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International Log & Sawnwood Prices

16-30th November 2007


Buying patterns in Europe drive prices higher
In the second half of November, prices rose for some species, particularly due to changing buying patterns in Europe. These are very much demand-led and respond to resumed interest and selective buying from Europe. Afromosia, azobe, douka and sapele showed notable gains and increased demand for belli by buyers from India pushed prices for the species higher. Sipo prices for LM and B grades continued stable at the recent higher levels while the BC/C grade moved higher with increased demand from both Europe and the Far East. Europe¡¯s renewed interest in iroko moved prices up and the species now competes at the same price as that for Far East destinations.

Demand for moabi slowed and prices moved downward in spite of fair demand from French buyers. Okan prices for European buyers also moved lower, although prices for Chinese buyers were unchanged even though demand was low. Heavy rains in some areas were also continuing to affect logging and transport operations. 

For sawnwood, recently higher log prices and reduced supply from Northern Congo and Central African Republic may cause sapele lumber prices to rise. Outside of sapele, there were no other anticipated reports of large fluctuations in sawnwood prices.


Ghana¡¯s 2008 budget provides for massive infrastructure investments
The Minister for Finance and Economic Planning introduced the 2008 Budget Statement and Economic Policy on 15 November 2007. The government indicated there had been significant improvement in the socioeconomic landscape of the country over the past seven years. He said this should give cause for continued optimism for Ghana to attain Middle Income Status by 2015. Also, Ghana¡¯s improvement in its international economic ratings is a clear testimony to its continued quest to improve living standards in the country.

Among the budget¡¯s highlights were a proposed total government revenue estimated at GH¡é7.1 billion; gross domestic product is targeted at 7%; and end of year inflation is targeted between 6% and 8%. According to the Minister, the budget will promote growth through massive infrastructure development, including through roads, water and energy development. The government will fund 166 districts to construct and tar 15kms in each district over the course of the year at a projected amount of approximately GH¡é199 million. Five communities in each of the 166 districts will be provided with potable drinking water. The estimated amount for the potable water project alone is GH¡é7 million.

Ghana¡¯s timber and forest resources hold future promise for economy
Recent developments in Ghana¡¯s timber and forest sector were announced during the 2008 Budget Statement. It was noted that timber exports had remained flat and were expected to reach approximately GH¡é241 million by the end of the year.

With regard to the Voluntary Partnership Agreement (VPA) with the EU, negotiations are expected to conclude by mid-2008. Other activities to be pursued with the EU include the integration of a log-tracking system into the Validation of Legal Timber Programme (VLTP) and the commencement of the Natural Resource and Environmental Governance (NREG) Programme. As a result of these activities, Ghana is expected to be in a better position to enforce forest laws, which will contribute to securing forest revenue for the country.

Additionally, a new programme to promote traditional medicine was announced. The programme will help emerging industries using herbs for alcohol-based medicine set up first aid gardens and medicinal farms to ease pressure on the forest.

Finally, the National Disaster Management Organization (NADMO) is expected to train and equip Disaster Volunteer Groups (DVGs) in forest protection management and plant five million seedlings of various species to ensure the restoration of degraded natural forests.

Ghana¡¯s development partners boost aid
Ghana¡¯s development partners have announced they will provide USD350 million, or 9-13% of the total government¡¯s budget, to bolster Ghana¡¯s chances of reaching the Millennium Development Goals and becoming a Middle Income Country by 2015. Since 2003, development partners have contributed around USD 300 million each year to the general budget in the form on loans and grants. Ghana¡¯s development partners include the World Bank, the African Development Bank, Canada, Denmark, the European Commission, France, Germany, the Netherlands, Switzerland, the UK and Japan.


Monsoon season halts price rise
The annual monsoon season failed to lift prices of Malaysian timber products. The Malaysian timber industry saw prices fall sharply on a broad front, particularly for raw logs and plywood. This compounded the problems faced by the industry, which has already been hit by the meltdown in the US subprime mortgage market.


Government prepares to unveil global warming action plan
As reported in The Jakarta Post, the Indonesian government will soon unveil its national action plan (RAN) to address global warming. The plan is expected to set guidelines that will assist Indonesia in mitigating and adapting to climate change. The Indonesian Environment Ministry has said that the plan includes a development strategy focused on alleviating poverty, creating jobs and economic growth, and improving the environment. The plan will help preserve forests and address carbon sequestration to reduce carbon emissions by up to 30% by the year 2025.

Fearing they may be neglected in the coordination process for the strategy, the Indonesian Chamber of Commerce and Industry (Kadin) has called for a comprehensive approach to address the issues of environment and industry in the new strategy. Kadin had appointed a team of 15 industry leaders to help draft the plan, which is expected to be made public at the upcoming UN Framework Convention on Climate Change (UNFCCC). Others speaking to the Environment Ministry on the subject, such as the CEO of Sinar Mas Agribusiness and Food, said the government needed to address land allocation matters in the new strategy to avoid future disputes.


Myanmar sanctioned by EU
The EU agreed to a Council Common Position, which forbids the exportation of machinery for or investments in Myanmar companies engaged in timber processing and export. European countries will also be prevented from importing logs, timber and timber products from such companies. TTJ Online reported that the EU Council agreed to the measures after meeting in Luxembourg, where ministers stressed the ¡®seriousness¡¯ of the situation in Myanmar.

Prices for the higher grades in this month¡¯s tender sales rose, while prices for lower grades of teak were subdued. There was a substantial drop in supply of SG-3 logs, although the production and total traded volume for SG-3 is on the whole not significant. Seven lots of SG-7 grades obtained lower prices than those for SG-8 grades. Nevertheless, this anomaly is not uncommon as prices for the lower grades have not followed a clear pattern. The average price obtained for export quality pyinkado is within range of the list price (USD470-500). The non-teak hardwood market also seems to be moving at its own pace, and not dependent on changes in seasonal demand.


Brazil postpones timber concession bidding
Meio Ambiente reported that on 14 November, the Ministry of Environment opened the bidding process for forest concessions in the National Forest of Jamari in Northern Brazil (state of Rondonia). However, the selection process has been postponed to take into consideration public suggestions on the bidding process. During a recent public hearing on the subject, one participant suggested that the list of non-timber forest products (NTFPs) for use by communities should be expanded to include NTFPs such as copaiba oil, breu resin, and palm fruits and that concessionaires should allow communities to harvest these products. Others suggested revising social and environmental criteria for the bidding process.

The first lot of the concessions to be contracted will be 96,000 ha and divided into three forest management units, which can be used for a variety of purposes. In addition to using the concessions for harvesting timber or conservation purposes, the concessionaires can also offer ecotourism and sports recreation in the forest. Each management unit will be leased for 40 years and the Brazilian Forest Service expects that contracts will be signed by March.

Mato Grosso¡¯s plan on avoided deforestation to be launched at COP-13
S¨® Not¨ªcias said that the state of Mato Grosso will present its plan on avoided deforestation at the UN Framework Convention on Climate Change¡¯s 13th Conference of the Parties (COP-13), which will be held in Bali, Indonesia, from 3-14 December 2007. The state is currently considering a range of global warming funds and the renegotiation of state and/or private debts as possibilities for compensation to those producers who participate in avoided deforestation schemes.

Two key mechanisms will help track progress on the implementation of the plan. One mechanism is Environmental Licensing in Rural Properties (SLAPR), which can detect illegal deforestation within properties with proper licenses through satellite images and field inspections. The other mechanism is the Integrated System of Monitoring and Environmental Licensing (SIMLAMMT). The technologies will help guarantee transparency of actions undertaken in the plan and ensure payment to those who conserve the forests.

Teak plantations show promise for Northern Brazil
Teak has shown to be a promising species for conditions in Northern Brazil, noted Ambiente Brasil. When parts of the Amazon were being reforested, exotic teak species were planted in Northern Brazil alongside other native species such as mahogany and cedar. However, high mortality rates were seen for many of the native species, which were affected by disease and pests and the species¡¯ inability to adapt to conditions in the region.

Acre provided ideal conditions for teak in the Upper and Lower Rio areas. In other areas of the state, teak grew well but did not produce high quality wood. Due to its success in Acre, teak is seen by many Brazilians as an increasingly attractive investment. Teak is now perceived as a tool for ¡®green social welfare¡¯ and an opportunity for landowners to manage assets on their land.

Exports of wood products rise 13% in October
Exports of wood products in October 2007 generally showed growth from October 2006 levels. Exports of general wood products (except pulp and paper) rose from USD332.5 million in October 2006 to USD375.7 million in October 2007, resulting in a 13% increase in value. Pine sawnwood exports also jumped 56.8%, up from USD15.2 million in October 2006 to USD24.2 million in October 2007. The exported volume of pine sawnwood exports grew from 76,623 m3 to 120,278 m3, representing 58% growth in volume. Exports of tropical sawnwood rose 12.2%, rising from 130,510 m3 in October 2006 to 146,432 m3 in October 2007. The export value of tropical sawnwood increased 31.2% during the same period,  growing to USD67.5 million in October 2007.

Exports of pine plywood rose 29.6% in volume and 72.4% in value in October 2007 when compared to October 2006. The exported volume of pine plywood in October 2006 was 95,363 m3 and 123,573 m3 in October 2007. Tropical plywood exports decreased in volume from 40,449 m3 in October 2006 to 33,278 m3 in October 2007, resulting in a 17.7% fall. There was a 6.6% reduction in the value of tropical plywood exports during the same period. Exports of wood furniture increased 9.3% in October 2007 compared to the same month of 2006. The export value of the wood furniture increased from USD70.6 million to USD77.2 million.

Furniture and wood exports strong despite weak US dollar
CGI Moveis and Newscomex report that Brazilian furniture exports in October 2007 jumped 13.4% compared to September 2007 levels, when total sales were USD726.4 million. During the period January ¨C October 2007, the furniture sector exported 3.6% more than the same period in 2006, despite the appreciation of the Brazilian real. Total sales of Brazilian furniture during this period were USD823.7 million.

The US purchased USD210.7 million worth of Brazilian furniture, corresponding to 26% of Brazilian exports and representing a 15.5% drop in sales during the first 10 months of the year. Nevertheless, the US purchased USD21 million more furniture in value terms during October 2007 than in September 2007. Spain¡¯s purchases of Brazilian furniture jumped 49.4% and amounted to USD49.8 million in value from January to October 2007.

Wood exports in the Alta Floresta Northern Brazil wood cluster rose 30% in October 2007 (USD2.2 million) compared to September 2007. According to the Secretary of Foreign Commerce (Secex), the municipality sold USD17.7 million to foreign markets during the period from January to October 2007. The main exported product was manufactured wood, which amounted to USD12 million. Most of the products were exported to the US and amount to USD8.7 million in value and represented 49% of the purchases.


Finnish investors to identify investment opportunities in Peru
The Commercial Section of Finnish Embassy in Lima, Peru, said that Finnish investors are willing to invest in the forestry, mining and energy sectors of Peru. Next year, a mission will be sent to Peru to identify investment opportunities. Nevertheless, the Embassy reported that while the forestry sector holds much interest, the country had concerns over land tenure and the size of the land in Peru available for forest harvesting.

A spokesperson from the Embassy¡¯s commercial section noted that the Finnish government had started a commercial partnership programme, ¡®Finnpartnership¡¯, which offers opportunities to develop joint ventures with Finnish companies and/or projects considering Finland and the EU as main market destinations for products. Finnpartnership will provide funds to support small companies from ten developing countries to allow them to export their products to Europe. For Peruvians to benefit from the programme, a Finnish company must express interest in forming a partnership with a Peruvian community. The maximum amount of funds a Peruvian community can receive for partnering with the Finnish company is USD726,000. The main idea of the programme is to facilitate development within the poorest populations by offering job opportunities and technology improvements.

Peruvian lumber exporters await outcome of talks with Mexico
With the Economic Complementation Agreement (ACE-8) between Peru and Mexico being finalized this December, Peruvian lumber exporters are on the look out to see where Peruvian and Mexican governments can meet common ground on Peruvian lumber exports. Mexico is the second largest destination for Peruvian wood products and first for the Loreto region, which annually exports wood products valued at approximately USD50 million. These exports largely consist of exports of cedrela and banack. The negotiations are also focused on incorporating a number of lesser used species such as congona, machinga and moena, which are currently being exported to the US, Asian and European markets.


New carbon monitoring tool launched in Mexico
Reforestamos Mexico, the National Forest Institution (INE) and Pronatura Mexico, launched a tool that will help Mexicans calculate the carbon emissions they generate from their daily activities. Each person can access the tool via an electronic website and enter relevant data such as kilometers crossed in public transport or kilowatts of electricity spent to determine actions they can undertake to reduce the problem of climate change. The site offers suggestions for people to help reduce the generation of greenhouse gases and can be found at






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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