What happened this week: We are not too exited about the week. A lot of activity started to dry up this week and interest was significantly lower than in previous weeks despite the decent strength of the dollar. We think that this is mainly because of a number of cheap offers that are circulating the market again. This was not seen so much from central Europe, but UK and Irish hides and material from southern Europe was suddenly quoted at reasonably discounted price levels. This provided another fright for a number of buyers, who have now put some of their interest on hold and have suspended pending negotiations.

We have had decent market stability for quite some time and this has actually helped in gaining some market confidence and getting some Asian tanners ready to buy in recent weeks. The price levels that circulated this week scared many away and the fear of having bought at too high a price returned rapidly. If there was any good news this week, it was that there was at least still interest in buying raw material.

The situation in Europe remains very dull and problematic. The drama in the automotive industry continues and may even be getting worse. More production cuts, further discussions about how to bail out ailing car companies, and the consequences if this does not happen, dominated the headlines this week. The real problem is that all the national attempts to help local car manufacturers are unable to solve the fundamental problem which is that there is not enough demand for certain cars to keep all the brands and factories alive. However, no government wants to be the first to bite the dust and to face realities. With all the subsidies offered, it is still impossible to rescue all production capacities and jobs; a lot of money that could possibly be better invested is being wasted.

The news from the upholstery market is not much better. Most tanners are complaining about the lack of orders and colour instructions. Most people’s eyes are still focused on the shoe and leathergoods sector. Despite the general optimism, European tanners are complaining bitterly about the lack of decisions being made by their clients. Although all brands and manufacturers are positive, only a few orders have been placed so far, and nobody really knows why.

The cold winter has cleared stocks, the consumer is still buying shoes and leathergoods and even a number of luxury product makers were still reporting reasonable sales activity in January despite the financial crisis. So there is still a lot of hope out there, but time is running out for many. Sales during the week were reasonable for males because of various running programme renewals, but interest for cows from China dried up significantly. Prices were essentially steady until rumours about cheap offers started to circulate and stopped the trend for steady levels of cows for the moment.

The kill: Having now entered the peak carnival period, the kill in western and southern parts of the country has suffered and will suffer in the coming week. The kill of males is well below average. 

What we expect: The low kill should offer the market enough support for males. However, the US market could again pose a threat if the pressure to sell rises over there. The cow market could possibly see headwinds again if there is no remarkable rise in interest in the next few weeks and some of the stockholders might lose their patience.

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