Market Report 15.12.2023

What happened this week

This week will probably be the last in 2023 to show any kind of normal commercial activity in Europe. Next week will probably be more about preparing for the Christmas break, doing administrative work and spreading good wishes for the festive season and the New Year. Discussions are increasingly centred on the question of how the situation in and around leather will continue next year. The problems and discussions are currently being conducted on so many different levels that everyone can pick out what is currently closest to their heart. Whether it is the difficulties surrounding the supply chain, the problems of how and to what extent the use of leather will continue in the various sectors, or the very simple business issues relating to employees, production, strategies or even developments that are currently occupying entrepreneurs. For the raw material suppliers, the focus is of course initially on meat production and then immediately on the demand situation. While meat production is still relatively easy to predict, analysing demand from the leather industry remains difficult. It is likely that the situation in the European automotive and furniture industry will remain relatively difficult and tense in the first few months of next year. This may be at least partially offset by a more positive trend in Asia. In the footwear industry, there are increasing rumours that, after a prolonged phase of contraction and destocking, the bottom may now have been reached and there could be a moderate countermovement. For Europe, the early onset of winter was of course very helpful here. For many raw material suppliers, the focus is always on price and therefore the question of whether there is already room for a significant increase in leather prices and therefore a reversal of the trend in raw material prices. Prices always fluctuate, but for various reasons we do not yet see any realistic prospect of a sustained trend reversal and a significant improvement in raw material prices. Fortunately, customers from Asia returned to the market this week. The focus remained on the lower-priced goods with largely stable prices. The significant weakening of the US dollar at the end of the week was of course a negative factor for European suppliers. In Europe, negotiations and talks remain extremely difficult. There are still a few deals to cover the first few weeks of the new year, but the price discussions are extremely complicated. European customers are firmly convinced that their problems must be solved first and foremost by lower raw material prices. There are legitimate reasons for this for some hide types, but to deduce a general price trend from this is undoubtedly exaggerated. All in all, we would therefore say that prices are officially almost unchanged this week, but that overall prices across all categories are slightly lower.

The kill

Kills remain at the higher level expected for the weeks leading up to Christmas. Temperatures remain low and the final plans for the rest of the year are slowly being made. Kills should still be relatively normal next week and then be reduced accordingly in the last week of the year due to the holidays.

What do we expect

We don’t know what could actually be the trigger for strong price changes now. Traditionally, business is now slowly going to sleep and over the next two weeks we will probably only have to rely on the same customers who are convinced that the Christmas period is also the time for presents and therefore great buying opportunities. Changes in the currency situation will probably have a greater impact on the markets over the next few weeks than fundamental market activity. This means that the focus in the coming weeks will be more on business in Asia and less on the tanners in Europe, many of whom are extending their Christmas break anyway.