Market Report 22.11.2024

What happened this week

All in all, it was a week that saw at least a little more activity. After so many weeks of relative calm, a little activity was noticeable. It seems that the buyers to Asia in particular are starting to plan their production after their New Year. Even a tanner cannot run his factory without raw materials – no matter how bad the leather business is, production has to be filled with something or the decision has to be made to close it. However, it is clear that there is no really clear and convincing purchasing strategy at the moment. Buyers are still trying to secure raw materials at prices well below the market level, especially for standard items, and at the moment there doesn’t seem to be enough pressure on them to abandon their ideas. At least in our case, the gaps between our asking prices and the customers‘ expectations could only be closed for speciality items. Of course, the current strengthening of the US dollar helps with the calculations. However, customers in Asia are also aware of this and adjust their bids accordingly. This made it very difficult to conclude successful sales and many negotiations ended without success. The situation was a little better for the speciality items, which are mainly heavy and male goods. Those who either already produce such leather articles or are trying to develop them had to make it with very small discounts on the asking prices in the end. The difficulties in the negotiations were repeatedly attributed to the fall in split prices in China. However, if the split price and not the price of leather is the decisive factor for the purchase of raw materials, then in our view there is something fundamentally wrong with the leather producer’s concept. All in all, we are left somewhat perplexed as to the actual order situation and capacity situation of the leather factories in China. Most sources report that the smaller factories have hardly any orders, that the importers and traders also have little business and that only the large, industrial factories are really busy. However, whether they are only producing to fill capacity or whether there really is a corresponding demand for leather remains unclear, at least for us. In Europe, business remained very subdued. This is not surprising, as it does not appear that many leather factories have any significant demand for raw materials until mid-January. There were no major changes in prices again this week and, in combination with the firmer dollar, we would say that hardly anything major has changed in the returns.