As the trade went into the Christmas and Chinese New Year holidays, there was no good news to report. There is always business in Italy somewhere but today little of it is profitable. This counts especially for furniture upholstery which it seems can only be produced and sold at a loss.

Trying to come up with a final conclusion over the Lineapelle fair in Bologna is a hard job to do. From the commercial side nothing changed and nothing came up that we did not know already. There is work for the leather industry but it is very difficult for tanners to do so profitably.

The Shanghai fair did not bring surprises or new developments. Demand remains mainly for cheap material,forced so by the manufacturers of the finished products who say they can only pay less for the leather due to the instructions and orders they receive from the world’s big marketing companies.

In Germany the kill reduced again in May and on a year-to-year basis is now 4.2% below 2006. Despite this hide prices remain weak in general.

With the new budget announcements for the year 2007-2008 come new export duties in East Africa. The duty on raw has been increased from 20-40% in Kenya and from US$0.09 to US$0.25 per kg in Uganda. Duty remains the same in Tanzania (where it was already high at 30%).

After two major trade fairs in Hong Kong and Bologna nothing has really changed. We are happy with the good demand for leather but unhappy with the impossibility of tanners making a profit on what they are doing. The new weakness of the dollar makes the situation worse again. One can say that almost the entire world trade, or the lack of trade, is ruled by the exchange rate of the US$.

When your editor dared to predict a 50/50 chance for the market to move up or down there were certain reactions. All opposite, of course, which says enough in itself!! An interesting and extreme response came from a well established European trader who said: 'No, it will be 90% down 10% up.'