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Wood Products Prices in UK and Netherlands 

1-15th November 2008

Report from Europe and the UK

Hardwood stocks drop to low levels
The European hardwood import trade is now very focused
on stock reduction and receiving delivery of outstanding
contracts. While hardwood stock levels across the main
European markets have whittled down during the course
of 2008, the general view is that they are still adequate to
meet current very subdued levels of demand.
There is very little forward purchasing across the board at
present, resulting in rather vague price quotes for some
products. Forward prices for most African hardwoods,
which are invoiced in euros, are generally regarded as
stable, although there continue to be some reports of
downward pressure on sapele lumber prices due to excess
stocks and weak demand. However, African hardwood
agents suggest that tight margins in the African supply
chain place strict limits on the ability of shippers to reduce
sapele prices much further. And many importers are also
now more skeptical of the value of reducing prices for
onward sales since experience is showing that in the
current European market even significant price discounts
do not greatly increase the outflow of products.

There has been rapid strengthening of the US dollar
against the euro in recent weeks. In normal trading
conditions, this trend would stimulate more forward
buying of dollar-denominated stock in Europe as importers
take steps to cover their future position and to exploit the
progressive increase in the euro value of their stock.

However, due to market uncertainty and weak
consumption, there is very little evidence that the recent
shift in exchange rates has encouraged any pick up in
European forward buying of dollar denominated stock.
Instead, shippers in the Far East and South America are
coming under significant pressure from European
importers to reduce prices. European purchasing from both
supply regions has remained extremely slow, with
importers only seeking to cover their most basic
requirements. Despite efforts to cut-back on production,
importers report they are able to place orders for most
products and grades from the Far East without
encountering any major problems.

With respect to future market development, the general
feeling is that there is very unlikely to be any real change
for several months with very little forward buying until at
least the first quarter of 2009.

CE marking requirements expand for wood products
The phased introduction of CE Marking of products used
in the construction sector throughout the European Union
is having a significant impact on attitudes towards product
quality. Requirements for CE marking in construction are
imposed on products covered by the Construction Products
Directive (CPD), one of the so-called European í«New
Approach Directivesí» which set out these requirements in
a range of economic sectors. The aim of CE Marking is to
ensure that products that are fit for their intended use can
be freely traded throughout the European Union. This
applies both to products produced within the Community
and to those imported from countries outside the
Community.

CE Marking is designed to overcome the problems which
have prevailed through the application of different
technical requirements in the member states of the EU. CE
Marking aims to remove these technical barriers to trade
within the single market by establishing a single, agreed,
standard for demonstrating the performance of particular
products, and a system of certification and test bodies
which are recognized as competent throughout the
Community. CE Marking is, in effect, a í«passportí» for
manufacturers to market their products throughout the EU.
CE marking requires that a manufacturer has documented
and independently assessed conformity to an internal
production control system.

CE Marking has been possible for certain products since
1997, based on European Technical Approvals (ETAs),
but the real increase in the CE marking started with the
introduction of harmonized European Standards (ENs) in
2001, which are intended to replace national standards.
Since then, a series of harmonized standards covering a
wide range of wood products have been developed.
Following publication, these standards are generally
introduced on a voluntary basis initially during a í«coexistence
phaseí» when they are applied alongside national
standards for a set period of time. At the end of this
period, all national standards are withdrawn and replaced
by the EN standard.

The EC Construction Products Directive requires each
member state to establish systems of regulation and
enforcement designed to ensure that construction products
are sold for the correct end-use. Nearly all European
countries have opted to include mandatory requirements
for CE Marking of materials supplied to the construction
sector as the new harmonized standards are progressively
introduced. Others, like the UK, do not require CE
marking but all materials suppliers to the construction
sector are now legally obliged to ensure that all products
are correctly labeled and to demonstrate that products are
fit for their intended use. Even in those countries where
CE Marking is not mandatory, it is increasingly seen as the
most effective way to demonstrate compliance with the
CPD. 

The current schedule for introduction of CE standards
relating to key wood products in the construction sector is
shown in the table below. Particularly relevant this year to
the tropical timber industry has been the introduction of
mandatory requirements in most EU member states for CE
Marking of solid wood paneling and cladding. Major
events next year will be the introduction of mandatory
requirements for CE Marking in most EU member states
for CE Marking of wood flooring from 1 March 2009 and
structural timber (including decking) from 1 September
2009.


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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