What happened this week: The entire interest this week was on the meeting of the trade in Shanghai.  The timing of the event proved again to be too early.  Despite a very good attendance and the confirmation, that the fair in Shanghai might overtake soon the importance of the APLF in Hong Kong it is timed too early to really gain security about the volume and the prices of leather business in the last quarter.  In addition remains of the focus on upholstery leathers and in the section of shoe leathers remains underrepresented there.  Anyway, the event proved that leather demand for upholstery leathers remains fairly good and consistent.  Hardly any tanner was met who was complaining about the volume of orders he is expecting from his customers over the next months.  The problem remains on the price for finished leather and the increasing overcapacity of production of Chinese tanneries continues to weigh heavily on their ability to negotiate leather prices with the buyers, which are desperately needed to justify present

raw material prices. And this was at the end also the reason why only limited business for raw materials was concluded.  Without having a clear picture what is going to be the result of the negotiations for finished leather prices no buyer was willing to place more than friendly orders to maintain relationship.  Price bids were about $1-$2 below asking levels and only where the customer/buyer relation was good enough to justify a sale, deals were concluded.  So, the total volume of raw material sales remained below expectations.  The US dollar was again trading in the range we have seen for some time now.  It was on the low side until the end of Friday when it returned to the levels seen the week before.  Who was able to hold the position had again the chance to improve the revenues in Euros before Friday's close.  Bad news came from the automotive industry.  China and the USA where both reporting poor sales of cars on the last weeks and the media was full of reports about the existing overcapacity in the industry.  In the logic

of the car industry this means further pressure on the suppliers and prices. Since automotive leather was for a long time the major driving force behind raw material fluctuations this puts a further ? on the directions in the near future.  However, having said that, raw material prices do not always follow the logic of finished product developments. The conclusion of the week has to be that we are not concerned about the demand for raw material for the rest of the year, but price negotiations will become probably even more difficult in the near future.  The kill: The kill continues to improve and we sincerely hope that also weights will do the same to give at least a little bit of a relief on calculations with abattoir prices being far too high versus the selling prices in the market at present.  What do we expect? We continue to fail to find any reason why raw material prices should leave the existing trading range we have seen almost for the whole of the last three months.  Currency factors and financial issues will remain more determining than anything else in the weeks to come.