It remains the case that at the moment, things are rather rippling along than developing seriously in one direction or the other. The period after the holidays until the end of September has been characterised almost always by little movement and activity in many years in the past, and we feel the same this year. In 2022, this is perhaps even more pronounced because companies simply have too little secure basis for decision-making and, in addition, the risks and problems have first to be carefully analysed and evaluated. At least in Europe, one has the impression that one had hoped that during the holiday season many things would change for the better. This is not the case, at least in Western Europe, and one has the impression that this also applies at least to China. In addition to political instability, China’s handling of the pandemic and, in Europe, uncertainty about energy prices and also inflation remain so dominant that the necessary confidence in developments in the coming months do simply not emerge. This inevitably means that decisions will be delayed again. This also applies to the hide market. Of course, productions have to be supplied and filled and this certainly happens within the framework of what is absolutely necessary. This reduces business in Europe to the unavoidable minimum quantity. Only occasional random business was added this week, which can hardly be described as representative of the market situation. Perceptions and market opinions already diverged widely in the last few weeks. On the one hand, there were those who wanted to see the low kill for months now as a reference and basis for decisions on price development.

On the other hand, there were those who were more concerned with the much worse outlook for the overall economic situation. This led to very widely diverging price expectations and equally correspondingly diverging sales strategies. However, this week we got the impression that concerns about the coming weeks and months have increased noticeably overall. The outlook, especially in the furniture sector and to some extent also for the coming shoe season, has become noticeably gloomier. Sentiment in the automotive and luxury goods sectors is still much better, but between the lines there is more concern in these sectors as well. Sales this week were again mostly confined to the renewal of regular programmes in Europe. This is still almost sufficient to distribute the low number. At least for us, interest from Asia was very quiet this week. Towards the end of the week, there were more and more reports of sales from various origins, some of which were nevertheless significantly below the last reported prices. This was mainly true for female goods and for names that were said in the last weeks to have accumulated some stocks over the summer and perhaps because of the longer storage period decided to sell these goods to Asia now rather than hoping for better times in Europe or elsewhere. The price range that one hears in the market show a wider range than ever.

The kill

This week you could already see the increase in production in the meat industry. Slaughter numbers everywhere in Germany are now noticeably upwards and if there were not continued labour problems around, we would assume that the numbers would already be even higher. All forecasts now point to further increases in autumn, although the really significant rise will probably only occur with colder weather. Overall, however, we must expect significantly higher volumes for the rest of the year.

What do we expect

Furthermore, we can see no reason why one should see more activity in the coming weeks. Circumstances have not changed fundamentally – at least so far – and we cannot see a sustained improvement in leather demand. This inevitably means that supply will probably become more important in the coming weeks and months. The further development of the market will thus depend on whether the increasing supply of hides can be absorbed by the market and the demand for leather. We are still on the sceptical side and it would therefore be desirable if the increase in the kill could take a little longer. A precise overview of leather demand will probably not be available until mid-October, so it would probably be better if there were no great pressure from supply until then.