This week, too, business has tended to drag along without any new impetus or increasing momentum in activity anywhere. It also does not change the fact that all the facts and opinions have already been exchanged to a sufficient extent over the last few months and things are simply continuing to develop as they have been apparent for some time. The leather industry is producing what it needs for its finished leather orders and in addition there are only the productions of traders for semi-finished goods, who have benefited in recent months from the still very high prices for top grades and the good revenues for lime splits. In addition to the seasonal decline in demand, which comes as no surprise to anyone who has been working in our sector for a while, optimism that leather demand might actually pick up in the coming months for some other reason is slowly fading. It is just that growing inventories have been piled up at all levels of the supply chain for quite some time, and for a long time they were not seen as a threat either in terms of valuation or quantity. This seems to be changing, at least for the moment, and the confidence that these quantities would dissipate in the short term through increasing demand seems to be evaporating. The last trump card for the optimists therefore remains the decline in the kill, which are expected not only here but also in other regions of the world over the next few months. This may trigger possibly one or the other problem in isolated sectors, but overall the supply of raw material remains higher than the demand for leather. After this situation had no effect on pricing in Europe in the past months, however, the

impression is slowly growing that it is no longer possible to ignore the realities of the market. The fact that no support can be expected for the near future in terms of prices and sales opportunities in Asia, even after the end of the lockdowns in China, certainly plays a very important role here. If one were to add one more thing to the problems in Europe, it would be the uncertain water situation in Italy, which, if negative, could limit beamhouse production additionally there in the near future. European suppliers have lost a lot of competitiveness and market share internationally due to the weak dollar and the price development of alternative goods. The price difference has simply forced many European hides out of the market in Asia. Without a corresponding adjustment, it is already impossible to regain market share, and this does not take into account that overall demand in Asia is also no longer at the levels of the past. We are in the middle of the month, and that is why there is little price negotiation. The prices for the current contracts have all been made and are now up for renewal again in May. There are always individual transactions, but their volume was again very small this week and the price negotiations very complicated. The tendency is that cheap goods are more likely to sell and better than more expensive and better ones.  The lower split revenue in Asia no longer supports the heavier skin types. If something can be sold, it has to be priced extremely attractively, which at the moment fits into our price structure only very sporadically.

The kill

The kill has dropped again over the last few weeks. The beef business is apparently similarly unsatisfactory as the leather business. Temperatures are starting to rise and the cattle will now slowly return to the pastures. There is usually not much impetus for additional beef consumption in Europe at this time of year and therefore we do not expect any significant change in slaughter volumes for the next weeks and months.

What do we expect

It seems that European suppliers are starting to think about how they will deal with pricing in the coming months. Furthermore, there are two factions, one that believes that a lower kill and holding back goods will support prices accordingly and, on the other hand, those who are thinking more and more every day about what to do and how prices must be lowered so that sales of current production are continuously secured. The outcome is uncertain, but it remains certain that the majority of central European hides are not competitive on the international market at the moment.