It is not unusual for things to calm down at the end of the year, but this year it is much more pronounced. In Europe, it is extremely difficult to get reliable information about the planned production of the leather industry in the first quarter of the New Year. It seems that almost all the energy in the tanneries is focused on discussing the current stock levels. Many companies are saying that they are very worried about the accumulated stocks and the dampened business outlook at the same time. Perhaps they have relied on the principle of hope for too long and are being forced to make decisions now that the planning discussion is about the next business year. This does very little to help sales of raw materials. In any case, it does not seem at the moment that the leather factories in Europe will start the New Year with full production. This leaves most hopes focused on what is happening in Asia. In China in particular, the restrictions and limitations associated with the Corona policy are being eased at a breathtaking pace – companies are of course delighted to see this, but at the same time report that this decision is coming too late for business in the consumer goods industry. Both the global Christmas business and the orders for the consumer market in China are lost for the current season and cannot be made up for, so it is of little help in the short term and many companies are sticking to their decision to close production in the short term and only reopen after the Chinese New Year. At the same time, however, this means that we might very quickly hear

much more positive opinions again for the second half of 2023, although this must always be subject to the further development of the infections in China. In the short term, the outlook remains very difficult and rather negative, and we will have to be patient to see whether the end of the downturn will really be reached in the course of 2023. Looking at the business and the sale of hides and skins, we can look back on another rather quiet week. The plans and deals for the start into 2023 have not yet been finalised and we will probably have to wait at least another week to get a clear picture of the situation in January. Asia was also very quiet this week. In view of the considerable changes in China, which of course also have an impact on the entire region, this could not come as a surprise. One waits to see how things develop. Business was again very sporadic this week. There are always individual deals, whereby this week it remained the case that customers in Asia want to make experiments with higher-quality articles. All in the hope that this will lead to higher added value. There was relatively little change in the market situation, both in terms of prices and currency, and if corrections were necessary, they were generally directed moderately downwards.

The kill

The kill is declining very significantly. Supermarkets seem to have covered their biggest needs for the holidays for now and the slaughter wave is thus coming to an end. We are already hearing that some slaughterhouses are thinking about possibly closing for a few days or completely over the holiday weeks to save costs. If one is realistic, then this must be seen as a thoroughly realistic scenario and we are therefore assuming an overall decreasing and lower volume of hides for the remaining weeks of the current year.

What do we expect

Next week the open repetitive contracts with the European leather industry should be finalised and this will then give a clear view of the situation to be expected at the beginning of the new year. We are not particularly optimistic for Europe. We do not believe that customers in Asia will immediately increase their purchases because of the changed situation. All experience suggests that they will wait and see how the situation and the political decisions develop. Looking at the calendar, however, it would not be surprising if activity in Asia were to increase again in the coming weeks under the same conditions, as people there have to start to think about the supply of raw materials for the period after the Chinese New Year. However, we do not expect any significant price changes until the end of the year without this allowing a conclusion to be drawn about the volume of business.