What happened this week: The week in review was a bit of a series of ups and downs. Every day was different, but adding up on Friday sales were good and the total number were very satisfying. Nothing changed as far products and buyers are concerned. Shoes and leathergoods are obviously doing very well and almost everybody confirms good orders and prospects for the next season(s). The full emotional confidence after September 11, has not yet fully returned and people still don’t feel as secure and good as before the tragedy. But many positive effects were seen during the week again. Stock markets rising, good military progress in Afghanistan and temperatures in Europe falling for the first time below 0 °C were for various reasons, but all good for sales and German shops were packed last weekend. US retail sales reported this week for October were up by 7,2 % what also confirmed that real sales are much better than the emotions and concerns of manufacturers and retailers. Although car sales in the USA were very high due to 0 % finance schemes it would not be a surprise to see  a move from high price items to lower price items, i.e. shoes and others.

Beside the positive development of side leather related hides we experienced also a round of sales for dairy cows for the Pacific Rim. In most cases it was not tanner business and we assume, that this was a round of short covering of export traders. The development of the USD was also very favourable and supported DM/€ revenues. This confirmed the extensive sales to mainly China over last weeks and it has to be seen if there are still more hides to be covered. Apart from the good retail figures also numbers from the German automakers were released. Domestic sales fell for the year, but export sales rose more than that and so total production figures were sufficient. A long list of ‘leather friendly’ new models for 2002 leaves the impression that auto leather production also in 2002 will not be less than be before. So, most of the week was positive with good prospects for the first quarter, with the only exception still being furniture upholstery. Although also here people seem to be a bit more optimistic, things are still not really taking off. Short term orders are missing and tanners struggle to keep productions alive. So here many try to reduce inventories further also for the sake of their balance sheet at then of the year

and most probably also for the sake of their cash-flow with the reduced shipments and payments to be expected over the X-mas season. The kill: The kill is now gradually declining and it really seems that the seasonal peaks – if there are still any peaks – are already over. From all what we understand from the beef industry the kill will not be very high in the coming weeks and also here we might see a long X-mas break. What do we expect? There is no question that the market has bottomed out. It seems, that the long lasting pressure on hide suppliers to sell hides is now reduced and many seem to be quite relaxed – also in expectation of less hides coming in over the coming 6-8 weeks. The price level of European hides justifies more confidence in price developments for the medium term. Short term shipments might be somewhat depressed due to inventory policies of tanners. This year it seems that the majority of European tanners is longing for low inventories what means that they are not too optimistic about their years end results. Not really a surprise after the turmoil of this year. Also next week we will see only few changes in prices and it seems that there is little interest for changes anywhere. For the medium term our confidence rises.