What happened this week: Business is still not waking up. Well, we did not expect it, but every week starts with the hope, that things would turn to the better and a positive turnaround can be noticed. The grip of leather prices still controls the market and – at least for the time being – tanners are still not tempted to buy more than what they just need for the very short term. This applies basically for the customers abroad, i.e. export customers for salted material. Market conditions and the general business environment are not positive – at least not for upholstery leathers – and the excess production capacity leaves the upper hand for leathers buyers to keep prices under their control. The most common comment in the trade at present is: Prices have to come down, my customer wants to spend less. All this is nothing new and has in general led the market and the situation to where we are now. In upholstery leathers price is definitely not anymore stimulating demand and some are believing even, that the price erosion of finished leathers has even had the opposite consequence – falling demand. At least we have to recognize, that for economical hides demand is not strong enough at the moment to absorb the global offer. Something

nobody was able to imagine several month ago when the price pressure shifted the demand more and more into more economical origins and demand for ‘cheaper’ material was strong enough to clean most availabilities up.  For the moment this does not seem to be the case anymore and tanners can not even find any profitability anymore. How difficult calculations and business is can also be seen by the increasing number of market and petty claims. Nothing serious, but clients are testing how much they can squeeze out of a supplier with damaging the relations for the future and looking too foolish. All this has already been for ages a clear symptom, that tanners are not too busy and calculations are more than tight. Side leather customers deliver still more fun and most of the isolated sales during the week went again into this segment. Light and extra heavy materials were the only ones in demand, but volumes were nothing really worth to mention. At the end of the week the firmer trend of the USD made offer prices for overseas export more attractive, but did also not attract more buyers for the time being and the assumption, that the Asian customers are now more in a ‘wait and see’ mode

until they have seen all the travellers which are turning up on the occasion of the APLF in Hongkong is valid. However, also in Asia it seems, that side leather business is better than the upholstery sector.    The kill: Slaughter last week was very low. In particular the kill of bulls was more minimal. The hope, that the retailers would take more inventory for the Easter days did not materialize and number were really short. This caused supply bottleneck for fresh bulls and will also have follow-up effects on the weeks to come. We are anyway now entering the low season of slaughter and in only a few more weeks cows will return to the fields. So, in general the outlook for the kill is no goods – as usual at this time of the year. What do we expect? We think, that also next week trading will be on the low side. If the firmer trend of the USD persists the prospective for cow sales are getting better, because prices would become competitive again. There is now reason to believe, that tanners have any reason to buy actively next week before they have had all potential suppliers parading around the Hongkong leather fair. For our prices we still don’t expect any changes. The firm USD supports cows while bulls are safeguarded by the  lower slaughter. Happy Easter !