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International Log & Sawnwood Prices

16-30th November 2010


  Timber market remains steady
The market situation for West and Central African logs and sawnwood remains steady through to the end of November. Prices and traded volumes remained stable, maintaining gains made in the previous month. Producers in the region are confident that current orders and forward contracts will be sufficient to carry them through into 2011.

The news that a number of factors are causing supply problems for Malaysian logging and processing companies is likely to increase demand for West and Central African timber products. India and China are forecasting high growth rates in their domestic demand for wood and timber products and currently African producers have the potential to increase supplies, says an analyst.

Producers seek relaxation of log export ban in Gabon
Producers in Gabon have been active in lobbying the government to allow for some log exports against set percentages of in-country processing volumes. This would bring some assurance of supply, particularly of okoume logs to plywood manufacturers in importing countries, who are dependent on this popular peeler species.

If there is to be any relaxation of the log export ban, exports are likely to be undertaken through the Gabon State Timber Export Inspection Agency (SNBG).

Uncertainty clouds some European economies and sawnwood markets
Sawnwood prices have remained unchanged, maintaining the gains made in the past two to three months. According to an analyst, producers have noted the existing risk of overstocking and eventual decline in prices at current production levels as the economic recovery in Europe is still slow.

According to an analyst, the recent fiscal crisis in Ireland may well inhibit demand for iroko sawnwood which is preferred by Irish importers.

The economies of Spain and Portugal are also under pressure and there is no foreseen improvement in the construction and other timber using industries in the short to medium term. Although these countries are mainly importing round logs, the situation in these countries has a significant bearing on the overall European timber market and trade.


  Invitation for harvesting of plantation timber
The Chief Executive of the Forestry Commission (FC) has invited applications for a total harvest of 22,169 cu.m of plantation timber in some selected forest districts in Western and Eastern Ghana. These forest districts have been classified into three categories based on annual export turnovers and ability to supply the domestic market.

Plantation timber given budget support
The Minister of Finance and Economic Planning, Dr. Kwabena Duffuor, has indicated the government¡¯s support for sustainable natural resource management and creation of wealth through the modernisation of the sector.

In addition to the government s¡¯ budget support for forest plantations, some of the other planned measures for the coming year include:

• Computerisation of the various divisions of the Ghana Lands Commission and development of an integrated Land Information System;
• Expansion of the National Forest Plantation Development Programmes to all districts in Ghana;
• Promotion of private investments in the forest sector.


  Booming property development in Malaysia
Two major Malaysian timber companies, Permaju Industries Bhd and Eksons Corp Bhd are diversifying from their core businesses and moving into property development as the Malaysian property market continues to heat up.

According to statistics provided by the National Property Information Centre (Napic), the average price of a residential property in Malaysia has risen by 16% during the first half of this year to RM212,815 (US$68,600). Residential properties in Malaysia are the most expensive in Southeast Asia after Singapore.

Property development is a lucrative business especially for those with a good reputation and status. Property developers are allowed to collect payments and deposits from potential buyers, when projects are launched.

Preparations underway for Malaysian International Furniture Fair
The Malaysian International Furniture Fair (MIFF) 2011 will be held at the Putra World Trade Centre (PWTC) and Kuala Lumpur Convention Centre (KLCC), from 1 to 5 March 2011. The MIFF will provide 80,000 square metres of exhibition floor space. For more information:


  Indonesia eyes Middle-East for her furniture exports
The Indonesian government is optimistic that its furniture sector¡¯s participation in the International Furniture and Design Exhibition (INFDEX) 2010 in Doha, Qatar will help promote sales of Indonesian furniture products in the Middle-East.

The building sector in the Middle-East and particularly in Qatar is booming with the completion of several residential, hospitality and commercial construction projects. The Indonesian Trade Ministry also hopes that the exhibition will help tap these markets and promote trade between Qatar and Indonesia whose growth has slowed to 4.76% during the period from January to May 2010.

Plywood exports on a downward trend
Exports of Indonesian plywood continue to decline over recent months due to difficult conditions in the main markets for Indonesian plywood, namely Japan, the US and the Middle-East.

According to statistics released by the Forestry Industry Revitalization Agency (BRIK), the volume of plywood exports from January to October this year amounted only to 1.9 million cu.m, down 11% from 2.1 million cu.m registered in the same period in 2009. However, in value terms exports increased by 2.2% to US$866 million compared to US$847 million for the same period in 2009.

The decline in exports is attributed to the strengthening of the Indonesian Rupiah against the US dollar, which has the effect of making Indonesian products more expensive and less competitive in the international markets. The appreciation of the Indonesian Rupiah has also eroded the profit margins of plywood producers. In November last year, the average exchange rate was Rp.9,500 / USD while the current exchange rate stands at Rp.8,900 / USD.

Demand eases as holiday season approaches
Prices of most Indonesian timber products remain unchanged during the period under review. The winter season is beginning in the Northern countries and the Christmas and New Year holidays are approaching. As a result, most buyers in North-America and Europe are winding down their operations for the coming holiday season.


  Market remains dull
The market was generally quiet during November. There was no demand for gurjan and kanyin logs while trade with eng (Dipterocarpus tuberculatus) is more active.

Demand for teak and pyinkado, as reported earlier, is still subject to grade and size. Larger logs are traded more than smaller grades. Prices are reported to be somewhat subdued. The general elections held in November turned some interest away from timber trade in the country.

6. INDIA  

  Industrial growth eases due to tight monetary policy
In September 2010, the growth of India¡¯s Industrial Output eased slightly from the beginning of the fiscal year 2010-11. For the first six months of fiscal 2010, the increase in industrial output was 10.2% compared to the same period last year, while for the first five months the increase was 10.6%.

The monsoon season was favourable to the agricultural sector and thus the prospects are good for the overall economy. However, due to the tightened monetary policy and the sluggish market situation in Western countries, the expected GDP growth for the fiscal 2010-11 has been revised from the target level of 10% to 9%.

Exports from the beginning of the fiscal year to date were up 21.6% compared to the same period last year.

India promotes renewable energy
India consumes more electric power than she generates and the overall consumption is expected to continue to rise. In order to increase the domestic electricity production, improve energy supply security, avoid shocks in fossil fuel prices and contribute to carbon emission mitigation targets, India is promoting renewable energy production in the country.

The total renewable power capacity is envisaged to be increased by an additional 15,000 MW during the next 5 years. For solar power, the total capacity target is set at 20,000 MW by 2020. In addition, India is also promoting the development of fuel wood plantations, bio-gas plants, bio-diesel and ethanol.

Government depots begin timber auction sales
Timber auction sales in Central Indian Government depots have started. Demand is good and logs are fresh, however, the prices remain at previous levels.

Auction sales at various depots of Western India were also announced with indicative sales of 3,766 cu.m of teak logs and 1,217 of other hardwood logs.

Continuing flow of lower grades teak to India
According to an analyst, the flow of plantation teak to India is good but imports mainly consist of lower grades. Freight costs are at levels that reportedly cause problems to traders.

Stiff competition for plywood logs
As the shortage of peeling grade logs is still plaguing the plywood manufacturers, imports of eucalyptus and poplar logs are increasing to keep the mills running. Local mills are reportedly having stiff competition from imported logs. Shortage of labour and power is also hampering local manufacturers.


 Significant decline in Brazil¡¯s tropical timber exports
In October 2010, exports of timber products (excluding pulp and paper) increased 6.7% to US$213 million from US$200 million in October 2009.

However, exports of tropical sawnwood declined in terms of both volume and value, from 51,600 cu.m worth US$26.2 million in October 2009 to 45,100 cu.m valued at US$21.6 million in October 2010, representing 12.6% decline in volume and 17.6% in value.

Exports of tropical plywood have also continued to slip, plunging 39% from 11,300 cu.m in October 2009 to 6,900 cu.m in October 2010. In value terms, the drop was 40%, from US$6.5 million to US$3.9 million.

In contrast, pine sawnwood exports jumped 28% in October 2010 compared to October 2009, from US$10.1 million to US$12.9 million. In terms of volume, exports rose 4.8% from 54,400 cu.m to 57,000 cu.m over the period.

The value of pine plywood exports gained 17% in October 2010 compared to the level in October 2009, from US$24.4 million to US$28.6 million. However, export volumes decreased 1.9% during the period, from 82,400 cu.m to 80,800 cu.m.

For wooden furniture, the value of exports declined 6.7% compared to the level in October 2009 to US$48.6 million in October 2010.

Timber is top export product from Alta Floresta
A survey conducted by the Ministry of Development, Industry and Foreign Trade (MDIC), showed that timber is the main export product from the Alta Floresta municipality in the Amazon region. From January to September 2010, tropical sawnwood exports totalled US$10.7 million, compared to US$7.8 million in the same period of 2009.

Exports from Alta Floresta represent 24% of the total tropical sawnwood exports of US$40 million from the Mato Grosso State in the period from January to September 2010. The national total tropical sawnwood exports in the period were US$191 million.

Timber product prices remain unchanged
The average price of timber products in Brazil remained basically unchanged from the previous fortnight. However, prices in US dollars increased 2.5% due to the strength of the Brazilian currency against the US dollar.

Financial indicators remain broadly favourable
According to the Brazilian Institute of Geography and Statistics (IBGE), the Consumer Price Index (IPCA) in October 2010 increased 0.75% over the level recorded in October last year. In September, the IPCA index also increased 0.45% compared to September 2009. The accumulated IPCA for the first ten months of the year is up 4.38% over the last year.

In October 2010, the average exchange rate to the US dollar was BRL1.68/US$ compared to BRL 1.74/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 Ocotober. This is the third month in a row that the prime interest rate is kept unchanged.

Electronic tags for timber tracking
The wireless tracking technology, the so-called Radio Frequency Identification (RFID) tags, will be used in timber tracking. Tags with the RFID system have implanted antennas which can be attached either to standing trees in forests or to logs to be transported. Each tagged tree or log gets an identification number and its information is updated in a database shared between the industry and timber control authorities. The database includes information on species, coordinates of harvest, current location, planting year and logging permit.

This monitoring system is expected to assist the work of timber industries, organisations responsible for sustainable forest management and governmental authorities.

Monitoring deforestation in Southern Par¨¢
The Brazilian Institute of Environment and Renewable Natural Resources (IBAMA) launched a forest monitoring initiative called the ¡°Guardians of the Amazon Operation - Goianos IV¡± in October 2010 in Southern Par¨¢, where the rate of deforestation is the highest in the country. From August 2009 to August 2010, 15,900 hectares of forest were deforested in São Felix do Xingu. Since the beginning of the initiative, IBAMA has imposed BRL12.3 million fines on violators responsible for deforestation of 1,900 hectares of forests in the region.

São Felix do Xingu was the region most affected by forest fires this year. At the peak of the dry season in August, 19,727 hectares of forests were on fire in the São Felix municipality, accounting for 31% of the total of 64,443 hectares of forest affected by fires in Par¨¢. During the Operation Hefestos to combat forest fires, IBAMA has imposed a total of BRL66 million fines on those causing deliberate forest fires.

IBAMA monitors and detects deforestation areas through the satellite images of the System of Deforestation Detection in Real Time (DETER), a programme of the National Institute for Space Research (INPE).

LIGNA timber trade fair
According to the Federation of Industries of Paran¨¢ State, the largest state exporting timber products, the timber sector has gradually recovered from the recession in 2008. Timber exports in the first half of 2010 rose by 7% compared to the same period in 2009.

The furniture sector was the hardest hit by the recession. According to statistics, furniture sales fell 11% in 2009. As a result of decreased exports and domestic sales, furniture prices plunged approximately 25%.

With a view to returning to growth and tapping recovering international markets, Brazilian woodwork manufacturers participated in one of the major timber trade fairs, the LIGNA Hannover, held in the last week of November in Curitiba Brazil. The fair gave an opportunity to introduce new technologies and sustainable solutions for the markets.

8. PERU 

   New forest law faces resistance from indigenous communities
In November, consultations on the draft Forestry and Wildlife law were held with the communities of Puerto Maldonado, Pucallpa and Iquitos. Indigenous groups in these communities are against the draft law. This is a serious drawback for the Free Trade Agreement (FTA) with the US, as the new Forestry and Wildlife law is essential in meeting the conditions of the FTA.

Consultations were held with the Confederation of Amazonian Nationalities of Peru (CONAP) and the National Organization of the Amazon Indigenous people of Peru (AIDESEP).

According to the Agriculture Committee of Congress, the indigenous groups are unclear of article No. 62 of the draft Forestry and Wildlife law. The article states that the concession area shall not exceed 40,000 hectares and a person could not have more than one concession.

Forest concessionaires face difficulties in securing financing
Improperly defined private property rights in Peru leads to reluctance among banks to offer credit facilities to concession holders, stated General Director of the Ministry of Forestry and Wildlife, Jorge Ugaz Gomez. Private forests are often considered inadequate to secure loans for forest concessionaires.

Forestry operations in tropical forests in the country are very expensive and investments in machinery, forestry equipment, infrastructure and logistics are desperately needed. To improve the financial situation, the Ministry of Forestry and Wildlife is identifying factors affecting forest concessionaires¡¯ access to financing. ¡°The forest sector is very dynamic and there is increasing interest in Peruvian timber products from the informal, domestic and international markets¡±, noted Jorge Ugaz Gomez.

Peru aims at zero-illegal logging in Amazon by 2021
The Minister of Environment of Peru, Antonio Brack, announced Peru¡¯s target of eliminating illegal logging activities by 2021. If successful, this can reduce Peru¡¯s C02 emissions by as much as 47.5%, according to the Minister.

OSINFOR proposes annual reforestation of 100,000 hectares
The Agency of Monitoring Forest Resources and Wildlife (OSINFOR) proposed an annual reforestation of 100,000 hectares in Peru. Other countries have shown successful reforestation results and Peru would have the potential to increase its rate of reforestation, according to the OSINFOR.

OSINFOR notes that the country still has the potential of reforesting 10 million hectares of land, and it is calling for a national commitment to promote reforestation and create forest growth in different regions of the country.



  Mixed timber price trends
During the period under review, there were some exports of greenheart logs in fair and sawmill qualities. Purpleheart log prices remained relatively stable for all qualities while mora log prices were down.

For sawnwood, undressed greenheart prices were favourable for the prime, select and sound qualities. Undressed purpleheart prices slipped while mora prices continued to hold. Dressed greenheart top-end prices rose from US$890 per cu.m to US$1,450 per cu.m, but the exported volumes were small. Prices for dressed purpleheart remained steady in the period under review.

This fortnight period saw exports of Lesser Used Species to the European market at good average prices. Guyana¡¯s washiba (ipe) continues to be in demand in the US market attracting an average price of US$1,750 per cu.m.

Roundwood, fuelwood and splitwood made notable contributions to total export earnings with the main destinations being the Caribbean, Europe and North America. Average prices for splitwood reached a high of US$969 per cu.m.

For the period under review, exports of value-added products were significant. The major exported products were doors, indoor furniture, windows, mouldings and spindels. Species used in the manufacturing of these products included greenheart, purpleheart, crabwood and kabukalli. The Caribbean was the major market for Guyana¡¯s value-added products.

First kiln drying facility commissioned in Guyana
On 9 November 2010, the first GYD20 million kiln drying complex was opened in Essequibo Coast. The facility was commissioned under the ITTO funded project ¡°Value adding and kiln drying of commercial timbers by small scale community saw millers in Guyana¡± being implemented by the Guyana Forestry Commission. The complex has a capacity of drying 10,000 cu.m of timber. The Essequibo region accounts for 50% of Guyana¡¯s total timber production.

The Minister of Agriculture, who opened the complex, noted that this kiln drying facility is the first of three facilities to be established nation wide. The facility also puts more focus on processing in Guyana and promoting exports of value-added products. This is expected to create more jobs and opportunities for loggers and concession holders.


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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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