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 Market Intelligence—19.08.25

Market Intelligence—19.08.25

2025-08-21

Source:leatherbiz

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In recent weeks, attention has remained focused almost exclusively on political developments. The US’s erratic tariff policy continued to influence the markets and the problem remained that while the tariffs as such were already a major problem, the uncertainty was even greater. Almost at the last minute, a decision on the final tariffs between China and the US were postponed for a further 90 days. Christmas sales in the US will presumably have played a major role in this, as many products for the main phase of annual consumption will be arriving in the US within this new 90-day period. In this respect, this is a certain relief for many suppliers and importers in the US.

The exact opposite applies to India, where tariffs of 50% have been announced and only a delegation, which is expected to arrive in India from the US on 25 August, can bring about a change.

Decisions regarding a possible end to the war in Ukraine are still unclear. The continuing unclear political situation is also having an increasing impact on international business and supply chains. Of course, as we have already mentioned in previous issues, the number of potential consumers in the world is still the same, and so is the potential for consumption. Nevertheless, psychology remains a key factor in the economy and when the mood is bad, it has a negative impact on consumer behaviour.

In addition to the direct political disputes, other side issues in the international community have also been of major importance for the leather industry over the past two weeks. The negotiations on the reduction and management of plastic waste have been a farce and must have felt almost like a slap in the face to the meat and leather industry. It was remarkable that we didn’t hear a single word about possible natural alternatives.

Last Friday, which was also a public holiday in many European regions, marked the slow start of the return of the leather factories from their holidays. In most cases, it will be another week or two before all production is up and running again, but the industry as a whole now has to deal with the return and day-to-day business issues.

This means that active day-to-day business is still almost exclusively limited to Asia, and even there only a few large factories are still determining daily activity, at least on the commodity markets.

If you look at the European market for cattle hides, the heavy, male hides favoured for this purpose have recently defended themselves very successfully against price declines. On the one hand, this probably has to do with the lower slaughter numbers, but on the other hand, the revenues from the split and the longer-term price agreements with the automotive industry have played an important role to explain the stability. If new negotiations are pending here, or if the automotive industry’s practice of passing on problems to suppliers comes to fruition, this could also lead to increased pressure on prices in this sector in the coming months.

This is not a particularly positive outlook for leather for the near future and it is further proof that the initiatives to change this will only achieve anything through consumers themselves. Of course, there is still some hope that big brand names will recognise the potential of leather again; sometimes difficult economic times are much better for this because they make new initiatives necessary if you want to generate new impetus for sales.

However, in our opinion, this would require a considerable rethink and a creative and convincing utilisation of the material as a key argument for the end product. The chances of this happening have probably never been better. The raw material is cheap and plentiful, the capacities are available and the restrictions and also mostly self-made obstacles (above all in Europe). Of course political uncertainties still stand in the way of a new development. Without a new departure, which must come very quickly, it will be very difficult to initiate the urgently needed trend reversal.

Anyone who needed a further, indirect argument in favour of leather was also supported last week by the reports on the huge quantities of textile waste. Everyone is aware of the gigantic quantities of textile waste that arise not only from used products, but also in many cases from unused clothing. We do not want to talk about the technical problems of textile recycling here, especially with mixed fabrics. Of course, outerwear plays the biggest role in terms of quantity, but nobody should forget that a large proportion of shoes are also made from textile fibres, or rather plastic.

Of course, some people also raise the issue of overconsumption. Fast fashion plays a particularly important role here. Whilst it is probably very difficult to change people’s desire to treat themselves and consume in the short term, there is also a lack of reference to the material, its properties and its longevity. This offers another great opportunity to provide consumers with many good reasons why they should choose a leather product.

These references and discussions have of course already been held many times. Within the bubble of the leather industry, this still takes place on a daily basis and we are constantly proving to ourselves that we have better, superior materials.

However, it is economically more attractive for consumer goods manufacturers to ignore leather as a material. Also, they have been constantly legitimised by campaign groups as to why they should do without leather. And the leather industry just has to put up with the accusations. At some point, the time may come to consider whether attack is sometimes the better economic defence. In any case, the passive, adaptive strategy has shown not really shown any sign of changing things for the better.

If figures from the European car manufacturers now lead to new pressure on suppliers, it would come as no surprise. This will bring up questions about how much leather will go into new cars; it could very well also mean that there will be another round of price pressure on suppliers.

For low-value raw hides, the next round of the question of how much can still be recovered for the leather industry and how much raw material needs to be redirected to other uses will take place in the coming months. Of course, this includes the protein market first and then bioenergy. As there are currently few signs that global meat production is on the verge of a significant reduction, these questions will have to be answered seriously in the coming months.

The market for splits and non-cattle hides has shown no great change or movement in recent weeks. Here too, of course, the holidays play a major role and this is particularly true for the split. However, we believe we are also seeing signs of a reorientation in this sector. On the one hand, demand for proteins needs to be monitored, as this market is still growing at the moment for various reasons. On the other hand, the availability of raw materials poses a challenge.

The fact that the production of cattle hides has changed and shifted significantly in recent times, both regionally and in terms of volume and production cost, means that protein manufacturers must also adapt to these changes. The issue is very complex and many parameters play a major role in this. As this market is much more dominated by large, globally operating groups, individual decisions play a much greater and also more effective role. The question of whether this sector could possibly also be wild card for the leather industry will probably also be decided in the coming months.

Otherwise, all raw materials and leather types that can be described as ‘special’ or niche in some way will continue to enjoy good interest. Where leather is perceived as special, unique and recognisable for its benefits in the end product, consumers are still willing to buy these products.

We wish everyone who can still enjoy their holidays a good rest and lots of fun over the next two weeks. After that, it will be back to the routine and the problems of everyday life. Some will be travelling to Asia at the end of the month and may take the opportunity to visit other countries and business partners in addition to the All China Leather Exhibition in Shanghai (September 3-5). This will probably give us a little more insight into the real situation and conditions for the rest of the year. We will endeavour to gather and evaluate as much information as possible. Until then, we wish you all a good time.

责任编辑人:樊永红

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