What happened this week: Sales were again reasonable, despite the general difficulty in the market. One has to admit, that in under market conditions like the present one we mostly have a ‘pre’ with the steady and loyal customer base we enjoy. Most of the sales were effected in Europe and we still find the Asian interest pretty slow. Having said  this, we, however appreciate the fast income of L/C’s for existing contracts and the request for very quick shipments. This must be directly related to the shipping delays and potential problems arising from the dock strike in the USA. This is even more admirable considering, that quite a few of the contracts are above present market levels. This confirms also, that the demand for hide continues and tanners are not lacking orders or production requirements as otherwise they would just sit back and wait. The business and sales in Europe continue to be burdened by a) the remaining margin problems and b) the rapidly falling market in

the UK and in particular in Ireland. As usual at this time of the year sellers take what they get and just try to get rid of the seasonal productions. For those tanners following these markets and having a use for the type of the product bargain hunting time has begun. The annual question is now asked: How long will buyers be able to benefit from the situation and how much can they cover of their needs. In any case this traditional game is weighing on the rest of the market and will maintain the pressure on the other origins. In many parts of continental Europe one gets the impression, that for the first time for many months unsold hides are looking for buyers. We do not assume, that the imbalance is significant and worrying, but at least it is undermining a bit the sellers confidence that the market is sorted out forever and one can be sure, that sooner or later buyers have to accept their proposals. Consequently there is fair chance, that tanners can still continue to keep control of the market and have a chance to widen

widen their margins. It has to be said, that this applies only for those who enjoy enough orders as steady business. Finally we are worried by increasing payment delays, confirming our long stated worries about the financial situation of a number of European tanners. The kill: Decently increasing and confirming our expectations. Cold weather and the end of the holidays support the seasonal kill what is now up by 15-20 % against the September average.   What do we expect? With all signs for a further price erosion we do not expect a substantial market break. The surplus of supply is neither big enough nor is leather business poor enough to justify this opinion. A further and moderate decline can be expected and should be appreciated by everyone. However, the decline is - in our opinion – cyclical, seasonal and – at least presently – not a result of a major change in the market environment. The results of the Highpoint and Bologna fairs will give us indications if the market will find its traditional floor by mid November with reducing kills and rising demand.