We are seeing a correction in the market

The Ron Sauer blog
Published:  10 December, 2014
Ron Sauer

Readers of TheSauerReport may find all the news published at the moment negative, even very negative. But before sending in complaints let me tell you it is not negative news but current reporting indicates to me that the market is correcting itself. 

Prices had gone too high and too fast. Demand for the second half of this year proved not to be what many had expected it to be. Expected by those who were convinced the market could only go up and never come down. Their opinion was mostly based on the reduced supplies of raw materials. But there is no price of a raw material in the world, which can only go up and never come down. The supply of hides moving to tanners continued to rise until the summer. The leather business has been running in top gear for a while now but we see many economies in the world cooling down such as China, many parts of Europe and Russia. Even with reduced stocks - finally supply has overtaken demand.

There is an availability of many hides despite the fact there are less killed in total than before. Now it is quiet everywhere, very quiet. But there is nothing dramatic about that. Over the next few months the correct balance in the market will be restored.

Hide and skin prices are dropping but no more than a correction in the market requires.

Demand will pick up again in the future and the chronic shortage of global raw materials will return to the surface. Over the long term hides will continue to become more expensive as a general trend and leather product makers will have to bear this in mind, for the very simple reason that demand for leather products is set to grow faster than the consumption of beef. That has not changed. At least not according to my own opinion.

Your comments are welcome.

Ron Sauer

Ron@TheSauerReport.com

www.thesauerreport.com

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