North American Lumber Market

01-15th May 2006

Analysis of the US tropical veneer market - Part II
As reported in the previous issue, the USA imported 30.5 million m2 ($41 million) of tropical veneer in 2005, up 34% and 32% from 2002 in volume and value terms, respectively. With regards to tropical veneer, USDA statistics only distinguishes between meranti and
non-meranti veneer. However, only some 1.2% of the volume (2.6% of the value) of tropical veneer imported is meranti veneer, mainly from Indonesia. On average, meranti and non-meranti veneer were priced at $2.58 and $1.33 per m2 as of 2005. Between 2002 and 2005, the
import volume of meranti veneer remained largely stable while that of non-meranti veneer advanced by about one-third. Furthermore, meranti prices declined while non-meranti prices remained stable, resulting in a market share loss for meranti both on a volume and in particular on a value basis.

China is by far the largest volume supplier of tropical veneers to the USA, accounting for 8.2 million m2 (27%) of total imports in 2005. Veneers supplied by China are modestly priced, averaging only $ 0.51 per m2 and accounting for only $4.1 million (10.1% of the total import value). However, China seems set to overtake Italy and Ghana as the largest supplier of veneer in value too. Between 2002 and 2005, China’s veneer exports climbed 2,566% in volume terms and 1,576% in value terms. No other country is coming close to such staggering growth rates.

With a volume market share of 20.3% (6.2 million m2), Ghana is USA’s second largest supplier of tropical veneer. Ghanaian veneer is one of the most pricy among all the tropical supplier nations, averaging $1.21 per m2 in 2005. As a result of the premium price, its import
value reached $7.5 million that year, equivalent to a 18.3% value market share, which is, after Italy, the highest among any other supply country. Between 2002 and 2005, US tropical veneer imports from Ghana advanced by 24% and 60% on volume and value basis, respectively, below the volume growth levels of China, Gabon, Cote d’Ivoire and Cameroon.

Gabon follows in third place with a volume and value market shares of 14% and 10.5% (4.3 million m2 and $4.3 million) in 2005. Veneer shipments from this country have been growing impressively by 73% in volume and 105% in value between 2002 and 2005. The average price of Gabonese veneer was $1.01 per m2, higher than Chinese veneer but lower than Ghanaian
veneer. China, Ghana and Gabon together accounted for 61% and 31% of US volume and value imports of tropical veneer in 2005. Other important tropical countries supplying tropical veneer to the USA included Cote d’Ivoire,Cameroon, Brazil and Thailand.

A fairly large quantity of tropical veneer in the USA comes from non-tropical countries, which re-export tropical veneer, usually in a “refined” form at a higher value-added price. The most important countries within this group are Italy, Spain and France, which together accounted for 14% and 35% of the market share in volume and value terms. With 2.5 million m2, Italy was
the fifth most important source for tropical veneers for the USA in 2005. Italy’s value of tropical veneer shipments to the USA of $8.8 million in 2005 was unsurpassed by any other country (21.5% of the total value market share), averaging $3.51 per m2 (a unit value surpassed only by France). Italy’s importance is increasing (although not as fast as China’s, as already (although not as fast as China’s, as already mentioned), as both its shipments in volume and value
terms grew at around 70% between 2002 and 2005, above average pace.

Tropical veneers stand in direct competition with temperate hardwood veneers. These products account for about one-third of the volume and more than half of the value of US veneer imports. However, the growth of imports of tropical veneers is outpacing that of temperate hardwood veneers, both on a volume and value basis which fell 8.6% between 2002 and 2005. Nevertheless, there are some important exceptions. For instance cherry veneer is being imported by the USA at a rapid and accelerating rate. The main temperate hardwood veneers
imported by the USA are birch, maple, red oak and cherry. Of these, cherry veneer poses a formidable competitive threat to tropical veneers. In spite of its relatively high price ($3.21 per m2), its import volume increased 68% between 2002 and 2005, almost twice as fast as the 34% increase of tropical veneer imports. Another competing temperate veneer is maple. Most of
the imported maple veneer comes from Canada, but imports from China have been growing the fastest.

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