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International Log & Sawnwood Prices

16-31th October 2010


  Strong demand pushes prices up
For the current quarter, West and Central African producers and exporters report strong order books and firming prices for premier timbers. The log export market reportedly continues to hold firm with traders confident of market prospects till early 2011.

Meanwhile, Gabon log producers are selling their remaining logs in the domestic market at prices much lower than were previously achieved in the export market.

Okoum¨¦ log prices have gained further on steady demand from China, while India and Vietnam also are buying their most favoured species, adding stability to the market.

Sawnwood prices also experienced some substantial gains through the second half of October, following earlier rises in August and September. Demand for iroko is still very strong and prices for both logs and sawnwood continue an upward trend. Sipo sawnwood is back in demand with China reportedly buying species that were once bought almost exclusively by European importers.

Sapele log and sawnwood prices have held firm with demand steady over the past three months. Demand for khaya logs and sawnwood has also improved in October after a long quiet period, pushing up their prices.

Plywood and veneer prices have also strengthened and veneer manufacturers in particular have strong order books into next year.

 Inroads to US and Middle East markets
The recent interest of US buyers for khaya (African mahogany) and other red colour species seems to have turned into firm demand. In addition, African mahogany are at lower prices compared to South American mahogany (Swietenia macrophylla).

West and Central African exporters have also been successfully trading timber products to Middle Eastern countries and this business continues to make good progress for the mix of lower grade timber products at highly competitive prices.


  More export permits for emerging markets
According to the Timber Industry Development Division (TIDD), during the second quarter of 2010, the head office in Takoradi and its regional office in Tema issued altogether 15 export permits for the shipment of rosewood sawnwood (Pterocarpus erinaceus) to China. In terms of volume, the total amount was 508 cu.m of rosewood sawnwood, worth Euro 166,468 shipped by Nkoranza Sawmill, Geavag Company Ltd, Effedan Services Ltd, Chester Wood Supply & Company Ltd and Trust Wood Company Ltd.

In the second quarter of 2010, altogether 57 export permits were issued for several timber companies to ship teak billets, poles and logs to India, totaling 4,272 cu.m. In addition, a total of 16 export permits (2,439 cu.m) were issued in Takoradi for the shipment of Gmelina billets and poles to India.

One export permit for 151 cu.m of rubberwood sawnwood was issued in Takoradi for Best Glow Wood Ltd for shipment to Malaysia.


  Joint effort to promote use of rubberwood
Malaysia and Thailand have agreed to promote jointly the use of rubberwood by sharing information concerning the regional and international markets for rubberwood products. A Memorandum of Understanding (MoU) was signed between the Malaysian Timber Council (MTC), Malaysian Timber Industry Board (MTIB), Malaysian Furniture Promotion Council (MFPC), Thai Parawood Association and Wood Processing Industry Club of the Federation of Thai Industries, earlier this year. Following the signing of the MoU, the Malaysia-Thailand Parawood Committee (MTPC) was established with the chairmanship and secretariat to be rotated between the various parties in these countries.

In Malaysia, there are 1.02 million hectares of rubberwood plantations while in Thailand the rubberwood plantation area is 2.6 million hectares. In 2009, Malaysia exported wood and timber products worth RM522.8 million to Thailand, with the major export articles being sawnwood, plywood, wooden furniture and particleboard.

Rating scheme to improve competitiveness of SMEs
The Malaysian Timber Industry Board (MTIB) in collaboration with the Small and Medium Sized Enterprises (SMEs) Corporation Malaysia have initiated a rating scheme to evaluate the performance of SMEs operating in the timber sector in Malaysia.

The new rating scheme ¡°SME Competitiveness Rating for Enhancement¡± (SCORE) includes several parameters such as business performance, financial management, innovation, management and technical capabilities, production capacity and quality control systems. The purpose of this new rating system is to enable SMEs to maintain and improve competitiveness in the international market.

There is an urgent need for the Malaysian timber sector to improve SMEs¡¯ competitiveness as the total export value of wood and timber products fell 14% from RM22.8 billion in 2008 to RM19.5 billion in 2009. The furniture sector remains the major contributor to total timber product exports with RM6.28 billion, representing a 32% share of the total export value in 2009.

However, operators in the timber sector are optimistic that the sector will improve on its 2009 performance. According to the Malaysian Timber Council, the timber sector is forecast to lift exports by 10% to RM21 billion in 2010. For the first seven months of this year, exports were valued at RM12.3 billion, up 14% over the same period in 2009.

The certification of wood and timber products is expected to improve the competitiveness of Malaysian timber products and create more international markets. To date, a total of 160 certificates for chain-of-custody have been issued under the Malaysian Timber Certification Scheme (MTCS). This is in addition to the total of 10 forest management units holding valid certificates under the same scheme covering a total area of 4.83 million hectares of natural forests.

No time frame for signing of VPA
According to the Ministry of Plantation Industries and Commodities, there is no time-frame for signing the EU Forest Law Enforcement Governance and Trade (FLEGT) Voluntary Partnership Agreement (VPA).

However, the EU has indicated that it would like to have the VPA in place before the EU Illegal Timber Law enters into force in 2013.


  Arrangement in place for moratorium
Indonesia is set to formally start the implementation of the 2-year moratorium on new permits to convert natural forests and peatlands next year, as a presidential decree was expected to be issued before the end of October 2010. This will pave the way for the country to begin receiving a grant of US$1 billion from the Norwegian government. The Ministry of Forestry Indonesia is preparing a new set of regulations to implement the moratorium.

The moratorium is part of the Indonesian government¡¯s effort to reduce greenhouse gas emissions by 26% before 2020 as outlined in the National Action Plan on Climate Change (RAN-GRK). With more support from the international community, Indonesia hopes to reach a higher emission reduction target of 41%.

The moratorium will be carried out primarily in Papua, Kalimantan and Aceh where primary forests and peatlands remain largely unexploited. There are still around 40 million hectares of natural forests and over 21 million hectares of peatlands in Indonesia.

Norway is to provide a total of US$200 million for the first phase of the implementation of the moratorium with the first disbursement of US$30 million to be made in 2010. In 2011 and 2012, US$70 million and US$100 million will be disbursed respectively. The balance of US$800 million will be disbursed gradually after 2013 based on forestry sector emissions reduction parameters.

A pilot project will be carried out in one of the proposed areas: Jambi, Riau, East Kalimantan, Central Kalimantan and Papua. The Office of the Coordinating Minister of Economic Affairs will select the pilot project area based on biophysical, social, economic and cultural criteria. The pilot project will place more emphasis on measuring, verifying and reporting methodologies.

Indonesia ready for talks on illegal timber with Malaysia
The Ministry of Forestry Indonesia announced that it is preparing to begin negotiations with Malaysia on allegations that Malaysia has been a destination point for illegally harvested logs from Indonesia. A Memorandum of Understanding (MoU) is expected to be signed between Indonesia and Malaysia to address the issue of timber smuggling.

According to the Ministry of Forestry Indonesia, it has received reports on smuggled Indonesian timber particularly merbau in the Chinese market, originating from Malaysia and Singapore. Indonesia and China have already signed an agreement to eradicate trade in illegally harvested timber and China is discouraging illegally sourced merbau from entering the Chinese market.

Aerial seeding for reforestation in South Sulawesi
Officials in South Sulawesi in collaboration with the Kalla Group and the Hasanuddin University have conducted an experiment of reforestation through aerial seeding. To date, up to 2 tons of seeds of trambesi and sengon tree species have been sowed from the air in Moncongloe village in Manuju district, Gowa region.

The South Sulawesi Forestry Agency noted that it needed a cost-effective method to reforest a wide land area. The governor of South Sulawesi added that much money had been spent in the past for reforestation but with poor results.

The new method of aerial seeding using helicopters is expected to reach remote areas which could not be reforested using conventional methods. The plan is to reforest all damaged forest areas in South Sulawesi during the next 2 years and obtain visible results in 5 years. Twenty helicopters will be used in this programme to treat up to 100 hectares of damaged forest per day.


  Slight improvement in market situation
Both teak and pyinkado markets have marginally improved from the previous months. However, while traded volumes of pyinkadoe logs are up, the prices still remain at low levels.

The market for Gurjan logs is subdued and dealers are reportedly having substantial stocks. The inventories are expected to increase as the dry season and new harvests begin in November.

Purchases of Myanmar hardwoods by country in October
Purchases of Myanmar hardwoods by country during October 2010 were as follows: India (3 buyers, 264 Hoppus tons), Thailand (3 buyers, 245 Hoppus tons) and Hong Kong (1 buyer, 47 Hoppus tons). In the domestic market there was one buyer, with 59 Hoppus tons in volume.

6. INDIA  

  Industrial output surge
In August 2010, India¡¯s Industrial Output Index jumped 26.5% over the level recorded in August 2009. For the first five months of fiscal 2010, the increase in industrial output was 10.6% compared to the same period last year.

India faces rising housing shortage
According to a World Bank report, India faces a housing shortage of up to 70 million houses. High economic growth, rapid urbanization and rising middle class have created considerable demand for housing.

The report emphasized the critical role of the private sector in providing sustainable and affordable housing solutions for lower income groups, as public sector housing projects alone could not meet the rising demand.

Red sandalwood seized
Nhava Sheva customs recently seized some 20 tonnes of red sandalwood (Pterocarpus santalinus) which was set to be smuggled out of the country as aluminium connectors.

The seizure at Nhava Sheva customs was the fifteenth this year for red sandalwood with false transport documentation. The total seizure during the current year amounted to 230 metric tonnes of red sandalwood worth Rs.210 million.

Red sandalwood is used in medicines and musical instruments, with Tibet and Japan being the major markets. Besides Nhava Sheva port, red sandalwood has been seized at Kandla port and ports on the east coast.

Shipments through land routes have been seized at northern border customs. According to an expert, large scale commercial plantations may be the solution to the problem of illegal harvesting of red sandalwood from natural forests.

Clone technology for increased wood production in teak, eucalyptus and acacia
Clonal propagation techniques for the mass production of teak, eucalypts and acacia have been tested by the Kerala Forest Research Institute (KFRI) in collaboration with several other institutes and industrial establishments. The techniques involve macro- and micro- propagation of genetically superior trees.

Forty to fifty years old plus trees of teak (Tectona grandis L. f.), were cloned using a technique comprising two major steps: production of juvenile epicormic shoots on branch cuttings obtained from plus trees and rooting these shoot cuttings. Through this process it takes about 90 days to produce 100 rooted plants from 10-15 branch cuttings. With the introduction of clonal teak plantations, a 3-4 fold increase in productivity can be expected.

KFRI has also tested a clonal propagation method for five species of eucalyptus and four species of acacias. Some of the best eucalyptus clones have reached a mean annual growth of 71 cu.m per hectare, more than 10 cu.m per hectare greater than in conventional plantations in Kerala state.


  Strong rebound in tropical sawnwood exports
In September 2010, exports of timber products (excluding pulp and paper) increased 8.9% to US$206 million from US$190 million in September 2009.

Exports of tropical sawnwood gained in terms of both volume and value, from 46,600 cu.m worth US$21.4 million in September 2009 to 51,300 cu.m valued at US$23.8 million in September 2010, representing 10.1% increase in volume and 8.7% in value.

In contrast, exports of tropical plywood continued to fall by 22.6% from 6,200 cu.m in September 2009 to 4,800 cu.m in September 2010. In value terms, the drop was 23.9%, from US$10.9 million to US$8.3 million.

Pine sawnwood exports increased 6.5% in September 2010 compared to September 2009, from US$13.9 million to US$14.8 million. However, in terms of volume, exports fell 10.5% from 72,300 cu.m to 64,700 cu.m over the period.

The value of pine plywood exports gained 2.9% in September 2010 compared to the level in September 2009, from US$24.1 million to US$24.8 million. However, export volumes plunged 20.2% during the period, from 84,600 cu.m to 67,500 cu.m.

For wooden furniture, the value of exports rose 1.9% compared to the level in September 2009 to US$49.2 million in September 2010.

Mixed performance of wood product exports over the past 12 months
Total exports of timber products including pulp and paper totalled US$6.3 billion, a 19% increase over the past 12 months. However, in August and September 2010, declines in wood product exports were recorded. Pulp and paper exports were the main products contributing to improved total timber exports.

Exports of wooden furniture, softwood and hardwood sawnwood decreased over the past 12 months. However, exports of these products increased from August to September 2010 by 2%, 4.6% and 21% respectively.

Softwood and hardwood plywood export volumes declined during the past 12 months, by 23% and 15% respectively.

Argentina emerges as top market for Brazilian furniture
From January to August this year, Brazilian furniture exports grew 14% from US$441 million during the same period last year to US$502 million.

During the period, Brazilian furniture exports to Argentina jumped 93% compared to the same period last year, from US$39.6 million to US$76.6 million. As a result, Argentina became the biggest market for Brazilian furniture exports followed by the US, France and the UK.

Year-to-date furniture exports to the US slipped 7% from US$64.1 million recorded in the same period last year to US$59.6 million this year.

The increases in furniture exports to Chile and Uruguay were significant during this period, up 43% and 41% respectively. Furniture exports to these countries totalled US$41 million in value between January and August 2010, compared to US$29 million in the same period in 2009.

Timber product prices remain unchanged
The average price of timber products in Brazil remained unchanged from the previous fortnight. However, prices in US dollars increased 2.9% due to the strength of the Brazilian currency against the US dollar.

Economy is on track for growth
According to the Brazilian Institute of Geography and Statistics (IBGE), the Consumer Price Index (IPCA) in September 2010 increased 0.45% over the level recorded in September last year. The IPCA index for September 2010 was also well above the August rate of 0.04%. The accumulated IPCA for the first nine months of the year was 3.6%, a 4.7% increase over the past 12 months.

In September 2010, the average exchange rate to the US dollar was BRL1.72/US$ compared to BRL 1.82/US$ during the same month of 2009, showing further strengthening of the Brazilian Real against the US dollar over the period.

The Copom (Economic Policy Committee) kept the prime interest rate (Selic) at 10.75% per year in September. This is the second month in a row that the prime interest rate is kept unchanged.

Illegally harvested timber seized in Sierra Morena
A joint operation by the Brazilian Institute of Environment and Renewable Natural Resources (IBAMA), the Federal Police and the National Indian Foundation (FUNAI) resulted in the seizure of about 1,000 cu.m of illegally harvested roundwood in the indigenous reserve of Sierra Morena.

IBAMA reported that some 50 native Brazilians with bows and arrows blocked the access of inspectors to the area. According to the Federal Police, 22 trucks, 4 tractors, and 2 vans loaded with logs have been seized in Aripuanã since the beginning of October.

Wood identification course for Federal Police
The Brazilian Forest Service conducted a wood identification training course for Federal Police officials. The lack of knowledge on wood identification hinders enforcement operations as federal police inspectors have not been able to validate timber loads against the timber transport documentation. The identification process is important as falsification of documentation of timber species is common.

The wood identification software used in the course was developed by the Forest Products Laboratory of the Brazilian Forest Service. It provides 60 different timber characteristics, such as colour, smell, growth rings and porosity of 158 tree species in the country.

8. PERU 

 Wood and timber product exports still below pre-crisis levels
From January to August 2010, exports of wood and timber products totalled US$114 million, up 30% compared to the same period last year, according to the Extractive Industries Management Association of Exporters (ADEX). Despite the significant rise, the result is still lower than the level of US$155 million recorded in the same period of 2008. In fact, wood and timber product exports from January to August 2010 were 26% less than the exports made during the same period in 2008.

During the period, the main timber products exported from Peru were semi-manufactured products with a 46% share of the total export volume, worth US$51.9 million.

Sawnwood and veneer/plywood exports amounted to US$39.2 million and US$10.9 million in value respectively.

Exports of furniture and its parts declined slightly by 3% compared to the same period last year to US$ 4.4 million.

According to ADEX, the top five importers of Peruvian timber products during the period from January to August 2010 were China, Mexico, US, Dominican Republic and Italy.

Third FENAFOR fair held in Lima
The 3rd International Fair of Machinery, Equipment and Services for Wood and Furniture (FENAFOR) was held from 21 to 23 October 2010 at the National University of Agraria La Molina.

At the fair, some 120 companies producing forestry machineries showcased their products. In addition, around 30 technical presentations were made by several national and foreign specialists at the fair. Presentations were made on low impact harvesting, sustainable forest management, forest products processing and value-added forest products. The next FENAFOR will be held in October 2012.


  Brisk log trade
During the period under review, greenheart and purpleheart logs were on demand attracting higher average prices for all categories. Mora log prices retreated for standard and small sawmill quality.

For sawnwood, prices declined in the period under review. Undressed greenheart (prime) prices remained stable while undressed purpleheart prices fell. Average prices for undressed mora remained steady. Dressed greenheart prices slipped while undressed purpleheart prices remained unchanged.

Baromalli plywood attracted a favourable average price for this fortnight period. Roundwood, fuelwood, poles and piles contributed to the total export earnings with good average prices and with the US being the major destination. Splitwood continued to attract buyers in the Caribbean market at high average price.

For the period under review, exports of value-added products rose. The major exported products were doors, outdoor garden furniture, windows, spindles and mouldings made from greenheart, purpleheart, locust (courbaril, jatoba) and Guyana¡¯s lesser used species darina (angelim). These products were exported to the Caribbean, European and North American markets.

Affordable core homes for low-income families
The Housing Ministry of Guyana has initiated a project that will provide 113 affordable wooden homes for low income families. The Central Housing and Planning Authority (CH&PA) of Guyana confirmed that the project will be implemented in Lusignan and Tabatinga. The project¡¯s financing will be drawn from the Inter-American Development Bank¡¯s fund for the implementation of the Second Low Income Settlement Programme, which has a total programme financing of US$27.9 million.

According to the project plan, the core houses provided are 330 square feet with timber and concrete structure. A house can be improved and expanded by its owner up to 743 square feet in total residential area.

Wooden building components used in the houses are affordable and enables the expansion work and recycling. Wood also adds to better ventilation to houses.


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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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