Looking at the situation realistically, another lost week is coming to an end. Lost in terms of hide market activity and equally lost in terms of new insights and market shaping developments in the consumer goods markets. This week marked the start of the Christmas shopping season and all retailers and internet platforms are courting customers to empty their overflowing warehouses. How successful this will be will be shown by the statistical data of the next few days, from which one can read, if necessary, to what extent consumers are willing to open their wallets and spend money on gifts and all kinds of products despite inflation and the geopolitical risks. The mood is not particularly good. Falling real incomes and rising prices to a greater or lesser extent in the various countries are weighing on consumer sentiment. This may be particularly pronounced in Europe, but a similar situation can also be felt in other regions of the world. Especially in China, where the big shopping season is still ahead, the mood is extremely burdened by the rising infection numbers. Besides the fact that the various lockdowns are keeping people out of the shops, there is also more and more criticism of the government’s policies, which in principle is not particularly helpful for relaxed shopping in an autocracy. For our business, of course, the situation in China plays a particularly strong role. In Europe, decisions and purchases have been made and made long into January and it can hardly be assumed that under the current conditions the tanners will suddenly gain new insights

or even develop a special purchasing optimism. The situation in China has already been described and there is no particular impetus coming from there either. If the rumours are true, many tanners are already considering closing their factories early and not reopening until February 2023. The reduced production of the last months and the sufficient stocks make it possible for buyers to stay out of the raw material market for some time. Only new optimism and speculative thinking, which are not uncommon in China, will be able to trigger a needed, larger buying wave in the near future, in our view. This week, demand has focused almost exclusively on high-grade and lighter hides. This is especially true for Asia, where they are obviously now trying to somehow produce leather that allows a higher added value. Unfortunately, there is neither enough raw material, nor is it possible to buy it at prices that we believe could be converted very quickly into corresponding leather prices in Asia. Another week in which sales were rather sporadic and at the moment it is probably correct to say that incoming goods do not correspond to sales. The few sales in the middle of the calculation were also affected by the weaker US dollar, so that the returns in Euros declined again.

The kill

The peak slaughter numbers seem to be behind us. The numbers still remain quite high and normal for the time of year, but the peaks of last week could not be reached. The slaughter industry is also looking with some scepticism at the sales of prime cuts in the coming Christmas and New Year period. Many express the fear that it is possible that some savings will be made on food and that the very expensive expensive cuts will not be sold in the quantities that should be expected in normal times.

What do we expect

They say there are always miracles, but they need a big one for the demand for hides to increase in the next few weeks. To really stimulate business we would need significant price reductions, because basically the leather industry will continue to produce and therefore need raw material. To produce better leather, you need better raw material and you can get it in Europe. But if the outlook for orders is very gloomy, there is no hurry and no willingness to take unnecessary risks. However, if better goods can be bought at an attractive price, then they prefer them to other alternatives. Otherwise, as a supplier, the only option is to wait for better times, and that could drag on for a while.