Market Report 02.08.2024

What happened this week

With the end of this week, the last leather factories are now saying goodbye to their summer holidays. Many are closing for three and some for four weeks, which means that they will not return until the end of August. In terms of activity on the hide market, this means that business in Europe will come to a virtual, final standstill for the next weeks. Occasionally, some customers north of the Alps will resume production in mid-August. In the meantime, slaughtering will of course continue and raw material will continue to arrive to processing. Part of the production will certainly flow into various interim solutions, but it is assumed that this will not be the case for the entire available quantity. This leaves the fundamental problem that there is currently no home for all the goods on the market. At least not at the prices that are currently expected by the slaughter industry for many hide types. It cannot be repeated often enough, but there will always be enough market for European raw materials if the price level is in line with the conditions on the world markets. The defence of lost positions seem under these preconditions relatively pointless. In addition the $1 million question remains: How much unsold goods that are still looking for leather production are still on the market at the moment? Only those who own the goods have to know, and perhaps there really are no more. There is a very high probability that we will receive the answers to this question until the end of September. The markets that are still available at the moment are therefore in the regions that do not have a classic summer break. We are currently seeing little interest from the Far East, and this will also be due to the fact that there are clearly not enough leather orders on the one hand, but also the realisation and knowledge that competitors from Europe are not currently active in the raw material markets. The Asians are also seeing global prices continue to fall and are not yet feeling any real pressure to secure raw materials. On the other hand, it also has to do with the fact that many suppliers, for their part, are not yet prepared to accept the price ideas, which are significantly lower than the sellers‘ expectations. Here, too, the question arises as to whether lower prices would actually trigger a sustained increase in demand. A certain amount of interest can still be seen from the Middle East, but here too the asking prices and buyers‘ expectations are still well below the sellers‘ expectations. As a result, business this week remained limited to very few, isolated, random transactions and we are miles away from any real market activity. Changing the official prices seems to make little sense at the moment because, as already mentioned, we hardly think that this would seriously affect demand.