What happened this week: We do not believe that there was much going on in Europe this week. In northern Europe most productions are already shut down or are already in the final lap, and in the south the situation is much the same with effluent plants closing. Only retanning and dying are keeping tanners busy before they also head off for the summer. Two weeks ago we believed that the worst was already over in this market and we feel that this was pretty accurate. Not all sellers will have solved their problems, but most of them could also be homemade and cannot be considered a fair reflection of the market situation.

The standard suppliers and buyers appear to have made their arrangements and this has brought most of the market back into balance for the time being. Those markets that needed major correction in order to trade back in line with the general market conditions have been adjusted and the weak $ has helped, while European suppliers suffered more than had been expected due to the currency market. However, at least the large discrepancies we saw in the market some months ago have been sorted out. Leather business remains pretty much intact and it is fairly difficult finding quality tanners that are actually complaining about the order situation and the outlook for the rest of the year.

Sales during the week were limited to the grades that are actually still available to sell. With the low kill in the next four to six weeks due to the holiday season, not many additional hides will come to market and those buyers that have not taken up chances in recent weeks might be surprised when they cannot find many ready sellers in the near future as they have already sold their production for the summer and have no need to handle anything else before the end of the holiday season. This suggests that ACLE in Shanghai in September will bring about the next main assembly of the trade and most likely the next indications of what we can expect for the rest of the year.

Prices during the week were almost unchanged, only the weak $ continues to cause damage here and there regarding sales to the Asian customer base. Abattoir prices made a partial step towards market realities but, considering the lower number and weights, the decline has not yet compensated for the market correction and will need another adjustment in August to start the new season after the holidays. If any threat still remains for this market, it is the general economic outlook for the various economies around the globe. Things might not be as positive as many tend to believe and turmoil in the financial markets could eventually have an impact on the leather business. With the massive impact the Chinese market has on the pipeline these days, changes of any kind in this part of the world could have very quick negative (or positive) influences on the market without much warning.  

The kill: The kill is now entering the lowest period of the year. In addition to the generally lower level compared with 2006, the numbers are certainly less than impressive. Not many more hides can be expected up to the end of August.

What do we expect: It seems that most players are leaving for their summer vacations feeling quite relaxed. Most of the pressure appears to have lifted and buyers are happy to see lower hide prices, while sellers are confident that a further freefall of prices is not expected and there is not much risk until the end of the holiday season. Without much movement in the financial market, we would be surprised to see significant changes in the near future.