The last weeks of production for 2022 are dawning. With just over four weeks left, tanneries are still accepting raw material and then it will probably be at least a two week break in most cases. The weather has changed in the last few days and temperatures have dropped significantly so that conditions are now normal for the time of year. Almost at the same time, the kill has increased and this will certainly change planning and create new challenges. In Europe, the additional volumes are very unlikely to be absorbed and so eyes are once again turning more to Asia. Here, the weaker USD makes calculations more complicated and there remains only some hope that the easing of sea freight will make calculations somewhat easier. However, business in Asia has not yet become much more active and the bids are at best at the same level as they have been for several weeks, which in effect means a reduction in revenues in EURO of at least 6% due to the changed currency situation. One cannot really believe in a recovery of prices in the next few weeks, because demand would have to increase significantly for that to happen. This is not to be expected without a wave of speculation from Asia, as the European tanners are unlikely to return to the market to any great extent before January and will certainly not have an open ear for price increases even then. For that to happen, the

logjam in the supply chain would first have to clear, energy and production costs would have to fall again, and a much more positive picture would have to develop with regard to consumer spending. This will all happen one day , but for the next few months the focus will probably still be on solving problems. Under these conditions, it is difficult to understand the again very tough discussions about the appropriate reduction of prices at the slaughterhouses. A stable and adjusted level must actually be in everyone’s interest and market risk should better be taken out of the system. European hides always find their market if they can be offered at adequate market prices. Sales this week were again rather sporadic. In Europe, most of the deals are done until next year already. Interest is coming from Asia, but bids are low and the USD is weak, so prices only allowed very special types to close at all.  It is also likely that the rising Corona cases in China are again weighing on sentiment.  In sum, prices were under pressure this week and volumes sold were below normal.

The kill

The kill increased in line with expectations. In the middle of the week, a cold wave reached the north and immediately the kill increased significantly. Weights also increased for many hide types, which is obviously the result of delayed slaughter which we have seen due to the mild temperatures so far. We now expect productions at similar, or possibly even still higher levels in the coming weeks.

What do we expect

As mentioned earlier, purchasing negotiations are dragging on. Prices should and must be lowered significantly to regain international market share and reduce market risks for the first quarter of 2023. Of course, the slaughterhouses see it completely different. A very difficult situation when the kill is increasing and at the same time the Christmas interruptions are waiting for us followed by the Chines New Year holidays and so the outlook for January does not suggest a more positive market development either. The hopes are no on the Black Friday sales followed by the Xmas shopping. We still see a need for further correction in prices.