Today, Friday, also marks the end of the third quarter of 2022. Normally, this is also the start of the active phase of leather production, which is then only briefly interrupted by the holidays in the Christian world and later by the Chinese New Year holidays. The period of summer rest came to an end and the factories and productions then normally run at full capacity and as busy as possible. This year, a great deal of uncertainty is looming and the possibility that the next few months will see many regions of the world producing at a subdued level of activity is becoming a reality almost daily. In Europe, and especially in Germany, no way has yet been found to absorb the explosion in costs. For companies with lower added value and those that already have to pay and calculate the massively increased energy costs, more production means more loss. Almost all governments are currently discussing how this problem can be solved or at least mitigated, both for companies and ultimately also for consumers. However, the clock is ticking and so far no convincing decision has been made that can solve this problem. Where energy has become extremely expensive, inflation is also rising and the dreaded spirals are beginning to turn more and more. Even though it is certainly still possible to change things for the better, overall time is running out. In the hide market we saw one of the typical weeks after the fair in Milan. Everyone has returned, analysed the situation and is working through the information that has been given. The tanners, and these are mainly those who

operate in the higher ‘quality to price’ segment, have already routinely completed their planning and purchases for the next few weeks. There was some demand from Asia, which was certainly helped by the strong rise in the US dollar in the middle of the week. With good timing, quick and easily calculable deals were possible, but very quickly Asian customers used the currency situation to discuss prices and with the weakening of the US dollar towards the end of the week, the short window of opportunity for acceptable prices was quickly closed again. In Europe, those who may not have grabbed opportunities right away last week quickly realised that prices at the upper end of the current range were no longer achievable. The buyers who were still willing to discuss more deliveries this week were very rigid and insisted on their asking prices, which then tended to be at the lower end of the price ranges. Overall, we do not have the impression that the volume of business has been very substantial this week. The big difference between the markets in leather with higher contribution margins and on the other hand the mass market with very small contribution margins is getting bigger and bigger almost every day. Without significantly rising prices for leather in the middle and lower price segments, it is hardly possible to justify production their production for leather in at the moment.

The kill

The kill continued to rise slowly but nevertheless noticeably. We are still a long way from the seasonal weekly figures that can be expected in autumn, but that is probably still a bit early. If we stick to the textbook, the highest numbers should be expected from mid-October to the end of November. Sufficient feedlot cattle will then be available, but no one knows how the slaughter industry will behave and, above all, how the consumer will decide at the meat counter. For the time being, however, we can expect production to continue to rise and hide weights to increase.

What do we expect

It is difficult to come to any positive conclusions in the current environment. Currently, there are no signs of a rising demand for raw material in the coming months. The usual exceptions are specialities, which are always in short supply, sometimes more and sometimes a little less. Otherwise there is more than enough raw material available and in our latitudes we can expect a higher kill and thus a larger supply in the coming months. Until February, we usually move into a phase in which significantly more raw material is needed and demanded. As a rule, this leads to lower or more stable prices as long as the kill is high here and is often followed by a rising price trend in the first quarter, when the kill drops again significantly. Whether this year the increased supply quantities will be easily and problem-free absorbed by the market is very doubtful, at least now. What impact this will have on the price development in the coming weeks can be decided by each market participant.