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Wood Products Prices in The UK & Europe Market

16-30th September 2007

Report from the UK

OECD warns of slowing UK economic growth
Organization for Economic Cooperation and Developmentí»s (OECD) announced that the UK would need to cut interest rates to boost the economy, said the BBC. It warned that that the slowing economy could increase the UKí»s budget deficit and lead to spending cuts. The OECD forecast that economic growth in the UK could be below 2.5% and suggested that the credit turmoil could affect the high street and housing markets.

Housing market shrugs off financial turbulence
Nationwide reported that despite recent turbulence in financial markets, housing prices have risen 0.7% in September. However, it noted that the annual price growth slowed to 9%, its lowest in a year. The Institute of Chartered Surveyors said there is a one in ten chance of a 1990s style housing market crash.

BBC also reported on UK housebuilder Barrett Developments similar statement on the housing market,
which warned that interest rates and the credit crunch would hit housing markets. However, it noted that its long term outlook was positive.

Optimism of UK timber traders waning
The TTJ recently explained the impacts of the CBI polls from July. It reported that UK timber and wood product suppliersí» attitude recently weakened toward the general business situation. It noted that businesses working below capacity had fallen to 56%, but that orders have shrunk relative to normal levels. The outlook for orders is expected to be flat in the coming months, as is the outlook  for manufacturing costs and factory prices of timber and related products.

EUROPE  MARKET and Scandinavia

German timber industry sales jump 9.5%
The German timber industry reported sales increases of 9.5% (EUR18.94 billion), said EUWID. President of the German Association of Wood Working and Plastics Industries (HDH), Dirk-Uwe Klass, announced the results during the associationí»s annual press conference in Cologne on 30 August. Despite the overall rise in sales, the timber industry had to overcome slow domestic order inflows. Klass said the jump in sales were mainly due to prices for exports and price increases in the furniture sector. Companies that were associated with the building sector fared better in the first quarter than the second
quarter, since there was reduced investment in residential building during the second quarter.

Sales rose for veneers, plywood, wood fiberboard and particleboard by 17.2% in the first half of the year.
Excluding furniture, the association expects a 9% rise in sales to EUR19.billion for the year 2007. This would mean that the second half of the year would experience a slow down in sales, due to the decline in building activity. Nevertheless, furniture sales are expected to grow 5% in 2007.


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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