caused the price increase at the abattoirs, discussions about sales in Europe were very difficult. For us, at least, discussions about corresponding increases in sales prices were almost always in vain. How we will deal with the situation in the coming months will certainly be one of the most exciting questions of the coming week. Overall, sales were again below average and the pressure to get a clear picture of demand and volumes in the coming months is increasing. Another decisive factor will be how the financial situation in the leather industry will develop in the coming months under the current circumstances.

The kill

No big news from the meat market. Slaughtering remains at the lower and seasonal level. The Chinese market has reopened to German beef, so it remains to be seen whether this can develop additional export business at all. Otherwise, any change in slaughter volumes in the coming weeks would be more of a surprise.

What do we expect

We have actually already made our opinion of the market very clear in our report and also in the weeks before. The situation along the supply chain in the leather industry is anything but satisfactory. Mass producers for schools in Asia may still have sufficient orders at the moment, but this is only of very limited importance for the raw materials that we can provide from Europe. The tanners in Asia currently have no great need or pressure to cover their raw material requirements. Consequently, they are holding back in anticipation of falling prices. In Europe, the situation will not change until leather orders improve significantly. From today’s perspective, therefore, a positive development cannot be expected in the near future.