What happened this week: At least in Europe everything was concentrated on the Lineapelle Fair in Italy. Athough the show in May is not as important as the one in November, it was impressive, that not only many suppliers were there, but they also spent a bit more time than usual. So, the attendence on the last day was much larger than expected and many who used to come for just one day extended this time to minimum two. This confirmed, that many hide suppliers were not anymore completely sure about the market and at least for the classical hides for Italy they felt it was appropriate to spend enough time to sell and to get a feeling for the market. What are now the results of the Fair and the feeling of the Fair? In general we are quite pleased with the results, although it has to be – as usual – analysed a bit more in detail. Leather in any case remains in good demand and except some there were very few complaints about insufficient orders. European tanners complained just about leather prices and margins. In particular upholstery tanners report severe price pressure from their well selling  export markets and many have to return to lower quality products to meet

the target prices of their customers. Not a particular good idea, but for the sake of the production levels and not to loose customers it has to be considered. Within the side leather tanners mainly those were happy who dispose of the high quality segment. Also here dominate the overseas export markets. The sick patient, however in all discussions is the European and in particular the German retail market. Those who are depending on sales and have their main customers in this area are all depressed. Dress shoe manufacturers who used to buy a lot of their premium leathers in the Tuscany area have cut back significantly and have not left any positive forecast. To add to the drama also German leather furniture makers are in the doldrums and various rumours were heard the credit insurers are withdrawing their covers on various respected names. This will certainly additionally reduce sales potentials for furniture leathers. Sales during the fair were relatively good. Accepting prices for cows which were about 3 % below last levels enabled many to move at least enough volume in the heavier end. Bulls remained scarce and most inquiries couldn’t be satisfied. People were also looking for good quality

light or heavyweight calfskins. With the price presure for lower priced furniture leathers even lighter weight cows could have been sold if the abattoir prices would have permitted. At 5-10 % below the present price level we see a lot of demand for this material. With several cheap sales of USA cows in Italy tanners have at least got now interesting alternatives vs. European or Brasilian hides. The kill: Nothing changes. Low kill, low weights and the holiday on Thursday in Germany is not what we really like. In addition did abattoir prices again not come down, due to some autistic players in the market. What do we expect?  For the coming weeks we would not be surprised to see a further decent in € terms of the cows. However, having said that we will, that ther is a very strong underlying interest for the material at abt. 5 % below present levels from many markets. So, if prices fall because some dealers feel that they wish to sell cheaper we would not be surprised to see a big round of buying interest or bids at lower levels. Question? How many quantities will be available for the market at the interest levels of the tanners. For bulls be don’t expect any major change. Sellers will not move below asking levels and so little changes on the upside might be seen still.