What happened this week: Despite, that the general activity remained reasonable quiet, an underlying improvement in the leather business could be recognized. However, it is again still not broad based and leaves the problematic markets almost completely out. Consequently were sales good during the week, but limited to the high quality customers in Europe. Selling prices had to be adjusted in accordance with the abattoir market and leave margin problems mainly in male mainly. All sales went to the premium European customer base and covered almost all categories except light weight low grades and ox/heifers. All the rest was readily absorbed by customers who seemed to be quite happy with their order situation and the present raw material prices. Since this is only a very isolated group of tanners it cant be taken as representatively  for the market activity in general. This leads however, to the question: What is today the reliable base for the market judgement? Certainly not anymore the number of tanners and the daily market gossip.

 The shift of production to bigger units and into the East and Far East has created a unrecognized consolidation and growth of individual players worldwide. Nothing new in other industries, but surprising for the traditionally structured and conservative leather industry in Europe. So are the sharply rising imports of finished leather upholstery out of China into the EU a clear sign for the volume manufacturers of leather and finished products, that their business has already left and – most likely – will not return. This is easily said, but the consequences will accompany us now for some time and are also a reason why the tone of the raw material markets here are much worse than the real situation. While everybody speaks about the problems only a few realize, that the global production has not really declined and this reflects mainly in the overseas raw material markets. The other talk of the week was certainly the sharp rise in some US asking prices, where the trade is debating, if this means anything to the market itself and in special for the European prices. Well, even without the jump European hides and in

 particular males are cheap in comparison to US hides and one can be suspicious how long Asian tanners will ignore the available bargains. One day the prejudices about European steers will be broken or simple economics will take over. For many years European steers carried a premium over their US counterparts , today it is the opposite and it is questionable if this is justified by their real value.    The kill: The kill slowed down this week. Very much to our surprise, because pretty cold nights should have supported the kill even further. However, butchers complain, that live cattle prices are not profitable and have become more cautiously buying and slaughtering cattle. It seems, that without a reduction in prices or better demand for beef the kill will not reach the levels we expected. What do we expect?: The market is not going to turn really before Bologna. However, in most grades a lot of pressure has been lifted and only the ‘Italian classics’ (low grades, light weights, higher quality specials etc.) still really suffer from over supply. The rest is more emotion than fact. However, better times and higher prices will need more time and confidence.