Market report | 30.12.2021

That’s it for the year 2021! Normally, now would be the time to take another look back and summarise the developments. But to be honest, that doesn’t make much sense this year, because when has there ever been so much talk and discussion about what happened in the past as there was this year? Actually, hopes are always replaced by experiences, and this year was no exception. The difference in 2021was probably essentially that positive surprises used to happen just as often as negative ones, but this year the negative surprises outweighed the positive ones. The greatest hope was certainly that the pandemic would end, and unfortunately it turns out that we are very little better off today than we were a year ago. Vaccination has achieved a lot, but it has not been able to eradicate the virus or render it harmless. If you take your mind off the pandemic for a moment, you can see that even during a pandemic the hide market does not behave much differently from what we are used to. A steady up and down. However, there have rarely been years when there was even less reaction to the facts than to the emotions. Similarly, we can hardly remember years in which such strong fundamental influences were evident and thus actually provided a fairly good basis for forecasting. In addition to the usual supply and demand data and the direct influences of the pandemic, the massive impact of international logistics problems and the length of

supply chains has probably often and for a long time not been sufficiently factored into the decisions. People are simply not used to the fact that it should not be possible to get the goods delivered from A to B according to their wishes and plans. The effects of this are so manifold that they have, in our opinion, also been extremely underestimated for the supply chain of the leather industry and become a significant amplifier of the basic factors. For the first quarter of 2022, the influences remain difficult to assess. The largest market, China, in addition to the disruption caused by the Chinese New Year and the possible impact of the Beijing Olympics, is still struggling with the possibility of the pandemic spreading again. The government’s rigorous measures would once again have a significant impact on economic life and thus also on supply chains. Logistics problems, rising energy costs, inflation and geopolitical conflicts could also have a very rapid and intense impact on market conditions. However, the world never stands still, only that in all likelihood much more short-termism and probably also simply more luck will be of decisive importance for business decisions still for a certain period of time. Business in the current week was almost exclusively limited to isolated sales to China. There was interest in higher-value goods and smaller sales were possible with smaller price concessions. However, the last week of the year is hardly representative.

The kill

As expected, the kill was low. This is likely to continue in the New Year. The big uncertainty now is the further development of the pandemic, which can have a quick and strong impact on demand, but also through possible production losses. Under normal and stable circumstance the kill in January should settle at a level about 20% below December.

What do we expect

We expect little activity for the first week of the New Year. In Europe there is little need for action until week 3/22 when the next negotiations for buying and selling will start. In Asia, we continue to expect individual random trades rather than a clear trend. We wish our readers a healthy, successful and happy 2022!