Market Report 27.09.2024

What happened this week

Anyone expecting major activity in the sale of hides this week was probably disappointed. At least that was the case for us. On the one hand, of course, this has to do with the fact that the regular programmes are not yet due for renewal, but on the other hand you can still feel the after-effects of the trade fair in Milan. It has become clear that, at least in the near future, it will be more difficult to sell your goods and that the search for successful customers will become increasingly difficult. Of course, it’s not just about selling the goods, but also about getting your invoices paid at the end. The situation in Asia is not much different and customers in China in particular are still only looking for the cheapest opportunity to fill their production. For many, including us, the question is whether the Chinese government’s decisions to support the economy and consumption could possibly trigger a turnaround in business to China. The stock markets, at least, are already convinced of this. It is also true that the majority of Chinese buyers are very much driven by psychology and sentiment. They know that the prices for raw materials are extremely favourable at the moment and if we have hopes of better business in the future, we would of course be well advised to secure cheap raw materials now. In addition, the Chinese currency has also recovered somewhat in recent days, making import prices more favourable. There has not yet been much sign of a possible improvement in sentiment this week, but we would have to be very wrong if Chinese customers were not already thinking in this direction. Presumably we will know a little more in the coming week and this week it was only enough for a few smaller deals, especially for the lower qualities at very low prices. In Europe, the focus is almost daily on how the leather industry will continue to develop in the coming months. The news from the German automotive industry in particular is alarming and, in addition to production interruptions, production cutbacks are being discussed or have already been announced everywhere. Not a particularly good environment for automotive leather. In such a situation, there is always plenty of room for all kinds of theories and speculation as to how things will continue in the near future. Our regular readers know that we are not on the optimistic side and even now we assume that the moment for a fundamental turnaround in the leather business has not yet arrived. This does not rule out the possibility of a recovery in demand from China and a temporary flurry, but that would not stop the fundamental trend and it is important to be involved in the successful supply chains, which will of course still continue to function and require raw materials in the near future.