Market Report 12.07.2024

What happened this week

The start of the holiday season is slowly becoming apparent. The number of e-mails with an out-of-office note or a reference to the holiday interruption in the coming weeks is increasing daily. Nothing about this is really surprising or would have any impact beyond the normal annual interruptions. Besides, we have all known for a long time when the holidays will interrupt leather production in Europe for a certain period of time. This would all be far less significant if the conditions we face this year before the holidays were too different from normal. Normally, prices are often under pressure before the holidays, as purchases in Europe decline, deliveries are interrupted and only sales and outflows overseas remain. However, there have also been even years when tanners actively wanted to supply their production for the first few weeks after the holidays and therefore the sales pressure before the holidays was not too high. Not this year. In the end, it all depends on the demand for leather, which determines how much raw material is needed and how busy the leather factories are. For some time now, people have been wondering how the reduced capacity utilisation in Europe could be reconciled with the overall stable or, in some cases, even increased supply of raw materials. There have been many theories about this. For the lower-priced goods – primarily cows – there has always been the possibility of selling them to Asia for months now, if one was prepared to accept the weekly market price. For other hide groups, the situation is less clear and unambiguous, which is why there were a variety of views on what happened to the hides that could not find a home in the European drums in any case. It is now increasingly clear that these hides have been parked between the various production stages and is slowly but surely becoming an ever greater burden. From salted to finished leather, larger stocks can be found everywhere. This is not a problem as long as the owner sees no need to sell these goods, then they are not available on the market. In the meantime, however, there are increasing signs that the desire to sell the goods is directly linked to a dwindling optimism that the demand for leather will be increasing and thus the stocks could serve. In the end, it is an attempt to square the circle. This week’s sales were clearly characterised by this overall market situation. In Europe, we could no longer see any buying interest, as tanners are obviously preoccupied with other problems than the fear of possibly not having enough raw material available. Overseas, the market is the same as we are used to. There are always buyers, but the situation has already been recognised there too, or they are also in the same situation. It is relatively easy to take advantage of the opportunity and further reduce the price of your raw material stocks. As a result, there were only very, very low bids, and this week we decided to skip them. For some of the main categories, we have now returned to price expectations that would make the collection and preparation of the hides no longer commercially viable. In the end, apart from a few smaller deals for niche manufacturers, there are no sales to report.