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Wood Products Prices in The UK & Holland

01-15th June 2010

Report from Europe

  UK plywood importers maintain low stocks despite rising prices
The recent TTJ report on the UK plywood market notes that CIF Europe plywood prices from almost all sources ¨C including both hardwood and softwood products ¨C have increased over the last couple of months. In normal times, this would generally encourage more buying as importers try to avoid having to pay more later and seek to exploit a rising market.

However, current market conditions are very far from ¡°normal¡±. As the TTJ notes, ¡°if anything, rapidly rising prices have served as a further incentive for UK consumers to keep their plywood stocks to a minimum. In addition, higher prices have pushed some buyers towards their credit limits and forced them to rein in their purchases¡±.

Nevertheless, this situation cannot last too long. Quoting one importer, TTJ suggests that UK hardwood plywood stocks are ¡°at an all-time low¡± and that ¡°They will have to start buying soon.¡±

TTJ also indicates that significant volumes of Chinese hardwood plywood arrived in the UK during early May and more is going to be shipped in early June. But, according to a leading importer, much of this is pre-sold and has not been bought to build stock in anticipation of future demand. It is clear that few UK importers have now real appetite to hold significant volumes of hardwood plywood in stock.

With increasing price pressure in the UK market, China now dominates the supply for undifferentiated commodity grade hardwood plywood. Malaysian producers are increasingly focusing on more specialised products, including FSC and PEFC certified. The relative strength of the Brazilian real on international currency markets hinders UK imports of Brazilian hardwood plywood.

TTJ speculates that the GBP is likely to weaken further against the US dollar and other international currencies throughout the course of 2010 with the implication that imported plywood prices will continue to rise and there will be further pressure to find substitutes.

Reduced buying and increased plywood substitution across Europe
Similar trends towards reduced buying and increased substitution of tropical hardwood plywood are reported elsewhere in Europe.

In a report on the central European market for Indonesian and Malaysian raw and film-coated boards in May, EUWID suggests that ¡°high repurchasing prices mean that European buyers are now less interested in buying these products. Chinese and Russian grades continue to act as substitutes for South East Asian plywood. A number of agents and importers reported that a few South-East Asian plywood grades were increasingly turning into niche products that were only sought by a few buyers and for specific applications. Moreover, existing inventories are mostly large enough to meet the current demand in Europe, meaning that hardly any new contracts had been signed.¡±

EUWID also reports in early June that demand for okoume plywood in its key European markets ¨C including France, Netherlands, Spain and Italy ¨C remains subdued. Efforts by French based manufacturers to raise prices in the face of raw material shortages following Gabon¡¯s log export ban since May 2010 have experienced resistance from European consumers. Existing European stocks of okoume plywood are still high compared to current low consumption. There are indications that manufacturers based in France dependent on imported logs are losing market share to those with capacity in Gabon providing more stable and assured long-term supply.

Panels based on waste plastic promoted as plywood substitute
An emerging threat to commodity grade tropical hardwood plywood in certain lower grade applications in the European market was highlighted in a recent article in The Sunday Times, a UK national newspaper. The article reported on the activities of 2K, a start-up company in Luton, UK, which is recycling the plastic of redundant household items into ¡°a sustainable alternative to plywood¡±.

The article suggests that ¡°there is a mountain of waste plastic and nobody knows what to do with it.¡± However, the European Union's waste legislation requires local councils, manufacturers and retailers to organise the collection of used electrical and electronic equipments, which is driving a search for new ways of recycling waste plastic. 2K turns the unwanted plastic into a panel product called Ecosheet which is already being used by large UK construction firms such as Bovis Lend Lease and Wates for hoardings on building sites. Leading retailers such as Asda and Sainsbury¡¯s are now working with 2K on marketing issues.

2K uses a process called powder impression moulding, through which the waste plastic is ground together into a powder and bonded in a heat press, a little like an enormous toasted sandwich maker. The technique produces a strong plywood-type board even if the plastic is contaminated with other materials, such as metal.

2K expects to process 30,000 tonnes of waste annually from next year and to have five more factories in Britain. It is negotiating with licence partners to build factories in France and Spain and has had inquiries from round the world.

The Sunday Times notes that Ecosheet ¡°is slightly more expensive than plywood¡±, but 2K argues that, overall, it ¡°works out two or three times cheaper because it lasts longer than plywood, does not need painting and can be recycled at the end of its life, saving disposal costs¡±.

Carrefour success provides grounds for optimism
According to the TTJ, visitor numbers were up at the Carrefour International du Bois (CIB) timber show in Nantes, France, in early June. Exhibitors also suggested the event provided further evidence that the international wood trade is emerging from recession.

According to CIB spokesperson Cecile Touret, preliminary figures show a 5% rise in attendance at the exhibition from June 2-4 2010 over the last event in 2008. The figures suggest that well over 10,000 people attended the show, while preliminary reactions from exhibitors suggest there was an increase in the proportion of foreign visitors as well which, in 2008, accounted for 15% of the total. Exhibitor numbers this year were around 500 with nearly a quarter from outside France.

TTJ quotes French hardwood specialist Ducerf, which was highlighting its new Coteparc range of heat-treated cladding at the show, ¡°Business could still be better, but it is improving with China buying again, thanks to the strong dollar, and England coming back into the market, particularly for (laminated) panel products,¡± said export director Florence Perrucaud.

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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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