If one is honest, there has actually been nothing really new to report about the hide market for weeks or perhaps months. The dynamics, the rapidly changing conditions that resulted from speculation, changes in demand, changes in supply or other events and then quickly influenced the opinions and actions of market participants are, at least for the moment, history. Depending on the quality and availability, every supplier has a certain basic load of business with his regular customers at the moment, which he can supply constantly – this leads to one person placing most of his goods and another person sitting on most of his goods. Much also depends on the extent to which one is prepared to accept the possible prices in the market and to put the outflow of goods before the highest possible price. The ranges have become wide and many try to hide what they done. Every company decides this differently for itself and then derives the corresponding views on the market situation from this. To be honest, this is also little news. Whatever the reasons, it is certain that the total supply of raw material has not been covered by the total demand for leather for a long time. The conclusion from this does not necessarily have to be that all producers and suppliers are thus also necessarily sitting on unsold stocks. Everyone has derived their own decision from the situation and the individual situation is correspondingly different. It is indisputable that there is probably less raw material waiting for customers in the warehouses, but that it is rather semi-finished goods that are increasingly burdening the market at the moment. For a variety of reasons, market participants have decided either to produce goods to utilise production capacity, or simply to be able keep them in stock for a longer period of time, to profit from split returns, or simply because they expected a stronger market recovery in the medium term and therefore did not consider stocks to be an extraordinary burden. In the meantime, the problem has developed that the demand for leather has

simply not developed homogeneously. Yes, there are areas and niches where the decline in orders is very small, but in total, at least for Europe, one can assume that production has fallen by a clear double-digit percentage, but at the same time leather demand has even fallen disproportionately. If you leave out the niches, it doesn’t really matter who you talk to, but basically the figures are at least 20% that are currently being talked about. Of course, the timing is also very unfavourable. We are now at the end of May and this is certainly the beginning of the quieter summer season. The last people who are still clinging to a certain optimism are talking about the fact that, in the wake of consumer restraint, stocks in the supply chain are being reduced too much now and that a strong recovery is therefore expected from September onwards. Everyone may decide for themselves how likely they think this is, but from today’s perspective it felt more like whistling in the dark forest. Business this week was similar to previous weeks. There is always someone looking for very specific hides and where the opportunity arises to sell and also deliver goods. The low slaughter levels are still not building up extreme pressure, but some customers are already preparing us for further production cuts in the coming weeks and months. Whatever colleagues decide, we have decided to accept reductions in individual categories in order to ensure delivery to reliable customers in the coming weeks.

The kill

The kill remains low. Next week there is another public holiday on Monday and therefore production is  curtailed again. Both from the political side and from general demand, the slaughter industry continues to face an icy wind. This is especially true for pork, but overall it is not much better for beef. Capacity utilisation and costing do not fit and this has led to the first decisions to close capacities.

What do we expect

How strong the further pressure on our market will be will probably depend on the kill. Despite all the difficulties, a certain basic supply remains essential for the leather industry. But it is of little help if the kill is 20% lower but production 40%. And these are the figures that – if one is honest – will probably have to be seriously grappled with for the coming weeks and months. The only unknown, and therefore also hope, remains a sudden recovery in demand from Asia, which could then provide support over the summer. However, it gives the impression that they are also fighting for their contracts and are well aware of their opportunities over the summer.