Market Report 22.03.2024

What happened this week

The long-awaited trade fair in Hong Kong ended yesterday and most people are probably on their way home or to their next destinations in Asia by now. For most, it was their first visit to Hong Kong in many years and definitely their first trade fair here since 2019. First of all, you realise that Hong Kong has changed considerably. It still looks the same, but the vibrancy that has always characterised the city has been significantly reduced. We must also assume that tourism has also declined significantly. In any case, the locals confirm that the flow of mainland Chinese who used to come to the city has decreased significantly. Looking at the prices, Hong Kong can no longer be described as a shopper’s paradise. Even though the trade fair was organised differently than in the past, everything at the Hong Kong Convention and Exhibition Centre was the same as always. The same faces, just all five years older. Many took the opportunity to find out whether Hong Kong will remain a very important melting pot for the industry and whether it is likely to remain so in the future. In terms of the value of the visit, there are actually no particular doubts. Anyone who wants to cultivate international contacts, think outside the box and get a feel for the real situation is in good hands at this trade fair. Of course, this goes beyond just visiting the trade fair; Hong Kong is not just about the daily presence on the stands, but also the socialisation afterwards. If you look at these “soft facts”, the trade fair was good, important and therefore a complete success. If you look at the actual business success, then opinions will probably differ somewhat more. But here, too, one thing remains the same as always. Everyone constructs their own reality from their visit to the trade fair. It is undisputed that the activity and atmosphere in Asia is many times better than in Europe. We already knew this beforehand, but it was once again impressively confirmed. It is also true that people in Asia are much more price-sensitive. This means that although there were enough Chinese tanners at the trade fair who were prepared to buy hides, they had the very clear ideas that the prices cannot move far away from those that we have been achieving for almost several months now, especially for cowhides. The declining prices for males also confirm that more and more attention is being paid to these male hides. It means that we can sell our European hides, but then have to come to terms with international price realities. For some categories, especially the lighter ones, it is currently possible with restrictions, but under the given purchase prices at the abattoirs, it is not a real pleasure or attractive business. However, from what we have been able to gather, some suppliers from Europe have resigned themselves to their fate, accepted the situation and accepted that if you want to ship larger volumes and clear stocks before the summer, you have to take what is available and that is probably significantly less than the hides may have originally cost. To summarise, it can be said that if you were prepared to sell within a narrow bandwidth around the most recently agreed prices, sufficient trade fair and courtesy transactions were possible. However, we consider it unlikely that this is a sign of rising prices and new market potential. Leather prices are not indicating this, nor is global consumption.

The kill

Kills remain at the level we have been seeing for many weeks. It’s no more and it’s no less and we don’t think this will change much in the coming weeks. After Easter we will then see whether farmers will possibly make adjustments to their livestock, although this will of course mainly affect the female stock.

What do we expect

It would be very surprising if a lot of new things were to happen in the coming week and after the fair, or if there were to be any major changes in the market. The best thing that could happen would be that the Chinese tanners who did not make the journey to Hong Kong might feel that they have missed out on something. This would of course push them back into the market, but it is unlikely that they will come across very attractively priced offers. We rather expect that they will continue to behave as they have in the past weeks and months. Bids will be made that are below the asking prices and people will buy when they find a supplier who is willing to match the current price level.