If you look at the situation rationally, you can only come to one conclusion, that actually relatively little is happening. If you look at the price development since January, the prices have moved within a very narrow range and despite all the complaints and speculation, this is actually a clear sign that the market is more or less in equilibrium. Even slight changes in the currency situation and falling transport costs have more or less compensated for them, so there has not been very much tailwind or headwind from that side either. The big question that many market participants are still asking is to what extent this is a true and complete reflection of the situation. Two components are being ignored, namely the question of whether there were or are unsold stocks that are not being made available to the market at the moment. In the case of salted goods, it seems that in the end a lot of goods have found a home, whereby the question can still be asked at what price. In the end, however, this is completely irrelevant; once the goods have been bought, they no longer press on the market. With semi-finished goods, it is safe to say that the situation is completely different. It is no secret that there are many grades and unsold stocks spread across Europe waiting in warehouses for customers. Here, too, only what is offered to the market and negotiated on prices is actually relevant to the market. Statistically, we slaughtered 1.5% more cattle in Germany in the first quarter compared to 2022, but this was not really felt. The kill was probably significantly higher in regions where we are not active, because the volumes were rather lower in the north and west. Slowly, the

activity from China is returning to normal. However, this applies mainly to communication and the number of emails and enquiries. It is noticeable that Chinese tanners are slowly starting to rebuild their stocks for production from the summer onwards. With the current price level for cattle hides in the main markets, it is not surprising, except for the fact that they obviously expect a significant improvement in the leather business in China in the second half of the year and want to secure this with goods at favourable prices. However, this makes it extremely difficult commercially, because the basic perception of Chinese customers is still that the market is weak and their asking prices are always well below ‚market prices‘. So the only way to sell is to think that it is better to load the goods before the summer and possibly give up a dollar or two. It is also worth noting this week that there was interest from China in good and heavy goods, which are normally far out of reach in this market. We have not yet been able to find out what is actually behind this and what is expected. To be honest, we can hardly imagine that leather prices are possible in China that could actually justify the prices for these goods. The overall volume of business this week was again not very spectacular, but somehow it is always enough to place the current accumulation of production. However, this also means that one has to seriously confront the customers‘ price expectations and stubbornness rarely leads to successful deals at the moment.

The kill

We are now in the weeks of the year when public holidays repeatedly interrupt or shorten the weeks. It is extremely annoying both from a logistics and warehouse organisation point of view. The weekly production is thus always reduced and this will continue accordingly in the next few weeks.

What do we expect

We do not expect any significant changes in the market situation in the next few weeks. In Europe, the more expensive goods will probably continue to have high counter-pressure from the tanneries. For the other main categories we do not expect too much change, although the actual prices may always deviate from the publicly published prices. This general situation can certainly continue for a while, at least until rising demand for leather opens up opportunities for the sale of semi-finished products.