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International Log & Sawnwood Prices

01-15th November 2010


  Log markets remain steady
Central and West African log markets remain steady and the recent price increases have been well absorbed in the markets without any disturbance to the flow of business. Prices remain unchanged during the first weeks of November and demand from the major markets is firm.

The European demand for tropical hardwood logs is still declining and current stock levels are reportedly adequate to fulfil projected demand for the winter period.

Sawnwood in good demand
West and Central African sawnwood prices are firm after the gains made in October. Saw mills in the region expect good demand through the rest of the year into 2011.

Generally prices have not changed from October. However, demand for padouk is strong, pushing its price up by Euro10 per cu.m for FAS GMS to Euro570 per cu.m, while scantlings were up by Euro20 per cu.m to Euro585 per cu.m.

Iroko sawnood is in good demand for the European and Asian markets. However, according to analysts, under the current high production volume there is a risk of overstocking and eventual decline in prices.

Uncertainty clouds demand prospects in Europe
Projections of European demand for tropical timber in 2011 remain uncertain. Housing starts in Europe are at low levels, but refurbishment activity has picked up. Improved refurbishment and renovation activity is good news for hardwoods as this sector uses more hardwoods and decorative timbers in joinery, carpentry and finishing than structural timbers.

China has introduced policies which are expected to increase imports of sawnwood rather than logs to China. If these policies are implemented within the short to medium term, the West and Central African mills have the capacity and resources to meet the greater sawnwood demand from China.

Projections for the rest of the year 2010 to the end of the first quarter of 2011 suggest that demand and supply will remain in balance and prices will continue to be stable.

Promising market prospects in Asia for Central/West African timber
The economies in Asia and Middle East are strong. Both China and India in particular are poised to meet forecast growth in demand for in-country wood processing industry for both the domestic and export markets.

So far, these countries are procuring much less logs and sawnwood from West and Central Africa than from the Asia-Pacific region. However, producing countries in the Asia-Pacific region are pushing their industries to produce more processed products, leaving less logs for export. This could create more opportunities for African exporters to tap these markets, as producers in Asia and Middle East are still demanding logs and sawnwood, because of their low labour and processing costs, say an analyst.



  Forestry Commission to promote legal timber for domestic market
The Forestry Commission of Ghana is working together with Tropenbos International to develop policy recommendations for enhancing production and trade in legally harvested timber for the domestic market.

The initiative is in line with the Forest Sector Development and Strategic Plan of the Forestry Commission. The Strategic Plan places emphasis on an efficient forest industry and value-added production among others.

The overall objective is to create an enabling environment for an efficient forest industry, by ensuring sufficient supply of legally harvested timber in the domestic market and discouraging illegal timber trade. Once the recommendations are completed, these will be submitted to the Ministry of Lands and Forestry for consideration.



  Monsoon and dam impoundment lead to drastic fall in log supply
Buyers of logs from Sarawak are facing a drastic shortfall in log supply, which has also resulted in higher log prices. One of the main reasons for the tight supply situation is the early monsoon season which affected log harvests.

The other reason for the log shortage could be the impoundment of the Bakun hydroelectric dam that might have lowered the level of the Rejang River and its tributaries which have been used to transport logs from the major logging areas in Sarawak. As a result, the transport of logs for processing mills and exports has been disrupted.

The other option for logging companies is to transport logs overland by lorries. However, this option will cost an extra US$10 to US$15 per cu.m vis-¨¤-vis river transportation.

The tight log supply has an impact especially on the Indian market, which is the biggest for logs from Sarawak. For the first seven months of 2010, exports to India accounted for 1.3 million cu.m of the total of 2.4 million cu.m of log exports from Sarawak.

Increasing production of environmentally friendly plywood
The largest plywood manufacturer in Malaysia, Shing Yang plywood group, has a monthly production capacity of 100,000 cu.m comprising four plants. Current production volume is only around 70,000 cu.m per month, out of which 50-55% is shipped to Japan. Other destinations are Republic of Korea, the US, Taiwan P.o.C, the Middle East and neighbouring South East Asian countries. The reasons for the current production include a shortage of raw material and volatile consumer markets, reports the Japanese Lumber Reports (JLR).

According to JLR, the company is increasing production of the so-called e-panels which are environmentally friendly plywood products made of plantation wood. The main products are flooring base board, concrete formboard, structural and standard panels, and LVL (Laminated Veneer Lumber).

The company owns 650,000 hectares of land, out of which 350,000 hectares are forest plantations. Shing Yang group has developed the first plantation area in 2000 and it is planting 40 million trees every year to keep production sustainable. The plantations include about 40 different species which are tested by the company to identify appropriate end-uses.


  President Obama addresses climate change and deforestation during visit
On 10 November 2010, the US president Barack Obama visited Indonesia. During his visit, he addressed the issues of climate change and deforestation in discussions with the Indonesian government. This effort is seen as another development to advance diplomatic relationships and trade between these two countries.

He was expected to announce how some of the US$700 million grant allocated to Indonesia by the Millennium Challenge Corporation (MCC), a US foreign aid agency set up under the former Bush administration, could be used to finance climate change and forest conservation programmes in Indonesia to create tradable forest carbon offsets that would help the US industries to meet future emission reduction targets.

In addition, he would unveil details of the implementation of four-year programme on addressing deforestation, reducing loss of biodiversity and improving the land use management. This programme involving US$35 ¨C US$40 million was announced earlier this year.

The US has also pledged US$20 million for marine conservation and promotion of clean-energy development in Indonesia.

Indonesian furniture sector falls short of export target
The Association of Indonesian Furniture and Handicraft Industry (Asmindo) stated that its recent marketing efforts to boost sales had fallen short of its target. During the period from January to October 2010, only half of the targeted growth of 30% over the previous year was achieved. Sales amounted only to US$25 million during the period.

Asmindo calls for a more effective marketing programme for Indonesian furniture, which would also help to generate more jobs in the country.

Rubberwood and construction material prices soar
The heavy monsoon and flooding in Thailand extracted a heavy toll on the main rubber tree plantation areas in Thailand, thereby lifting rubberwood prices across the South East Asia. Thailand is the world¡¯s largest rubberwood and natural rubber producer.

In addition, the devastation and evacuations arising from the violent volcanic eruptions of Mt. Merapi near Yogyakarta, has resulted in soaring construction material prices in Indonesia. The tragic volcanic eruptions, which have destroyed homes, farms and killed livestock, have also displaced more than 100,000 Indonesians to date.


   Teak market remains brisk in India
The market situation remains unchanged over the previous month. Apart from India, other markets are quiet. It has been reported that the teak market is good in India especially for grade 7 logs and good quality pyinkadoe logs, while demand for Gurjan logs is sluggish.

Monthly shipments of teak and other hardwoods for the past three months indicate the current market situation. Teak shipments were reportedly around 22,000 Hoppus tons in August, 15,000 Hoppus tons in September, and 22,000 Hoppus tons in October. The average export volume for other hardwoods was 70,000 Hoppus tons per month.


6. INDIA  

  Sharp jump in exports helps trim down trade deficit
According to the Department of Commerce India, exports in September were US$18 billion, up 23% compared to September 2009. The result was the highest in 24 months. September imports in India grew 26% to US$27 billion compared to last year. As a result, the trade deficit in September decreased to US$9.1 billion from $13 billion recorded in August.

The Indian economy is forecast to grow by 8.5% - 9.7% in the fiscal 2010-2011. The main driver for the economic growth is domestic demand, according to the Ministry of Finance India. In addition, IMF revised the forecast for Indian economic growth to 9.7% in 2010 and this is expected to encourage more foreign investments in the Indian equity markets.

India¡¯s forest cover expands by 3 million hectares
India¡¯s forest cover expanded 3 million hectares over the last 10 year, according to the Environment and Forest Ministry India. India is planning to launch satellites in 2013 to monitor the country¡¯s forest cover.

International Panelexpo and Conference 2010 postponed
The organisers of Panelexpo 2010 have announced that due to the distracting news circulated during the Commonwealth Games and the festival season in India, many of the participants had called for the postponement of the fair. The fair was planned for 1-4 December 2010 at NSIC Exhibition Ground Okhla, New Delhi and the new dates will be announced in due course.

Furniture fair showcases alternatives to plywood
The Index International Furniture Fair 2010 held between 8 ¨C 11 October in Mumbai showcased a number of alternatives to plywood for interior decoration. For example, advanced digital printing techniques have brought paper laminates to the markets. The fair also signalled that composite flooring panels as well as printed and coated Medium / High Density Fibreboards are gaining ground in markets with expanding production capacities against plywood.

India delegation participates in US furniture fair
The International Woodworking Machinery & Furniture Supply Fair was held from 25 to 28 August in Atlanta USA. The India delegation was led by CAPEXIL (Chemical and Allied Export Promotion Council of India) and included wood and timber product importers and exporters. The visit has resulted in new business and trade contacts for the delegation, reports CAPEXIL.

Strong demand for plantation teak
According to an analyst, there is a substantial flow of plantation teak to India and demand from the housing sector is expected to pick up as the monsoon season is over. Recently, some lower grades have arrived at cheaper prices than standard grades. These are included in the price table below.

Plywood manufacturers face shortage of peeling grade logs
Shortage of peeling grade logs is plaguing the plywood manufacturers. Eucalyptus and poplar logs are used to keep the mills running. The manufacturers are also still suffering from shortages of labour and power.


  Forest sector is key to economy in Par¨¢
According to the report ¡°Price of standing timber, Economic Value and Timber Market in Transition Contracts in State of Par¨¢¡±, published by the Para Forestry Institute (IDEFLOR), the forest sector plays a kea role in the economy of Par¨¢ state, generating jobs, income and foreign exchange.

In 2008, the forest sector¡¯s revenues reached US$4.46 billion accounting for 9.6% of the state¡¯s GDP and generating 30,481 jobs, representing 3.6% of the total employment in Par¨¢. According to the report, although timber trade in Par¨¢ state involves low value-added products, Par¨¢ remains a net exporter of timber products, with a total surplus of R$1.93 billion (R$2.37 billion of exports and R$0.44 billion of imports).

The report notes that as the forest sector generates significant income and employment in the state, it is therefore a strategic sector in the context of rural development in the Amazon.

Available area for concessions in Brazilian Amazon exceeds 1 million hectares
The area available for forest concessions in the Brazilian Amazon has exceeded 1 million hectares, according to the Brazilian Forest Service (SFB). The total area consists of seven concessions in the states of Rondonia and Par¨¢. The estimated timber production in the total concession area is 850,000 cu.m per year.

According to the SFB, forest concessions have been promoting the implementation of sustainable forest management, generating jobs, improving living conditions of forest dependent people and conserving natural forests. For the private business, concessions offer an opportunity to have legal access to forest resources in the long-term.

The forest concession contract value for the Jamari National Forests and the Sarac¨¢-Taquera National Forests totalled R$6 million. The amount collected from other concessions will be known after the bidding process is completed, as companies may pay premium over the minimum price set by the SFB. The minimum total value of the concessions under the bidding process is over R$20 million a year.

The SFB estimates that forest concessions practising sustainable forest management have the potential of increasing timber output in the future.

Timber product exports on course for growth in 2010
Analysts say that if the current economic trend continues without any downturn, timber exports from Brazil will record a growth in 2010.

From January to September 2010, export value has gained 11% compared to the same period in 2009. The segments that contributed the most to this growth are veneer and mouldings, increasing 35% and 16% compared to the same period last year respectively.

For tropical hardwood sawnwood, a 4% growth in export volume was recorded from January to September 2010 compared to the same period in 2009, up from 380,731 cu.m to 396,145 cu.m. In value terms, the growth was 6.3%, from US$179 million from January-September of 2009 to US$191 million in 2010. The exports of sawnwood in September 2010 topped US$24 million, equivalent to 51,267 cu.m of hardwood sawnwood.

Furniture exports from Rio Grande do Sul show signs of recovery
Wooden furniture exports from Brazil have been declining since the economic crisis started in 2008. However, at the end of 2009, exports started to show some signs of recovery. According to the Association of Furniture Industry of Rio Grande do Sul (Movergs), furniture exports from Rio Grande do Sul in 2008 amounted to US$289 million, accounting for 30% of total furniture exports in the country.

In 2009, furniture exports from Brazil totalled US$707 million. In Rio Grande do Sul, the leading furniture cluster in the country, exports reached US$200 million, accounting for 28% of the national total.

Furniture exports in the country from January to September 2010 amounted to US$573 million, up 13% compared to the same period in 2009.

8. PERU 

  Peru timber exports poised for strong growth
Wood and timber product exports are forecast to grow by 20% - 30% in 2010 over the previous year to US$200 million, according to the National Exporters Association (ADEX).

In 2009, wood and timber product exports from Peru were valued at US$157 million, while in 2008 exports totalled US$219 million.

From January to August 2010, wood and timber product exports rose by 30% in value compared to the same period in 2009. Semi-manufactured products such as sawnwood and wooden flooring contributed to export growth during the period. These products were mainly exported to the US and China.

The forest sector in Peru generates more than 500,000 jobs and this is expected to increase by 80,000 by the end of the year.

Granting of new concession areas delegated to regional governments
There are seven million hectares of forest concessions in Peru which are monitored and regulated by the State to ensure the sustainable development of forestry and domestic investments into the forest sector.

Forest concessions used to be granted by the Ministry of Agriculture¡¯s department of Forestry and Wildlife. Currently, the regional governments, such as Loreto, Ucayali, San Mart¨ªn, have the power to grant concessions after evaluation made by the department of Forestry and Wildlife. However, since the transfer of power to the regional governments made in mid 2008, no new forest concession areas have been approved, according to the Agency for Supervision of Forest Resources and Wildlife (OSINFOR).

OSINFOR is the designated organisation monitoring and regulating forest concessions in Peru. It has granted altogether 682 permits and authorizations to operate in forest concessions during the last and this year. Currently, there are 1,500 operators holding permits for forest activities in concession areas and all of them are required to have annual management plans.




   Timber exports and prices remain favourable
During the period under review, there were no exports of greenheart logs. However, purpleheart logs were in demand attracting higher average prices in both fair and small sawmill qualities. Similarly, mora log prices increased for all qualities.

For sawnwood, prices gained in the period under review. Undressed greenheart prices remained stable while undressed purpleheart (select) prices jumped from US$750 per cu.m to US$1,350 per cu.m. However, the exported volumes were small. Dressed greenheart and purpleheart prices gained while undressed purpleheart prices remained unchanged.

Several Lesser Used Species (LUS) including burada, cow-wood, darina, fukadi, iteballi, itikiboroballi, muniridan and Tonka bean were exported as sawnwood during the period under review. The major markets for LUS were Asia, Caribbean, Europe and North America. In addition, roundwood, fuelwood and splitwood contributed to the total export earnings. Piles fetched a good price average of US$831 per cu.m, with the major destination being the US.

For the period under review, exports of value-added products rose. The major exported products were doors, indoor and outdoor furniture and windows. Species used in furniture manufacturing included Crabwood (Andiroba), Kabukalli (Cupiuba), Locust (Courbaril) and Purpleheart (Amarante). These products were exported to the Caribbean and UK markets.

Capacity building to meet EU FLEGT requirements
On 10 November 2010, the Food and Agriculture Organization of the United Nations (FAO) and the Forest Products Association of Guyana (FPA) signed a Letter of agreement in support of a project entitled ¡°Building Capacity within the Guyanese forestry sector to meet European Union¡¯s Forest Law Enforcement Governance and Trade (FLEGT) Due Diligence requirements.¡± This US$102,400 project will be funded by the European Union (EU) and implemented by FAO.



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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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