Market report 14.10.2022

RE070122a

Osterhorn, Friday, 14.10.2022
The US $ in EURO 0,9740

What happened this week

This week, too, little has changed in the overall picture of the market, at least for us. For the current delivery weeks, the sales have all been made and thus the only slowly rising volumes are largely completely covered. So far so good, and those who are happy with this may have a different view of things than those who are looking further ahead. Basically, there is agreement that the top-level sector will still have sufficient orders and demand to absorb the accruing quantities of high-grade hides, at least for the next few months. As everyone knows, this is only a small part of the total quantity and only concerns suppliers and tanneries that either produce the corresponding raw material or are part of the supply chain to the luxury goods industry. The demand from the automotive sector is also described as normal, which also leads to the fact that confidence is also spread for the raw material that goes into this sector in Europe. However, if one looks realistically at the sector as a whole, it will not escape the attentive observer that this is by no means true for all companies in the same way. If we look at all the major producers together, we estimate that production is noticeably lower than it has been in the past at this time of year. Here, as in all other sectors, there is a big difference between demand and production for different quality levels. For the rest of the leather market in Europe, the confidence that came out of the summer holidays is slowly but steadily giving way to fears. The problems that are burdening everyone in Europe – energy supply and energy costs in combination with other strongly rising costs – make adequate planning and calculations almost impossible. The whole thing mixed with declining consumption makes for a very problematic cocktail. In Asia, the holiday lull slowly but surely came to an end. This meant that there

was interest here and there and the odd sale was possible, but the volume had nothing to do with what one is used to at this time of year. Sporadic and coincidental probably describes the situation better – it can hardly be explained in any other way than that Chinese customers in particular want to wait for the party congress to get a better idea of their government’s strategy for the next few years. In the past, such a market situation would normally have led to considerable dynamism in the hide market. These times are over for the moment and therefore all the concerns and hopes are almost not reflected at all in the prices at the moment. However, one may have some concerns about the quality of the officially published prices. In some categories, one can certainly ask oneself to what extent the published prices are actually real or whether the quantity they represent can be considered representative. In the end, however, it hardly really matters for market activity and for most it is more a question of whether they are able and willing to fully place the production volumes that arise. In terms of sales this week, demand was again concentrated on speciality items, low grades and, surprisingly, male goods from Asia. However, the price expectations of buyers vor bulls there were so low that a serious negotiation on a possible compromise was not possible. However, if one expects prices to fall significantly in the next few months, then larger deals would have been quite possible, which in itself can thus be a positive sign. However, it also shows that male goods that do not qualify for automotive leather production remain far overvalued in the international market.


The kill

The kill continues to increase as expected. The increases are slow, but steady from week to week. We have not yet reached the numbers one would expect at this time of year. However, if the trend remains intact, then we can expect significantly higher production figures by the end of the month. It is highly likely that this will continue until a few weeks before Christmas.

What do we expect

We do not expect any major changes next week either. As has been the case for months, both demand and supply lack the decisive pulse that could give prices a major push. The pressure on neither side is yet great enough to make anyone resort to sensitive measures. However, general conditions are really not such that one could assume it would stay that way. In addition to the question of how far supply and demand are really balanced, we also have concerns about financing. It varies from country to country and from region to region, but the massively increased costs and burden with possibly falling sales do not make for a good basis for liquidity. If this problem were to become real, it would add to all the other difficulties.


Type Weight range Avg. green weight Salted weight Avg. weight salted Price per kg
green weight
Trend
Ox | Heifers 15/24,5 kg 22,0/23,5 kg 13/22 kg 20/21 kg € 1,15 Stable

25/29,5 kg 27,5/28,5 kg 22/27 kg 25/26 kg € 0,80 Stable
Dairy cows 15/24,5 kg 22,5/23,5 kg 13/22 kg 20/21 kg € 0,70 Weakish

25/29,5 kg 27,5/28,5 kg 22/27 kg 25/26 kg € 0,60 Weakish

30/+ kg 33,5/35,5 kg 27/+ kg 29/31 kg € 0,55 Weakish
Bulls 25/29,5 kg 27,5/28,5 kg 22/27 kg 25/26 kg € 1,10 Weak

30/39,5 kg 36,0/37,0 kg 24/34 kg 31/33 kg € 1,20 Weakish

40/+ kg 45,0/48,0 kg 34/+ kg 38/40 kg € 1,15 Weakish
Thirds 15/+ kg 25,0/27,5 kg 13/+ kg 24/26 kg € 0,45 Stable
Thirds bulls 30/+ kg 38,0/40,0 kg 24/+ kg 33/36 kg € 0,55 Stable