What happened this week: After the non-events of the last few weeks we saw some signs of a recovery this week, although it was a normal round of replenishment rather than a sign that things are performing much better. As already mentioned in the past few weeks a large gap can be seen between the situation in which different clients and different market segments find themselves. While top quality tanners are just suffering from a lack of selections available in the product mix, side leather tanners are still enjoying a decent order book, but don’t like their margin situation and we fail to see anything positive in the standard average upholstery sector. Although some are saying that the order situation is also good in this segment, we are not quite so sure about this.

Many European tanners we have talked to are reporting a decline in repeat orders and also a slow down in colour instructions and shipments and when business slows down in such a market it can become pretty critical for the cash-flow situation. In addition we have to consider that we are slowly entering into the seasonal end of the European production cycle in upholstery leather, so the fundamentals in this part of the world for this business sector are not essentially bright. But, in this segment of the market at least we can see few warning signs.

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