What happened this week: Kung Hei Fat Choi! Let us see if the year of the monkey is going to deliver the same expansion and success of the Asian leather industry as in 2003. At least this week the industry in the Orient took a break and relaxed to be prepared for the challenges to come. Activity from Asia was consequently slow, although still some e-mail traffic was noted - without leading to any kind of business. The shortlived rebound of the USD evaporated also the benefits of export calculations and so we are back where we were about two weeks ago. The situation in the USA is also normalizing by the day and so is rationality taking over again and one can return to the normal evaluations of supply and demand. Our assumption, that the firmer USD could support the European market faded with every Cent the USD lost. The market was consequently just about steady and only some of the regular European sales were concluded. However, with the large sales booked over the last weeks it doesn’t change very much and might be even better to prevent the

market prices to go up,which we would consider to be a premature. It leaves now the time to see how the Asian buyers are going to resume their activity after their holidays. Most information one was able to collect from the fairs taking place at present were positive. The fairs in Turkey and the furniture fair in Cologne delivered moderately positive reports. This continues to confirm the positive outlook for  sales of leather products in 2004.  If raw material prices can be kept within the price range we have seen for a while it could lead to a positive first quarter or half of 2004 – at least for those who have leather order in their books. If there is anything special to mention this week it was the strong interest for ‘cheap’ products. This is normally a  sign, that players don’t expect further price declines for regular productions and try to cover their leather orders, which might already be booked at too low prices in expectation of a further sliding raw material price level and need now protection and coverage. Apart from this we don’t see anything really new as far as the demand is concerned. The attention might now move more back to the supply side.

While the kill in the USA continues to normalize rapidly, starts now the decent of the kill in most parts of Europe. Short term this will not change too much, but we have to watch the situation carefully. Our price levels, however, will continue to be more influenced by the currency and overseas price movements rather than anything else. The kill: As already mentioned above, the kill starts to decline. Declining, means less kill in cows, where the flood of animals offered, because of exhausted milk quotas starts to decline. We expect the kill to descend now week by week for some time. What do we expect?: From todays standpoint it is difficult to preview the next weeks. We still believe, that the global leather business is good, what might be hidden to one or the other European. The market will be determined by the activity in the Orient and exchange rates. We maintain our opinion, that no matter if  leather orders in Europe will improve, most tanners in Southern Europe are  sufficiently covered for the coming weeks. The lower kill will show its effects only later. So, we think, that the market short term will be more determined by the trade of the day rather than a new and clear trend established.

Dairy cows

15/24,5 kg

22,5/23,5 kg

13/22 kg

20/21 kg

€ 1,75

Steady

25/29,5 kg

27,5/28,5 kg

22/27 kg

25/26 kg

€ 1,45

Steady

30/+      kg

33,5/35,5 kg

27/+   kg

29/31 kg

€ 1,30

Steady