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Wood Products Prices in The UK & Holland

01-15th April 2013

Report from Europe  

Except for small purchases to fill occasional gaps in stocks, most are content to delay major purchases for the time being.


Demand in Europe is also constrained because some importers built stocks in advance of implementation of the EU Timber Regulation (EUTR) from 3 March 2013.


Its conceivable that, after two years of historically low purchases, any significant upturn in demand could quickly transform into shortages on the ground in Europe. However, such an upturn seems unlikely at present.


Mounting economic and political uncertainty has meant particularly weak demand in Italy this year. Markets in north-western Europe are a little better, although importers reckon that consumption is no better than, perhaps even slightly less, than last year.


There is stronger demand in parts of Eastern Europe, but these markets are not traditionally big buyers of tropical wood and cant compensate for weak buying in Western Europe.


Some larger European importers are reporting reasonable levels of sales during 2013, although this is at least partly due to a decline in the numbers of European distributors involved in direct imports from Africa.


Due to the legal risks associated with EUTR and costs of compliance, more European companies are choosing to buy from stocks landed by larger trading companies.


Despite low production and relatively long delivery times for some species, the supply situation is not problematic for European importers due to slow consumption. Times for delivery of sapele sawn lumber to Europe, currently up to 5 months, are longer than those for sipo, iroko and wawa.


Sapele is now strongly favoured as the leading tropical hardwood species for joinery applications in many European countries. FOB prices for sapele on offer to European importers have been rising in recent weeks, although importers are not in a position to pass on price increases to their customers in the current market environment.


European demand for Malaysian sawn meranti has picked up a little in recent weeks as construction activity has increased in the spring weather.


However the EU market for this commodity is now much reduced compared to previous years, partly owing to the preference now shown for sapele and partly to substitution by engineered wood and other alternatives.


Nevertheless prices for sawn meranti on offer to European buyers have remained firm and stable due to reduced production and good demand in other markets such as the Middle East.

With the onset of spring in Europe, there has been an increase in demand for decking sizes of Asian bangkirai, South American cumaru, ipe and garapa, and African azobe, okan and bilinga.


However, volumes are expected to be lower than in previous years. Partly this is due to an unexpectedly large carry-over of stocks after a very slow garden season in 2012.


Prices for Asian bangkirai on offer to European buyers have weakened in recent months. However, producers have reacted by reducing manufacturing for the European market.


Therefore the price trend could quickly reverse if there were any significant increase in demand once the European summer gets underway.


EU imports of mouldings and glulam
Over the last decade, the decline in Brazilian, Malaysian and Indonesian share of the EU market for rough sawn tropical hardwood has been partly offset by these countries role in supply of mouldings and glulam.


This is aligned with a general trend towards value added production which has progressed further in these countries than in most other tropical hardwood supplying countries.


It is also linked to efforts by manufacturers to reduce waste and improve consistency of supplied wood through progressive tightening of material specifications.


In 2012, EU imports of hardwood mouldings (both temperate and tropical) declined 20% to 290,000 cu.m. Imports of this commodity declined substantially from both Brazil and Indonesia, the two largest external suppliers to the EU, but recovered slightly from China.


EU-25 imports of hardwood mouldings 2009-2012 (1000 cu.m)

During the recessionary period in Europe, EU imports of glulam have remained more stable than imports of both rough sawn timber and mouldings. Imports in 2012 were 138,000 cu.m, only 7% down on the previous year.


Most of the decline in 2012 was in imports from China, while imports from Malaysia and Indonesia were stable compared to the previous year.


EU-25 imports of glulam 2009-2012 (1000 cu.m)

EU tropical hardwood log imports down 30% in 2012
EU imports of tropical hardwood logs in 2012 were only 205,000cu.m, 30% down on the previous year and less than a quarter of the volume prevailing prior to the economic crises.


The decline in European imports forms part of a wider transformation in the international tropical log market over recent years.


Europe has always looked to Africa for supply of tropical hardwood logs. However the key traditional exporters in central Africa have increasingly tightened controls on log exports of the most valuable commercial species.


Meanwhile demand for African logs has continued to escalate in China. Chinas imports of African hardwood logs increased from 2.1 million cu.m in 2011 to 2.7 million cu.m in 2012, the supply being diversified both in terms of species and countries.


These now include C in order of importance in 2012 C Congo (Brazzaville), Cameroon, Equatorial Guinea, Mozambique, Benin, Liberia and Gambia.

India has also overtaken Europe as the second largest international market for African hardwood logs, importing around 530,000 cu.m in 2012 C although this mostly comprises plantation teak from Ghana, Ivory Coast and Nigeria.
EU-25 imports of tropical hardwood logs 2007-2012 (1000 cu.m)


The recent growth in Chinese and Indian demand for African logs has meant that prices are now relatively high compared to sawn timber. This is making log imports increasingly unattractive to European buyers.


At the same time, the numbers of plywood and custom cutting mills engaged in processing tropical logs in Europe has declined very rapidly in recent years.


European based plywood mills have consistently struggled to compete in a market increasingly impacted by Chinese plywood and a broadening range of substitute products.


As a result, following the Gabon log export ban imposed in May 2010, which led to a huge fall in French okoume log imports, there has been no move in Europe to seek to replace this volume by importing from other sources.


Europes imports of tropical logs in 2012 fell substantially from all the leading supply countries and into all the main consuming European countries.

European imports of tropical hardwood veneer down 15%
EU imports of tropical hardwood veneer were 259,000 cu.m in 2012, 15% down on the previous year. A large proportion of European tropical veneer imports consist of rotary veneer from Gabon destined for French plywood mills.


This trade declined last year as European okoume plywood production capacity and consumption continued to fall.


Europes market for decorative sliced tropical hardwood veneers also slowed last year. There was a range of contributing factors including: weak European furniture consumption, particularly in the face of competition from Chinese manufacturers; very low levels of activity in the southern European door sector - formerly a significant market; an ever increasing focus on oak in the furniture and finishing sectors; and intense competition from artificial surfaces.

EU-25 imports of tropical hardwood veneer 2007-2012 (1000 cu.m)

A recent analysis by the European veneer marketing campaign, the Initiative Furnier + Natur (IFN), shows that the latest fall in tropical hardwood veneer imports to Europe forms part of a long term decline in European veneer consumption.


IFN show that in the 15 years prior to 2011, there was a dramatic fall in veneer consumption in nearly every major European market. Consumption in Germany fell from over euro 300 mil. in 1995, to euro 200 mil. by the end of the 1990s, before slipping below euro 100 mil. in 2002.

Since then, German consumption has remained at around euro 50-60 mil. per year. Veneer consumption in Italy fell from euro 450 mil. in 2004 to euro 187 mil. in 2011. Spanish consumption fell from euro 260 mil. to euro 124 mil. over the same period.


Of all the large European markets, only France has maintained veneer consumption at reasonably consistent levels C at around euro 100 mil. over the last decade.


These trends are due to the combined effects of a movement of veneer and wood product manufacturing facilities to lower cost locations, and continuing substitution of real wood veneer for artificial surfaces.


Abbreviations

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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