What happened this week: What can one actually report at this time of the year? At least as far as Europe is concerned the market is coming almost to a standstill and trading activity is basically inexistent. Most of the weekly gossip in what part of the world was related to the bankruptcy of a larger tanning and trading operation in the north of Italy .  Since quite a number of contract tanners are involved in the failure many pundits would not be surprised if further tanning capacity is going to be closed as a consequence of the present situation.  Also more bankruptcies can be expected until the end of October and if this is going to happen one has to be carefully about the reaction of the financial community, i.e. banks and credit insurers which react normally pretty hard when the business sector is showing a pretty weak performance.  In the present particular case a large figure of losses is circulating and if it is really the double digit million Euro number the main question is how many suppliers are involved and if they can digest the losses and cash flow shortages they have to bear. We can only hope, that this is not going to spill into some kind of a domino effect with others being dragged behind and also hurting the suppliers. In any case the trade has

to accept the situation as the expected restructuring and it doesn’t consequently mean, that the global demand for raw material is declining and we are now entering longer period of a weaker trend, because the loss of production capacity can be balanced by increases in other markets. However, we have to admit, that we at the beginning or already in the middle of another fundamental change in the global leather industry. As far as the day-to-day business is concerned trading has been light during the week. There was a reasonable amount of interest for dairy cows from Asia , but due to the weak USD at the beginning of the week ends couldn’t really meet and the rally of the greenback on Friday came a bit too late to turn some of the business into sales. However, it leaves a better prospect for next week and we would be  surprised if buyers in the Orient will try to secure shipment for September/October on present levels to be covered and not to be forced to negotiate end of August around the Shanghai Fair. With the strong sales performance with large program deals from the USA also the European suppliers should get their fair share of the activity at least for the upholstery related hides.

As far ox/h and dairy steers are concerned the situation might be a bit less comfortable. Prices for the bits and pieces sold were  steady although the few interested still consider the market vulnerable and negotiations start normally with bids well below market level and the quality of the interest is quickly seen when it comes to serious talks about the prices. And so were sales limited to a few dairy cows and some light weights and ox/heifers and dairy steers were left aside – mainly for price reasons. . The kill: With also a lot of slaughterhouse staff being on holiday also the kill is in holiday mood. Steady on normal seasonal levels with numbers and weights on the lowest level of the year. Normally this should last for some more weeks before everything is getting better again . What do we expect: Assuming, that the USD can hold its gains also into next week we are quite positive as far as sales to the overseas customers are concerned. In Europe hardly anyone is in operation or buying mood. Regarding prices we don’t expect much, because looking at todays fundamentals European hides are adequately priced and do not need major adjustments. Steers and heifers might see a bit downside potential still, but it all should be within acceptable ranges.