What happened this week: Reading the various reports from across the globe, talking to a number of people around the globe and analyzing the situation and the activity in Europe on has to realize, that the opinions and sentiments are drifting further and further apart. The market in the USA - as it is reported and described – doesn’t seem to show any signs of fatigue and leaves the impression, that nobody expect any major decline throughout the whole year and every week it is another Asian market in combination with the forward position which keep the sellers in the drivers seat and the market firm. Under the condition, that this is true and correct other markets shouldn’t worry too much, because the price levels (paid) over there protect other markets including our own. Without this protection things wouldn’t so bright over here anymore. The low kill is covering the fact up, that the resistance against the price levels in Europe is growing daily. The vast majority of tanners have made their calculations and figured out, that the high prices and the selections which are  below standard are even more weighing on calculations than what they expected. It is the old story, that it always takes

until the pain really reaches the decision levels. There are still little or no effects in the general markets. The need for fresh hides and the low kill does not allow the accumulation of salted inventories with the exception of some neighbouring countries. What cant be absorbed in the extra heavies is – like in previous years – parked in wetblue by some of the processors with contract tanning or tanning facilities. The expectation is, that the surplus is only temporary and the declining kill in spring in combination with the lower kill will allow the sale of the merchandise like it happened already in 2006. In the meantime many tanning areas in Europe report reduced activity. The optimists consider this to be a seasonal matter while the pessimist believe, that this could be a start of a – at least in Europe - declining demand for leather and/or production for demand and price reasons. No matter who is right at the end, but the fact of the matter is, that the European market has lost already since December a lot of its momentum. As long as this can be absorbed by the Asian buyers no problem, but with the example of the extra heavies where certainly not all hides find their home at present one

has to accept, that without the overseas support the market conditions would be  different. This would be less important if not a number of suppliers are fully focussed on the European customer base and if they cant move their product anymore in the volume they were used to for long the gap between prices between Europe (fresh) and overseas (salted) could widen quickly.  Well, at present certainly too early to know, but the high priced and also extra heavy materials will find the market conditions certainly more difficult in the near future. The kill: Still now change. The kill is low and the ratio between males and females is still not really favouring the bulls. With the carnival season still ahead of us it must be believed, that little is going to change this – at least not before the second half of February. What do we expect: Whether one likes it or not the situation is not anymore as easy as it was for a long time. The fundamentals of supply and demand still do not allow any market change, but the sentiment – at least in Europe – is not anymore the same than what is used to be. Resistance is building and may it still not be strong enough to break the price trend, but it the level of uncertainty is rising. A small adjustment could settle a lot.