Market report 27.01.2023

Another week is coming to an end and the markets continue to lack the necessary dynamism and activity. In China, the New Year is being used for an extended period of rest and recovery, probably also to readjust to the new, free conditions and living circumstances after three years of complete movement control. We know that it is relatively unlikely that they will return to the old restrictive pandemic policy, but whether and what has possibly changed in the minds of consumers in the last few years is not known at the moment. It is also possible that many things will change in Chinese society and economy. In our business, we at least come to terms with the idea that the demand for leather as a material will continue to decrease in various segments and that this will not only lead to shifts in demand, but also to the abolition of many certainties that have been valid for decades. Europe, in particular, seems to be reordering many things. Less demand for leather, less slaughtering and thus less production inevitably leads to shifts not only in the leather sector, but also in other fields. This has been quite evident for some time in the by-products of leather production. Raw materials for gelatine and collagen production are no longer assured in quantity and regular availability for the industries. Low hide prices therefore make it possible to divert according to demand and preferences, and a similar scenario has therefore formed as we already saw at the height of the corona pandemic in the summer of 2020. Fewer splits for leather production, the use of

The kill

The kill continues to drag on this week. Sufficient stocks in the cold stores, below average demand in the supermarkets, lower supply of live cattle all do not serve to stimulate slaughtering and the meat business. Here, too, there is a relatively high probability that nothing fundamental will change in the next few weeks.

What do we expect

Business will certainly pick up in the next two weeks, if only because the next deals for the current programmes in Europe are now coming up. As mentioned earlier, opinions are extremely divided, with suppliers pointing to the low kill and demand to the poor leather business. Somehow, however, production has to be supplied and probably the delas will be for a period as short as possible and as close as possible to the last agreed prices. For a big change one can not expect that either side would have enough strength and arguments to achieve it. However, there is no doubt that in the long run everything stands and falls with the demand for leather in the various sectors.