Within this market frame some other trends can also be determined. On one side there are tanners who had moved to more economical hides in the past that are returning due to sharp rises in the price of lower grade material, and on the other side we find tanners that have been on the high side of the quality end now trying to average down and to enter the average quality market. The result is the same as that which we have seen over the past weeks, the blanket can’t cover the whole table, and whichever direction you pull, something always remains uncovered. With all the positive signs in the market, it is impossible to ignore the clear warning signals. Among all the enthusiasm and short-term hype, which can’t be changed at the moment, the circumstances also have to be considered. We hear about more cases of payment delays in Europe and some smaller tanners seem to already be in serious trouble. Letters of credit are coming in far slower than in the first half of the year and the number of tanners disposing of sufficient inventories or considering production cuts due the insufficient margin situation is constantly growing. Short term, the driving force is still the shortage in some segments, but this effect can soon lose its momentum as it is hard to believe that many tanners around the globe still operate in the black. Negative margins at full speed productions have, in the long run, similar effects to unused production capacities. The negative impact on calculations for Chinese tanners with the reduction of the drawback to 8% will also have an effect. However, the immediate future will mainly depend on the outcome of the fairs to be held in the coming weeks.

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