Market Report 14.06.2024

What happened this week

We maintain that it is extremely difficult for us to assess the market situation at the moment. It is easy for us to collect the daily facts and the weekly business, but whether this is actually representative of the situation on the market as a whole remains very difficult to judge. Somehow, month after month, we manage to sell current production and avoid the risk of growing stocks despite all the difficulties and resistance. This is usually a not too bad starting position before the summer and the company holidays. If there were any really understandable reason for optimism at the moment, then it would be better to take the opportunity to use the rather declining demand during the summer months to build up new stocks again, which could then possibly be sold profitably as activity increases in the final quarter. Everyone may have their own assessment of these speculative opportunities, but in our rational assessment of the situation, the relationship between risk and chance is not currently such that we can really bet on a sustained trend reversal. It is of course true that many of the main categories are once again not very far from the historic low prices. It is also true that the way down can no longer be very far – at least with a few exceptions. However, one factor will change relatively little. There needs to be a fundamental improvement in the demand for leather and therefore an improved demand for raw materials. Also there is to suggest that there are still quite extensive stocks of semi-finished goods, many people who currently own goods may not be against rising prices, but it is also true that a lot of people would then initially take the opportunity to sell and release stocks into the market, which would contradict a significant, rapid price increase. A crucial point in this whole theory is also the question of how long the financing cover and quality risks will allow those to wait. All in all, more questions than answers. This week’s business was once again similar to many weeks before. It’s not zero and if one is ready to sell, there are always opportunities to do so. In terms of prices, the spread between the various markets and opportunities is widening. You have to do the maths very carefully to arrive at anything approaching a weighted average of prices. In the end, everything still depends on whether you want to place your entire production or whether you prefer to keep goods for which the asking price is not available and wait for better times. This week, too, market activity was mainly centred in Asia and, fortunately, interest covered almost the entire range. With certain price concessions, it was possible to conclude a satisfactory volume for the coming weeks.