What happened this week: The Shanghai fair is behind us and as usual almost the whole trade has met there. The show is growing, more chemical and machinery companies are exhibiting and the domestic attendance and number of exhibitors is steadily increasing. Due to the assembly of the Chinese tanners association the attendance was impressive already on the first day and falling back the following ones. However, even on the last day aisles were not empty and stands were still quite busy. This is anyway for us the most interesting impression. at the end, despite the worrying news we had the weeks before one could hardly trace any tanner who was complaining about the order income. Most tanneries confirmed, that after a low season from May to July customer interest started to pick up in the second half of August and they were also optimistic about the near future. So, the classical ‘we have no order’ or ‘we are waiting for the same’ was almost never heard. This applied to mainly Chinese tanners with an established customer base in all segments of the  leather business. Even the furniture and garment tanners where expectations were quite low were in a much better

mood than anyone would have expected. So far the good news. Now one would have expected, that this could have been transferred into a decent round of sales at steady price levels. But at the end our concern, that business could become tricky - in particular for cows – confirmed to be close to what has happened and sales were difficult to be finally booked. It needed quite a bit of effort to nail the customers down and in most cases it needed price concessions of a couple of percent which are hurting in combination with the weaker USD rate. It was quite peculiar, because the need to buy could be sensed in many cases and also shipping times are indeed pretty short what confirms the reduced inventory position, but leather prices remain under pressure, chemical and energy cost are rising and for the moment there were more sellers with the wish to have business booked and to keep the ball rolling rather than to wait for a better time to come in the near future. Speaking to other suppliers from around the world it seemed to be almost the same situation for everyone no matter from which part of the world he is coming. Another general statement was the complaint about profitability. Costs are

rising everywhere while revenues are remaining under pressure. As a final resume we think, that the one has to be positively impressed by the prospects for leather in the consumer business, but at the same time there is little hope, that this can in the short term convert into higher raw material prices. There are still quite a number of new tanneries in China under construction and with leather demand as it looks like today it seems ,however also that price are as well protected against a major correction.  The kill: We cant find anything new. Numbers are fully steady. The process of consolidation in the beef industry continues with the next and expected take- over from the VionFood Group in the South of the country and the announcement to shut down one slaughterhouse in the West. This will not be the end and more is to come. What do we expect? Next week the trade will be busy to digest the situation. Basically this should mean, that cows need a downward adjustment at the abattoirs for September to reflect the market situation. The rest should remain pretty steady although we would not be surprised if also the male market is running a bit out of steam as time passes. Just light and premium materials look very solid or even better.