What happened this week: Business continued to be very moderate. The Asian customers are slowly returning from their holidays and start to monitor the market. With the softer note in the USA market they hope for further corrections to save on raw material prices. Basically nothing more happens like what we expected. The classical overreaction after the BSE case in the US is now correcting back to the normal level. As the kill has never been as much affected as many were afraid, the supply was always good enough to get through January and may be also February. However, the total volume of hide and skins business does not reflect the total volume of leather business and consequently the pipeline is emptying rapidly and it is only the question who can wait longer. At the end the total supply of hides will decide in the next weeks about the market trend. Since the kill in Europe will be low it is a question if the other market will be able to supply enough material to prevent the market from rising. As far as leather business is concerned at least a little silver lining was also noticed this 

week with further interest and sales in light weight calf and kips. Let’s hope, that this is going to be the change of the fashion after such a long time of inactivity. The rest of sales was just bits and pieces. Some regular sales of dairy cows and ox/heifers were concluded in Asia, while Europe was quiet in expectation of the new price levels fixed for the month of February. Prices established were basically on the levels of the previous weeks with some marginal declines for dairy cows. There is presently a massive contradiction of sentiments in the market. Mainly in Europe there are salted hides available in the market while the low kill is already creating problems to maintain the regular supply of fresh material. With the volume of offer of salted hides, tanners try to transfer this to the total market and taking it as an indicator for the total availability. Wrong! The supply of fresh hides is insufficient at present and this will not change for some time. So, either one accepts salted hides for the production or we have to consider, that the price difference between fresh, chilled and salted will widen further in favour of the fresh hides. This has not yet penetrated the mind of everyone but bottlenecks of supply will have its own

effects. Leather business, however offers the impression of further improvement and the price pressure for finished products is tried to be compensated by buying cheaper raw materials. If this is going to work out one will see. The next weeks The kill: The kill continues to be low and with the carnival weeks ahead of us we fail to see any reason why this could change in the short term. Another one or two weeks the market can digest this, but then many security stocks will be absorbed and if the kill doesn’t return to better levels we have to expect bottlenecks of supply – at least for fresh material. With consider the risk to be high.  What do we expect?: There continues to be little reason for major changes. In the present situation sellers and buyers have plenty of arguments to drive the market into their direction, however none of the arguments are strong enough to move the market sharply. In the next weeks Europe expects a large number of visitors – mainly from China – and one has to see if this is going to mean anything. We still believe, that prices are on safe ground and levels and we are still awaiting the trigger for new directions. In this respect we watch the supply more than the demand