What happened this week: We do not believe that there was going on in Europe this week. In Northern Europe most productions are already shut down or already in the final lap and in the South the situation is not much different with aflluent plants closing and only retanning and dying are keeping tanners busy until they are also heading for the summer holidays. Two weeks ago we considered already the worst to be over in this market and we tend to believe, that this was pretty accurate. There might not all sellers having solved their problems, but most of them might also be homemade and cant be considered as a fair reflection of the market situation. The standard suppliers and buyers seem to have made their arrangements and this has brought most of this market back into balance for the time being. Those markets which needed major correction to trade back in line with the real market conditions have been adjusted and the weak USD has helped them while the European suppliers had to suffer more than expected due to the currecny market. However, at tleast the large discrepancies which we had seen in market some months ago have been sorted out. Leather business remains pretty

Intact and it is pretty hard to find any tanner of a certain qaulity who actuall complaing about the order situation and the outlook for the rest of this year. Sales during the week were limited to the grades which are actually still avaialble to sell. With the low kill during the next 4-6 weeks due to the holiday season not much extra hides will come to market and those buyers which hadnt taken the chances in the last weeks might be surprised when thy will not find too many ready sellers during the next weeks simply because they have sold their production already throughout the summer and have no need to handle anything anymore before the end of the holiday season which is again pretty much corresponding with the dates of the Shanghai Leather Fair as the next main assembly of the trade and probably the next indication we have to expect for the rest of the year 2007. Prices during the week wre almost unchanged, just he weak USD is still hurting here and there reagrding sales to the Asian customer base. Abattoir prices made a partial step towards market realities, but considering the lower number and weights the decline has not yet compensated for the market correction and will need another adjustment in August to start the new

season after the holidays also from adequate levels. If there remains still a threat for this market than it is the general economical outlook for the various economies around the globe. Things might not be as positive as mayn tend to believe and large turmoils on the financial markets could eventually also have an impact on the leather business. With the massive impact the chinese market has these days on the business changes of any kind in this part of the world could have quickly negative (and positive) influences on the market without too much prenotice.   The kill: Now entering into the lowest period of the year. In addition to the generally lower level vs. 2006 the numbers are certainly less than impressive. Until the end of August not many more hides can be expected. What do we expect: It seems, that most players are leaving quite relaxed into their summer vacation. Most of the pressure seems to be lifted and buyers are happy to see hide prices lower and sellers depart with the confidence, that a further freefall of prices cant be expected and they don’t risk too much until the end of the holiday season. Without much movement on the financial market we would be surprised to see large changes in the near future.