This week, too, there was no major breakthrough and customer activity remained manageable. Frankly, of course, there is also very little impetus that could lead to a significant revival in demand. Rather the opposite is the case, with more and more companies complaining about falling sales and rising stocks at the same time. Visible for all to see in large corporations that have to disclose these problems to their investors and the public at large. Maybe not everywhere, but in many cases a really dangerous situation is developing in Europe. Rising costs, rising stocks and at the same time falling revenues are now a relatively dangerous development. Fortunately, a large part of the European leather industry produces products with a high added value, so that so far the situation has not really left any deep marks, neither on the leather nor on the raw material market. This week, business with Asia picked up somewhat. This is probably not so much due to deep insights that came out of the Communist Party Congress in China, but rather due to the tanneries‘ need to adjust their supply to the Chinese New Year holidays. The break in China is, after all, much earlier this year and with the extended shipping times, good coordination is needed to ensure that both shipping space and transport times can be presented in such a way that the goods arrive on time accordingly. Of course, this is especially true for deliveries that are supposed to arrive in China before the interruption. In the meantime, there has been some talk about the fact that the order situation at the Chinese tanneries is increasing the risk of prolonged production closures. Similar fears are already being voiced in some places in Europe when it comes to the Christmas season. Here, it is not only a

question of the order situation, but the energy demand will also play a weighty role in these decisions. In the meantime, the energy supply and the energy costs for the coming months have become important decision-making factors for production management in Europe. The trade fair in Bangkok also confirmed the general, subdued mood. People are happy to meet, they exchange ideas, they discuss the changes and problems, but not one square foot of leather is sold more because of that. Only the confirmation that production is shifting and that other countries are benefiting from the decline in China could be taken as a positive result. Business-wise, the week was a little better than the previous two, but tough probably describes the negotiations best. If you wanted to realise sales outside of Europe, you had to make friends with the buyers‘ ideas, and that meant lower prices for getting to the deal. The main interest was in better quality hides, which would not only offer better assortments but also a good split revenue.

The kill

The kill continues to rise, but the curve is flattening out considerably. Fortunately, hide weights are also increasing. Live cattle prices remain at a relatively high level. However, this does not reflect the current situation in food retailing. Sales of prime cuts are not sufficient at the moment, neither in volume nor in prices, to justify the current price level. What the outcome will be, it will show in the coming weeks. Either live cattle prices will have to fall, or meat prices will have to rise accordingly. We expect slaughter numbers to continue to rise in the coming weeks.

What do we expect

Slowly, we have to start looking at purchasing for the month of November. From our point of view, this will be a very difficult undertaking. In purchasing, the situation is relatively clear and the slaughterhouses will do everything they can to avoid a drop in revenues from by-products. How and to what extent the leather industry will position itself in the price negotiations is absolutely not foreseeable today. Nevertheless, we believe that the headwinds to be expected will certainly increase.