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International Log & Sawnwood Prices

01-15th December 2010


  Log market sustained by strong demand from China and India
The market situation remains unchanged for West and Central African logs as winter arrives earlier in Europe, hampering construction activity.

Adverse weather conditions are expected to impact on the economic situation in UK. Portugal and Spain continue to face severe financial difficulties and prospects for the timber based industries in these countries remain dull.

Nevertheless, China and India continue active buying of West and Central African logs.

Overall, log traders and exporters have had a relatively good year; with steady market situation and level of prices due to the Gabon log export ban and the log export relaxation by Cameroon and Congo Brazzaville.

Better markets for some processed products
Sawnwood prices, especially for premier species, have made gains through the year, and remained stable in the past month.

Currently, sawnwood producers are worried that any over-production could affect prices. According to analysts, producers in the region have to accelerate efforts in achieving full certification for their products, in order to keep market shares in Europe and benefit from the recent greater interest in premier red species of sawnwood from the US market.

Markets for veneer have reportedly improved, but the trade in other value-added products has yet to show any sign of full recovery to pre-recession volumes and diversification. West and Central African manufacturers are slowly re-activating processing facilities, but as the current market is still dull, any increase in production is expected to have an adverse impact on price levels. In addition, as the winter season is slowing down business in Europe, there is little incentive for West and Central African producers to increase production.


  Second JMRM meeting on VPA convened
The second formal meeting on the Joint Monitoring and Review Mechanism (JMRM) of the Voluntary Partnership Agreement (VPA) was held from 15 to 18 November 2010 in Accra. The JMRM was established to facilitate the implementation of the VPA, provide recommendations for capacity building, and assess the social, economic and environmental impacts of the Agreement.

The parties discussed the progress in the implementation of the Agreement. Ghana provided an update of progress in respect of the various envisaged components for the Legality Assurance System (LAS). LAS establishes institutional and procedural arrangements to verify the legal origin of timber through a verification and licensing scheme for all commercial timber products destined for the international and domestic markets. The update indicated Ghana¡¯s progress in developing institutional arrangements to manage the LAS effectively. In this regard, the establishment of the Timber Validation Division at the Forestry Commission and the Multi-Stakeholder Implementation Committee were proposed.

The Minister of Lands and Natural Resources noted that the VPA will have an impact on livelihoods, particularly among local communities. Both the EU and Ghana have initiated studies to address these impacts and challenges. In addition, Ghana will take concrete actions to link together the Plantation Development Programme, sustainable supply of legal timber, and the Forest Law Enforcement Governance and Trade (FLEGT).

According to Ambassador Maerten representing the EU, the recent adoption of the EU legislation on illegal timber provided a significant push for Ghana and other countries negotiating the VPAs towards their full commitment. The legislation provides justification and reward to countries with VPAs and constitutes an incentive to initiate negotiations on the VPA.

Ghana became the first timber producing country to sign a VPA with the EU in November 2009. Since then, the Republic of the Congo and Cameroon have also signed VPAs, while seven other countries are currently in the negotiation process.

The next series of meetings of the JMRM will be held in Accra in June 2011.


  Sarawak plywood manufacturers seek certification to expand market share
Sarawak plywood mills are increasingly pursuing international certification in order to expand their share in the international plywood markets.

The Sarawak Timber Industry Development Corporation (STIDC) reported that out of 42 plywood mills operating in the state, 24 have already been certified under the Japanese Agricultural Standard (JAS), 15 under the California Air Resources Board of the California Environmental Protection Agency, and 12 under European Union standards.

In the first half of 2010, Sarawak exported 1.46 million cu.m of plywood worth RM2 billion, compared to 1.7 million cu.m valued at RM1.45 billion in the same period of 2009.

In the first half of 2010, plywood exports from Sarawak to Japan amounted to 663,710 cu.m, valued at RM939 million. The Republic of Korea was the second largest export destination for Sarawak plywood with 283,493 cu.m worth RM316 million, followed by the Middle East countries with exports totalling 174,887 cu.m worth RM224.4 million.

Other major export destinations for Sarawak plywood include Taiwan P.o.C, the US, China, Hong Kong, the Philippines, Vietnam and the EU.

In 2009, the plywood industry in Sarawak employed 9,000 workers, both foreign and local, representing 20% of the total of 45,100 workers employed by the Sarawak timber industry. The plywood sector is thus the main employer within the timber industry in Sarawak.


  Improved demand for Indonesian furniture in Europe and US
The approaching holiday season in Europe and the US has resulted in increased demand and orders for furniture from the city of Surakarta in Central Java, Indonesia.

According to the Surakarta branch of the Indonesian Furniture Association (Asmindo), improvement in orders began in October this year for deliveries to be made before December 2010. It is estimated that orders for the period from October to November 2010 increased by 20% over the period from January to September 2010.

In the past, some 50 furniture manufacturers in Surakarta shipped an average of 400 containers of furniture to the EU and US annually.

Sri Mulyani, the major furniture manufacturer in Surakarta noted that orders for desks and tables are also coming from Australia and Italy. Orders have been increasing since September this year.


  Pyinkado prices trending downward
The general market situation in 2010 so far has remained unchanged from the previous year. The teak market is steady with stable prices, while pyinkado and gurjan are experiencing fluctuating demand and prices.

Pyinkado log prices reached as high as US$1000 per Hoppus ton for large girths, but towards the end of the year prices retreated to US$850 per Hoppus ton. Buyers complain that sizes of pyinkado logs are getting smaller and supply is short.

Teak from plantations on the rise
Expensive timbers such as padauk, tamalan and thinwin are no longer available in substantial quantities.

Myanmar teak is of superior quality as it is sourced from natural forests. This is an advantage that keeps it in demand. However, teak grades and girths have declined over the years. Experts are worried that the situation for teak will be the same as those for padauk and tamalan.

The Timber Merchants Association has suggested that timber extraction might be reduced in the coming year. However, the Myanmar Timber Enterprise (MTE) has yet to confirm this and the harvest quota for the next year is still pending.

Some experts suggest that the harvest quota will remain more or less unchanged. Teak plantations are expected to expand but plantation teak is of no comparison to naturally grown teak in terms of hardness, beauty, durability and stability.

Myanmar urged to reduce log production and export more value-added products
According to a report on the assessment of Myanmar timber utilisation, sawn teak was the main export from 1856 to 1940. It was estimated that 37 million cubic tons of teak logs and 39 million cubic tons of other hardwood logs were extracted from 1856 to 2006.

From 1936 to 1941, exports of teak logs accounted for only 1% of the total teak exports. The average annual of teak log exports was 2,397 cubic tons during the period. Between 1955 and 1956, Europe and Japan began producing veneer resulting in the share of teak log exports increasing to 22% of the total, with the balance of exports accounted by sawn teak. Most of the exported teak logs were grade 4 and higher and mainly for veneer production.

India as the largest importer ceased imports of teak from Myanmar from 1963 to 1983, but resumed purchasing after 1983. India that used to buy teak squares, has shifted to procuring more low grade teak logs.

Myanmar¡¯s forest policy is to reduce log exports and increase production of value-added wood products. According to experts, Myanmar should reduce log production to mitigate climate change and degradation and promote exports of more value-added products.

6. INDIA  

   Robust economic growth sustained in second quarter
In the second quarter of the fiscal year 2010-2011, the manufacturing and construction sectors grew 8.9% and 8.8% respectively, enabling economic growth to exceed the forecast of 8.2% growth for the period. The agricultural sector grew 4.4% over the same period last year due to the favourable monsoon season, according to the Central Statistical Organization.

In the second quarter of the fiscal year 2010-2011, exports grew sharply by 21.6% compared to the same period last year.

India targets forest cover of 33% of land area by 2020
India targets 10 million hectares of land more under forest cover by 2020. The announcement was made by the Director General of Forest Department in New Delhi, during the Indira Priyadarshini Vriksha Mitra (IPVM) awards given for afforestation and wasteland development efforts.

The forest cover in India is currently 23% of the total land area and the plan is to expand it to 33% within the next ten years. Better soil and water conservation and afforestation efforts will result in expanding agriculture, less migration to cities and improved livelihoods.

The efforts of the government of India are supplemented by plantations of poplar, eucalyptus, casuarinas, semul, gmelina among others species, in order to improve raw material supply for the paper, plywood and panel industries. NGOs are establishing plantations for fruit and medicinal plants including mango, tamarind and ebony. Established plantations of eugenia, mimusops, subabul, sissoo, neem and acacia provide timber for the construction and furniture industries.

Teak log import statistics
The following table presents teak log imports from different countries through Kandla port in the period April 2010 ¨C October 2010.


  BAMA meets 2010 deforestation reduction targets
The Brazilian Institute for Environment and Renewable Natural Resources (IBAMA) achieved the targets set for 2010 in the fields of environmental control and enforcement actions. The evaluation was made in preparation of the Annual National Plan for Environmental Protection (PNAP) for 2011.

The main indicator for IBAMA¡¯s work on combating forest fires and illegal forest activities is the deforestation rate. It is estimated that the annual deforestation will be reduced to 6,450 square kilometers in 2010, a 14% decrease over the previous year and the lowest in the last 20 years.

Brazilian forest production expanded in 2009
Juara municipality in the state of Mato Grosso is the largest roundwood producer in the country, accounting for 4.5% of the total national roundwood production. According to the Institute of Geography and Statistics (IBGE), 688,920 cu.m of roundwood was produced in Juara in 2009.

In 2009, the Brazilian roundwood production totalled 122.15 million cu.m. Out of the total 87.5% came from forest plantations and 12.5% from natural forests. Among the states, the largest timber producer is the state of Par¨¢ with annual production of 5.97 million cu.m of roundwood accounting for 39.2% of the national total, followed by Mato Grosso with 3.92 million cu.m (25.7%), and Rondônia with 1.35 million cu.m (8.9%).

In 2009, the total production value of plantation forests and natural forests was BRL13.6 billion. A share of 66.4% came from plantation forests and 33.6% from natural forests, while in 2008 the shares were 69.3% and 30.7% respectively. Timber production from natural forests amounted to 15.2 million cu.m in 2009, up 7.9% from 2008. The production value of natural forests totalled BRL4.6 billion in 2009; BRL3.9 billion came from timber production and BRL685 million from non-timber production.

Balsa wood production in Mato Grosso
A Swiss company visited Mato Grosso in order to procure Brazilian wood for wind turbine propeller manufacturing. The Swiss company is globally one of the largest distributors of balsa wood (Ochroma pyramidale), and in addition to propellers, balsa wood is used for insulation, crafts, rafts, paper and furniture among others.

In the state of Mato Grosso, the planted balsa wood area totals 3,700 hectares which is managed by 105 producers. First harvests of balsa wood plantations are made at age of 3-4 years when trees reach the height of 20 meters and 35 cm in diameter. Currently, 20% of the total balsa wood plantation area is ready for harvests while the balance is less than 2 years old plantation trees. There is no processing industry for balsa wood in the state and thus it is sold as roundwood.

The Corporation for Agricultural Research, Technical Assistance, and Rural Extension of Mato Grosso (EMPAER) has been carrying out research on balsa wood during the past five years analysing growth data and production costs for marketing purposes. EMPAER together with Embrapa (Brazilian Agricultural Research Corporation) are conducting research on characteristics of balsa wood to meet higher standards and commercial value.

Timber production levels off in November
The state of São Paulo is the major market for timber from natural forests. The market in São Paulo remained steady in November 2010, while only few changes were registered. In the region of Bauru municipality, an average price of jatoba panel increased 0.95%. Prices of peroba rosa panel fell 0.38% in Bauru and 2.08% in Mar¨ªlia. For the regions of Itapeva, Campinas and Sorocaba average prices of timber products remained unchanged.

In Par¨¢ state, November prices of timber products were also stable. Only maçaranduba panel average price declined 0.56%.

In November 2010, the total Brazilian timber, pulp and paper export value amounted to US$729 million, down 1.9% from October 2010 with US$743 million. For Brazilian timber exports, the export value totalled US$156.9 million, decreasing 5% from US$165.3 million exported in October 2010.

8. PERU 

  October wood product exports dropped significantly
The Export Association of Peru (ADEX) has reported that October 2010 exports of wood products were US$ 12.3 million, down 19% from the levels in October 2009. Year-to-date exports totalled US$141 million, representing a 20% growth from the same period last year.

Three biggest buyers were China, the US and Mexico, together accounting for 78% of the total export volume. In October, Sweden increased imports of sawnwood, plywood and decking materials compared to last year. Columbia increased imports while Venezuela and the US reduced their wood product imports significantly from last year, by 50% and 45% respectively.

Main items of wood product exports
In the period from January to October 2010, the main exported items were semi-manufactured products with a 45% share of the total wood product export volume. The exports totalled US$64 million, representing a 31% increase over the same period of 2009.

Semi-manufactured products were exported mainly to China which accounted for 78% of the total exports in the period. Swedish and Israeli importers substantially increased their purchases of semi-manufactured products in October.

Sawnwood exports made up 35% of the total exports. In the period from January to October 2010, sawnwood exports totalled US$49 million, up 12% over the same period last year. The main destination was China with a 34% share of the total sawnwood exports.

Veneer and plywood exports in January ¨C October valued at US$13.2 million, an increase of 9% over the same period last year. Veneer and plywood are exported mainly to Mexico which accounted for 93% of total exports.

In the period from January to October 2010, exports of furniture and its parts were valued at US$5.5 million, representing a 8% decline compared to the same period last year. The US is the main market for furniture accounting for 52% of the total exports. During the period, exports to the US and Chile collapsed compared to last year, down 58% and 32% respectively.

Heavy fines imposed on illegal logging
The Ministry of Agriculture of Peru announced a total of US$750 million to levy fines collected on transportation and trade of illegally harvested timber without the documentations required in the Forest law.

According to the General Directorate of Forestry and Wildlife Fauna (DGFFS), any timber products without required documentation will be seized, as well as tools and machinery used in illegal activities. If a concession holder is suspected of any violation of law, all activities, licences and permits will be suspended from the time of investigation till the final decision.

Peru¡¯s natural forest cover is second largest in South America
With a total natural forest area of 68.7 million hectares, Peru has the second largest natural forest area in South America after Brazil and ninth largest in the world, according to the Agricultural Ministry (Minag). Most of the forest area in Peru is in the Amazon, accounting for 94%, followed by coastal forests (4.6%), and highland forests (1.3%).

The total reforested area stands at 0.9 million hectares in the country. The estimated total forest plantation area is 40,000 hectares, mainly located in La Libertad, Cajamarca, Cusco, Apurimac and Ancash. The potential area for reforestation in Peru is more than 10.5 million hectares which is a good opportunity to expand the forest plantation area, say an analyst.

Strategic Agenda for Amazonian Cooperation
Eight member countries of the Cooperation Treaty Organization (OTCA), namely Venezuela, Bolivia, Brazil, Colombia, Ecuador, Guyana, Suriname and Peru met in Lima in the last week of November. Countries signed the Declaration of Lima targeted at achieving a balance between the extraction of Amazonian natural resources and the conservation.

During the meeting, the Strategic Agenda for Amazonian Cooperation was designed, an effort to agree on guidelines for the short, medium and long term sustainable development and cooperation in the Amazon.


  Demand from Asia drives timber prices up
During the period under review, there were no exports of greenheart logs. On the other hand, purpleheart logs achieved favourable prices for all qualities (standard, fair and small) with the major destination being the Asian market. Mora log prices remained relatively stable in this fortnight period, however, prices for small sawmill quality gained slightly.

For sawnwood, undressed greenheart prices gained for the select quality. Undressed mora prices continued to hold, as well as prices for dressed greenheart. Prices for dressed purpleheart gained slightly in the period under review.

In the period under review, Guyana¡¯s Washiba (Ipe) attracted a higher price average at $US1,800 per cu.m with the main export destination being the US market.

Roundwood, including both piles and posts, showed favourable prices in this fortnight period with the main destinations being Europe and the Caribbean. Average prices for splitwood inched up to US$1,000 per cu.m.

For the period under review, value-added products made notable contributions to total export earnings. The major exported products were handicrafts, mouldings, wooden utensils and ornaments with the main destination being the Caribbean. Crabwood (Andiroba) was one of the main species used for the production of these value-added products.

Second kiln drying facility commissioned in Guyana
On 29 November 2010, the second GYD20 million kiln drying complex was opened in Crabwood Creek, Berbice. 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 first kiln drying facility was commissioned in the beginning of November in Essequibo Coast.

Export markets for lumber can attract a market price of US$1,000 per cu.m, compared to about US$600 per cu.m currently received by exporters. Kiln drying prevent stains and degradation of wood. In addition, the weight of dried wood is lower. Kiln dried sawnwood is mostly utilised by the furniture manufacturing sector.


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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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