What happened this week: As expected the weeks again determined by currency movements and activity from the Far East. By mid week a larger number of orders were place by some of the bigger tanners in China. Most of the orders arrived to export traders who hurried to cover the substantial size of business. The weak € helped a lot and an order which seemed to be low in the morning was sometimes already pretty attractive by midday. Impressive was the amount of interest for bullhides. We saw the increase of interest already for some time, but this volume sold was not anymore a trial. So, one has to assume, that also this type of material is finally becoming a standard product in the Far East. This will change trading patterns in Europe in the medium long term significantly. More and more clear is the fact, that inventories in Asia cant be very high, since again most sales were combined with exact shipping instructions and those were not for the long term. Also clear is that Asian tanners have finally now European hides fixed on their purchasing list and it

seems, that they use the alternatives now to keep their main supply market – the USA under control. And indeed we still find European hides to be attractively priced against their counterparts from the other side of the Atlantic. So far the good news. Meanwhile things in Europe are not really improving. Apart from the few quality names which are very busy and working full, are the others still waiting for the long expected improvement in leather orders, Being already in March it could be already too late. Few signs of hope are at least seen with a few bits and pieces  on lighter weight materials. The rest is still struggling and fighting to meet the prices paid from their competitors in Asia. Day by day it is harder to hope for a positive outcome out of the crisis of the industry Europe and frankly speaking nobody really can expect anything else than the shake out to continue. Our regular readers know, that we are been moderately positive about the global leather business and we feel more comfortable with this opinion now. If this opinion is true, than inventories have to be replenished which have been run too low for various reasons. Looking at the sales figures

in the USA the replenishment seems to have started.  Worrying is, however the fact, that with the massive pressure on finished product prices there is little room in tanners margins to afford higher raw material cost and this forcing more and more tanners to look for the cheapest acceptable raw material instead of staying with their standard items which could be too expensive for their calculations. The abattoir buying did not deliver yet the expected decline. The kill: Recovering a bit for the lows seen during the last weeks, but still on the low side. Nothing really unusual for the time of the year. Average weights stay fortunately still on the high side, what is positive. What do we expect: So far the market has not really reacted with higher prices. But the interim firmer USD has at least lifted the revenues in overseas sales moderately. It will be a tremendous fight to convince the European customer base, that they have to follow the trend and that some upward adjustments are needed to allow adequate margins as well as to stay in line with the overseas market levels. We don’t expect a firm market with substantial price increases, but small upward corrections can not be excluded anymore.