Market Report 13.12.2024

What happened this week

Anyone who still needed proof of the difficulties in the leather industry was once again provided with sufficient facts last week. Of course, other geopolitical events took centre stage and overshadowed the banalities of day-to-day business. Nevertheless, this could not be used as evidence of the general calm on the market. Even though every year in December companies tend to be preoccupied with the break for the holidays and preparations for the year-end results, it is noticeable this year that the calm is much earlier and much more intense than usual. There is a general sense of worry everywhere and most conversations are not centred on the issue of raw material procurement, but rather on the concerns that many have for the coming year. A recovery in leather demand is not expected for the coming months, at least in Europe, and this means that the question of planning production is becoming more difficult from week to week. Further reductions are often hardly possible for purely technical reasons and many leather factories are reporting that with the current level of orders, no further raw materials actually need to be purchased and processed for some time. The current stocks are sufficient for the time being. This is simply not possible in many factories, which is why there is still a basic demand. However, it is also true that there are already some companies that have spoken out against further production of raw materials for the first few weeks of 2025. The solution that some believe they have found is the current demand for raw material for the collagen industry. Due to the reduced, regular production for the leather industry, which normally ensures the supply of this sector with the split, alternatives had to be found at short notice. As was the case a few years ago, the processors of splits for collagen are now acting as buyers for bovine hides. Some suppliers see this as a welcome opportunity to clear stocks of questionable quality and others to avoid the need for salting, storage and market risk. The only question that remains is how long this demand will be maintained and how quickly and to what extent the split raw material can be sourced from other regions. In any case, the current quantities that are being processed for these purposes in the short term are quite remarkable and take some quantities off the market. The real business with the leather industry was also extremely quiet this week. There were various bids from Asia, but these were very far below the current market prices. However, any negotiation on prices was doomed to failure and sales here were therefore almost negligible this week. Interest was once again focussed on the heavier goods in which, even in China today, the best calculation can be found in the total revenue for split and leather.