The latest edition of our exclusive Leatherbiz Market Intelligence newsletter went live on May 21. By Leatherbiz.

We have a special focus this time on the situation in Hebei in northern China, which is still home to a large number of small and medium-sized tanneries that have a significant combined weight in the market.

This market is of fundamental importance to the suppliers of raw materials and was encouragingly active in the early part of the year, the newsletter says. Now, though, Market Intelligence adds that “everything that was presented as positive two months ago has turned negative”.

It goes on to explain that this scenario has occurred at the end of the first quarter many times in the past.

It says: “The season starts in the autumn with relatively low raw material prices, low purchase prices and a solid costing basis. Over the winter, prices slowly but steadily increase to support leather sales and leather prices, and to reflect rising demand. Companies endeavour to keep stocks as low as possible at the end of the season and if they are able to do this successfully, they slowly withdraw from the market in the summer, let the prices for raw materials fall as far as possible, and start the game all over again.”

Unfortunately, two elements of the strategy appear to be absent in spring 2024. The first is that inventories are likely to have built up too much, making it necessary for Hebei tanners to keep selling to clear stocks.

Perhaps more importantly, the report says that, in previous years, a busy furniture manufacturing market provided tanners in Hebei with orders to keep business ticking over during the quieter production period. This year, there is no sign of this relief from customers in the furniture market.