Market report 03.06.2022
Osterhorn, Friday, 03.06.2022
The US $ in EURO 1,0720
What happened this week
The summer vacations in Europe are now approaching at an accelerated pace. May has come to an end and June has started this week. This leaves very little time to prepare for the production interruptions in the European leather industry. This means that greater hopes and activities are now being placed on the Asian market again, as it seems relatively unlikely that additional and excessive volumes can be sold in Europe in the coming months. This means that without overseas shipments in July and August, many suppliers would then actually only have the alternative of storing the goods and hoping for improved business after the summer vacations. No one has the crystal ball today to predict what the world will look like in three months, and therefore those looking for security must find the alternatives today. Since Wednesday, the lockdown in Shanghai has almost completely ended, life is starting to return to normal and many are now counting on strong government support to quickly revive production and consumer demand in China. Opinions differ widely as to its potential success. What is clear, however, is that while buyers in Asia are complaining of reduced leather order books on the one hand, they also recognize that for many hides the price correction phase is either already over, or will come to an end for the time being in the short term. Of course, this is not true for all origins and product groups, but it is certainly true for many. However, to deduce from this a trend reversal and improvement of the business situation for the coming months is certainly still far too early. With regard to the demand for leather, no improvement can be seen at present, and we will probably have to wait until autumn to gain any conclusive insights into how the material leather will continue to develop. At the moment, the leather industry first has to find a stable calculation basis for the next season, which first has to be determined from the reduced raw material prices and
the strongly increased costs. Since buyers for leather will certainly not face this issue at this point, it is likely to be a very difficult topic for the leather industry to deal with now. First of all, however, it is probably not wrong to do some hedging of the current price levels, which are attractive in many cases. That is certainly what many have taken with them as experience from 2020. This week, at least in the case of female goods, showed the movement that had actually been expected for some time. In both Europe and China, the first sellers faced the realities and prices adjusted relatively quickly to international levels. However, the range of prices was relatively wide, and illustrated the individual situation of each of the different suppliers. For the male product, which is sold almost exclusively on the European market, the situation remains extremely complicated. On the one hand, the producers still have to cover their production until the summer vacations, on the other hand, it is clear to everyone that the European male product continues to be too expensive in international comparison and thus, of course, at the same time limits the competitiveness of the tanners who have focused their production on this raw material. Here, the price difference that one has to notice in the meantime has grown up to 20% between the highs and the lows. Also a condition that can never last in the long term. The business which this week was much better in terms of volume than in previous weeks was the result of the adjusted price demands. From our point of view the volume was concentrated on the female merchandise the larger new deals for the male merchandise are still looking for their price compromise for bigger volumes.