Summary
¦ Gabon’s log export ban finally came into effect on May 15.
¦ Cameroon and Congo-Brazzaville have eased their log export restrictions.
¦ Sawn timber markets have improved.
¦ European buyers are feeling more positive.
¦ Producers are generally confident of the stability continuing into the third quarter.
Since the beginning of the year the centre of attention in the West African timber trade has been the log export business to Asian destinations.
The on-off, will they-won’t they deliberations on the long trailed January 1 ban by Gabon on export of logs had considerable impact on the industry in the West and Central African region.
Negotiations between government and industry did at times appear to offer a possibility that some log exports might be permitted on an annually reduced volume if the greater proportion of the total allowable log harvest would be processed. In the interim there was the problem of close to 400,000m³ of logs already felled before the December 31, 2009 deadline and in various stages of transit to the ports.
There were occasional stoppages followed by the arrangement that the overlying logs would be exported through the state agency SNBG, with a final cut-off date of May 15. Even then there was continued speculation that a last-minute reprieve might be negotiated. This did not happen and log exports from Gabon are now banned.
Asian buyers’ needs
Meanwhile there was an obvious need for the major Asian buyers, China and India, and the lesser but still important importers, Vietnam and North Africa, to locate sufficient log supplies to feed their own processing industries. Much the largest volume of the Gabon logs was purchased for shipment to China, the obvious attraction being okoumé. During this period, by good fortune, good planning or coincidence, Cameroon eased controls on export of logs in the non-premium species, triggering a surge in buyer interest and intense competition to secure this alternative source.
Congo-Brazzaville also re-entered the log export market in larger volume, this too an easing of the strict controls on the proportion between processing and log export.
These moves did have the effect of keeping prices relatively steady and the bigger price hikes were confined to the favourites; by mid-February okoumé was higher by €20-30/m³, okan had moved up €70/m³ and padouk €20/m³. A little later, sapele, which had languished long in the not wanted file, began to gain popularity and is currently €40/m³ higher than in January.
Non-European destinations
With this exception and few others, movingui up €40, padouk plus €20-30 for France, and belli plus €65/m³ for India, the species that have moved higher are almost all those traded into destinations other than Europe.
There were other fluctuations – azobe weakend on poor demand from Europe but recovered again as buyers for China entered the market, and ayous/wawa was steadied by consistent demand for Italy although subject to tough price negotiations.
The Gabon industry is uncertain as to the future prospects. Some hold out the hope that, despite the ban, the government will eventually concede that a mix of processed products and export logs would be the optimum to maintain revenues for both sides. There is as yet no sign of this happening, but there remains as much as 50-60,000m³ of the logs felled prior to January 1 that may have to be taken back to the mills to be processed in-country.
There is a high degree of concern in trying to determine what future plans could be implemented. Without log export volumes, total harvests would be much lower and up to half the logging machinery would be surplus. Sawmilling is the obvious choice but the marketing of significant extra volumes of sawn lumber and further downstream products would not be a simple matter. It is reported one producer is moving from Gabon to join an associate company operating in Cameroon and others may have to decide whether to relocate elsewhere or reopen sawmills and plywood factories.
The result is that approaching 1 million m³ of logs have been removed from the market, leaving importer countries having to decide on how to find alternative sources or adapt their industries to this new situation. This is much less relevant to the European trade where logs are now a very small percentage of the total timber import. In 2008/9 China did indicate there would be more emphasis on imports of sawn lumber but this was put on hold during the economic downturn. Perhaps this policy may now be reconsidered.
Sawn lumber markets
Logs aside, the sawn lumber markets have performed reasonably well and certainly better than producers’ rather pessimistic expectations at the turn of the year. However, as has become normal, processed export prices did not by any means compensate for the extra raw material costs of the whole of the sharp increases in the prices for the most popular log species, although there have been quite notable changes through the first half of the year. Sapele has led the pack with a rise of €50-55/m³, closely followed by okan up by €50/m³, while belli and padouk are now €30/m³ higher since earlier in the year. Azobe didn’t make further gains after a rise of €20/m³ in late 2009 while makore did manage another rise of €20.
Some of the species less familiar to European buyers were also in favour for Asian importers and niove increased by €40/m³ while onzabili and ekop rose by €20/m³ in the first half. Sipo did improve marginally by just €15/m³ and has not yet really made a return as a preferred European market favourite. Of the French sawn lumber specials, movingui has been very firm and is up by €40/m³ and moabi, now a species banned from harvesting in Gabon, increased by €30/m3.
For the future, producers have noted a marginally more positive attitude from their European buyers, most of whom realise that prices are firm and on a rising trend in the still quite difficult market conditions.
The financial problems in Greece, Spain and Portugal have to be borne in mind. These countries, which have cut back on construction of all kinds, are not likely to be growth markets for tropical timber products in the medium term.
As recent statistics show, the plywood, veneer and timber component sectors of the West African industry were seriously dented by the downturns in demand in the past two years. So far there are few signs of any recovery and very competitive prices from the low-cost products from China and elsewhere must be much in the minds of West and Central African producers considering whether or not to step up or restart production.
Once again, it is difficult to assess market prospects through the third quarter other than the perception that most producers are more confident of a stable trend than they were at the beginning of the year.
