Market Report 08.09.2023

What happened this week

After the trip and the visit to the trade fair in Shanghai, the first part of the week was occupied on the one hand with tidying up the matters that had been left behind during the trip and on the other hand, of course, with observing how the interest of the customers in China would develop further after the trade fair this week. It has to be mentioned again very clearly that of course it was only about a very specific part of the offer lists. This was exclusively about cowhides, which were the focus of interest during the week of the fair. In fact, there were still some stragglers this week who tried to get hold of a few containers either at lower prices or at most at the prices last concluded. So, if one was still willing and able to make additional deals for a delivery time until the end of October, there were still isolated opportunities to do so. The good news at the moment is that this part of the market has found stability and that is probably assured for a few more weeks. The situation is quite different for male hides. Here, the occasional chance business overseas is not enough – the standard customers in Europe are currently analysing their situation very carefully and it is not particularly promising. On all fronts there are currently reports of declining purchases on the part of leather customers and, in addition, there are public reports that leather buyers in both the automotive and shoe sectors are looking ahead to the next season with great concern. Particularly in the footwear sector, inventories are still far too high, and this extends into the high-end and high-priced segment. The retail trade, at least in Central Europe, has a glaring lack of space and money and the discussions about the right strategy to reduce the high stock levels are not ending. In the end, there is only one measure left in the retail trade and that is discounts and special offers in the hope that this will encourage consumers to buy. Beautiful autumn weather and a cold winter could be a further stimulus. But as we all know, we have no influence on that. There is still no good news from the furniture sector and if you study the TV commercials and newspaper inserts today, you might be enthusiastic as a potential buyer, but with regard to the business situation at leather factories, retailers and furniture manufacturers, you have to think twice. Discounts of 40 and more percent on the entire range are not uncommon. In the case of female hides, there was plenty to sell this week, and even low grades found their home. For male hides, we will have to wait until the fair in Milan to get a clear picture of how not only prices but also quantities and the needs of the leather industry will develop. At the moment, no one is changing prices, but whether this can continue into the autumn will most probably be seen at the fair in Milan.

The kill

As much as other regions in Europe are suffering from extreme weather, the weather here is all the nicer. Blue skies, pleasant, relatively warm temperatures and never-ending sunshine are giving us a clear extension of the summer. It doesn’t help or hurt slaughtering, and only a slight revival can be felt due to those returning from holiday. Meat business, both domestic and export, on the other hand, remains very difficult and frankly rather poor. Nevertheless, we are now entering the phase in which slaughtering usually starts to rise slowly and the cattle that are ready for slaughter will then also be slaughtered in the next few months.

What do we expect

We find it very difficult to imagine that there will be big changes in prices in the next week. The female market has found a stable base and the male market is now waiting for the fair in Milan, because obviously some producers and suppliers still need more evidence for the long list of difficulties we are facing in the leather industry in Europe. Price levels are honestly the least of the problems at the moment. While rising demand prices would certainly dampen demand considerably, the central question is whether falling prices would actually solve the problem and stimulate demand. We have rather reasonable doubts about this.