Market Report 29.12.2023

What happened this week

Today, Friday, finally marks the end of 2023. Everyone will have their own memories of the past twelve months, but there is probably one thing that everyone will agree on: it was almost unimaginable to have to experience another war of such cruelty. If the suffering and misery associated with it were not enough, it is deeply disturbing that there are more and more unscrupulous leaders who see war as a tool and have no qualms about abusing and making innocent people suffer for their own ends. We can only hope that either these people will be stopped or that they will come to their senses in their madness. In any case, the events of the last two years have reorganised many priorities.

As trivial as business may seem in these times, it was surprising that our expectations of an almost uneventful week were rather deceived. Of course, almost all businesses in Europe are closed and only we and our colleagues, such as the slaughter industry, are – as always – an exception. However, the interruptions overseas are much shorter and usually only Monday was a full public holiday. As so often in the past, some buyers took advantage of this to check whether there were any ‘Christmas presents’ to be found or whether one or other supplier was available to receive any special offers. However, this only affected the standard items and the cattle hides to a small extent – most of what we found this week were speciality items, especially from the Middle East. We could have expected a little more interest from China, but interest from there was very limited and there were only the usual standard enquiries, mainly for cowhides.

It was very difficult to come to reasonable price negotiations, as the weak US dollar and the possible threat of surcharges on sea freight due to the security situation in the Red Sea caused the asking prices and the buyers’ price ideas to diverge significantly and further. In the end, very few business opportunities remained and even these had to be negotiated subject to possible surcharges. Most shipping companies are currently threatening surcharges of USD 1,000 for the Asian destination, which, with all due respect for the problem, seems clearly excessive. Depending on the skin type, this means a price increase of between USD 1-2.00 per piece, which may have to be renegotiated.

The kill

In the end, this week only had three production days in the slaughter industry. The overall figures for the week were correspondingly reduced, although the three days produced quite satisfactory quantities overall. Next week will also be shortened by one day and is likely to see significantly lower volumes after the public holidays.

What do we expect

We are expecting a very quiet start to the New Year. In Europe, almost all factories will still be closed next week. It is still unclear to us what decisions and needs customers in Asia have and to what extent they will make major decisions before the holidays. The extremely unstable geopolitical situation makes it very difficult to predict the further price trend over the next few months and hardly justifiable. The fundamental data do not speak in favour of a sustained improvement in the situation and an increase in demand for leather. If the global situation calms down and optimism driven by a possible fall in interest rates leads to a recovery in private consumption, the supply chain could be prepared to replenish and possibly increase its stocks. However, we believe that optimism in this direction for the start of 2024 is clearly premature. At the moment, other influences, particularly the currency and possible risks to freight costs, are weighing on the market. To all our friends and readers a very Happy, Peaceful and Healthy New Year!