What happened this week: Although business gained momentum during the week the market continues to be relatively relaxed. However, sales volumes were fully satisfying with furniture and shoe tanners overseas being the main buyers. Namely Italy, India and China were the most active markets and added to the regular sales volumes with the local industry. In any case we felt confirmed in our opinion that the market had bottomed in December and with the moderatly positive outlook given into the new year. To be complete, also the negative news should be mentioned. Information coming in from the bovine garment tanners in Korea and China as well as the Spanish market were not very good and all of them complaining heavily about missing leather orders. In case of the garment tanners it is surprising as ovine producers are much more optimistic and we are eagerly looking forward to the fairs of the coming weeks as well as the order placements in Asia which are due in the next 4-6 weeks. It could well be, that we overestimate the retail and business climate in the USA which seem to be the biggest burden for the volume manufacturers in Asia. Information and statements are also

conflicting. Economists and financial markets bet on an earlier recovery of the US economy than in the EURO zone. At the same time are US companies not giving the orders for consumer products to arrive exactly when the world expects the economy to recover. To make a final judgement we might have some more weeks to analyse and to wait if expectations will reflect also in orders. In the meantime it is impressive, that still most of the produced hides are sold and have found customers and that leaves the question open how the market could look like when things are indeed normalizing. For the time being one has to assume, that quite a large proportion of the production must have been absorbed in Asia and/or in the Eastern bloc. In Europe things look much more stable, although the rising unemployment figures in Germany are worrying. Coming back to the hide market and sales. We were able to place all hides at asking, i.e. steady levels and in a few cases even at minor increases. Although tanners like always to buy at less money it seemed, that many are satisfied with the present levels and are now more interested in a period of longer stability rather than in saving the last

penny. Our attempts to reduce abattoir prices further had only limited if any success and we would call purchasing prices for the month of January unchanged. Summarizing it was a good start into the regular business in 2002. The kill: The kill has normalized and has finally reached the normal seasonal levels. This is just about enough to support the regular programs. What do we expect? We maintain our moderate positive market opinion. The consolidation is safe now with just leaving low grades and light weight dairy cows with a question mark. We consider the market still in order with an unchanged state of balance and we sincerely hope that this can be maintained still for a while to the benefit of the trade. With no present shortage of supplies it is now entirely in the hand of tanners to prevent the market from taking off. As long as the fundamentals are as favourable as they are now we should not destroy the chances for the extension of the levels reached. As long as leather biz is not significantly increasing or slaughter declining there is no reason for any change. If speculators fail and tanners don’t try to surpass their college we have the possibility to continue to recover from 2001 until the inevitable disturbances will return us to market reality.