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Wood Products Prices in The UK & Holland

01-15th August 2009

Report from Europe, the UK and Russia

Market slows during summer holidays
Recent reports suggest little change in overall market
sentiment in Europe. If anything, demand for both tropical
logs and lumber has slowed further with the onset of the
summer vacation period, following the substantial fall in
consumption across all major European markets beginning
early 2008. Lack of credit insurance for many key
customers of the importing sector remains a significant
problem. Although many importers will still supply
customers lacking such insurance, the situation has
considerably increased the financial risks associated with
transactions and further deepened the trend toward smaller
orders and just-in-time trading. Customersí» unwillingness
to commit to purchases of larger volumes creates day-today
uncertainty. This further discourages moves by
importers to enter the forward market despite emerging
signs of shortfalls in landed stocks in certain specifications
and long lead times between ordering and arrival in the
EU. For example, lead times of 4 to 5 months are now
common for new orders from African sawmills. In current
conditions of very low consumption and supply, prices for
both logs and lumber on offer to European buyers are
generally holding steady at relatively low levels.

European veneer producers operating at 50-70% capacity
The German trade journal EUWID reports that European
demand for veneers has stagnated at a low level in recent
months. Most Central European manufacturers report
double digit percentage falls in turnover during the first
half of 2008 compared to the same period the previous
year. EUWID anticipates overall turnover in the sector this
year may be as much as 30% down on last year. Overall
European veneer manufacturers are operating at around
50-70% capacity and many operators are planning long
shutdowns over the summer months. The downturn has
affected all end-using sectors. The downturn in Spainí»s
large door industry is mentioned as particularly severe. On
the other hand, demand has held up better at the higher
quality end of the market. In addition to the downturn in
overall consumption, EUWID suggests real-wood veneerí»s
market share is coming under increasing pressure from
replacement products such as wood imitation plastics.

Plywood prices poised to make gains
There is limited forward ordering of tropical hardwood
plywood in Germany, France and the Benelux countries
and orders in the UK remain very slow. In recent months,
the market for tropical hardwood plywood in the EU has
remained finely balanced between very low consumption
and limited supply, keeping forward prices broadly level.
However, key Asian suppliers are now looking to push up
CIF prices on the back of much reduced production levels
in East Asia, improved demand in a few markets, notably
Japan and the Middle East, and rising freight rates. Freight
rates for a 40 ft container between China and Europe
increased from around USD700 in March to USD1100 in
July and are expected to rise again to around USD1300 in
early September. Overall, the rise in freight rates has
already increased costs of importing by around USD20/m³.

France at heart of okoume business
France lies at the heart of the European okoume plywood
business and currently hosts five major manufacturers of
this product. Most have production plants in Gabon in
addition to France. In 2007, they imported 165,000 m³ of
okoume logs: with a 60% yield this represents about
110,000 m³ of okoume plywood. In addition 148,000 m³
of manufactured okoume plywood were imported.
Together this represents some 258,000 m³ of okoume
plywood supply in France during 2007 of which about
55% was exported (104,000 m³). The Netherlands is a
major export destination and accounts for about 55% of
French exports (58,000 m³). Italy is the second biggest
market, but only accounts for 15% of exports.

Okoume plywood is strongly valued in these European
markets due to its versatility, high level of durability,
visual aspects, good dimensional stability, resistance to
wearing and excellent strength to weight ratio. In addition
to general joinery applications, okoume plywood is also
used extensively for yacht building, train and van floors
and inside panelling. Access to specific markets is now
heavily dependent on conformance to the EN 636 standard
and the French NF-EXTERIEUR CTB-X standard set by
the FCBA, which guarantees that a plywood product meets
required specifications set by the building industry for
external applications. Okoume plywood panels that are
certified by NF-EXTERIEUR CTB-X have a ten-year
guarantee in terms of durability.

Despite its natural assets and wide market presence,
okoumĘŽ plywood has been steadily losing share in the
European market for the past 10-15 years against a variety
of competing materials. These include Malaysian meranti
plywood, temperate hardwood and softwood plywoods,
and Chinese look-a-like products comprising a poplar
substrate to which is added two very thin 3mm faces of
okoume veneer. Various alternative products are also now
entering the market including Trespa (a composite
material combining a woodfiber base and melamine resins
used both for internal and external applications) and
Rockpanel (manufactured from mineral wool fibers
compressed under high pressure and used for external

Factors driving substitution include: the substantial price
gap separating okoume plywood from alternative
products; the high euro exchange rate, particularly in
relation to the Chinese yuan; architectsí» perception
(particularly in the Netherlands) of high maintenance
requirements for okoume in external cladding; and
demand for FSC or PEFC certification in some sectors
(which has tended to favor birch and softwood plywood



LM       Loyale Merchant, a grade of log parcel  Cu.m         Cubic Metre
QS        Qualite Superieure    Koku         0.278 Cu.m or 120BF
CI          Choix Industriel                                                       FFR           French Franc
CE         Choix Economique                                                        SQ              Sawmill Quality
CS         Choix Supplimentaire      SSQ            Select Sawmill Quality
FOB      Free-on-Board     FAS            Sawnwood Grade First and
KD        Kiln Dry                               Second 
AD        Air Dry        WBP           Water and Boil Proof
Boule    A Log Sawn Through and Through MR              Moisture Resistant
              the boards from one log are bundled                      pc         per piece      
              together                      ea                each      
BB/CC  Grade B faced and Grade C backed MBF           1000 Board Feet          
              Plywood   MDF           Medium Density Fibreboard
BF        Board Foot F.CFA         CFA Franc        
Sq.Ft     Square Foot              Price has moved up or down

Source: ITTO'  Tropical Timber Market Report

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