Supply – or the lack of it – has continued to dictate the market course of a number of leading hardwood species, although the impact has been softened by the fact that overall UK demand is far short of breaking any records.
Whereas white oak has commanded the North American hardwood headlines over recent times, black walnut was occupying the thoughts of many sector experts contacted this week. This species has enjoyed a prolonged run of success in the UK, but is produced in relatively small volumes and has become a favoured target of Chinese buyers both in log and bulk size forms.
As a result, UK customers are now suffering the effects of ever-decreasing availability – particularly of high-quality walnut. “Where a customer is asking for different sizes, it is proving very difficult to get the mix he needs,” according to one expert. “In general, no single supplier has all of the sizes.” Given that many UK end users tended to be small businesses, they were not in a position to increase massively their order volumes in order to obtain the required mix, he added.
American species
Inevitably, black walnut prices have continued to rise, with one contact putting the increase at 5-10% since the start of the year. White oak prices have also remained strong against the backdrop of hungry demand. With many producers having concentrated on cutting 8/4 material, a temporary over-supply of this size appears to have developed; some of the other popular sizes – notably 4/4 through to 6/4 – have been in shorter supply. “Wide boards in most thicknesses are difficult,” TTJ was told.
Other species of North American hardwood have been a focus of less feverish demand. A vogue item in the UK not so many years ago, cherry has seen its popularity ebb on this side of the Atlantic although it retains a distinct appeal for what are termed high-end uses. And so while imports of cherry fell 33% in volume terms during the first four months of this year, the value of those imports was actually 10% higher than during January-April last year. Meanwhile, supply of hard maple is generally deemed to be sufficient to see a largely unenthusiastic UK customer base through the summer months. The second quarter has brought relatively stable market conditions for ash while UK tulipwood imports soared 27% in the first four months of the year, an increase attributed in part to substitution of ramin.
Red oak
Despite the well-publicised promotional push on red oak, the UK market is still proving largely resistant to the charms of this species although, interestingly, latest statistics reveal that North American shipments to the UK surged 16.5% in the first four months of this year. According to a spokesperson for a company, which has joined the push on red oak, interest in the species has increased over recent weeks – albeit marginally.
While agreeing that The American Hardwood Export Council’s campaign had raised the profile of the species in this country, he also attributed the modest improvement in sales to its competitive price and difficulties for some buyers in obtaining other forms of oak. Overall, UK imports of North American hardwood slipped 1.75% in the first four months of 2007.
Despite the fact that prices of European oak are still significantly ahead of those of its North American counterpart, the former is attracting a dedicated following and has witnessed slightly improving demand in the second quarter of this year.
Turning to tropical hardwoods, framire is showing no signs of price weakness after having gained 40%-plus in FOB shipping terms during the past 12 months. Availability is once again the key to understanding this phenomenon: volumes of framire have dwindled because processors have enjoyed significantly higher margins on iroko.
“There is a chronic lack of framire around,” said one regional expert. “We are not getting regular offers and when we do there is a massive jump in price every time.” Another added that all framire becoming available to his company was heading directly into outstanding orders. UK demand was proving particularly strong for the 2, 2.5 and 3in specifications destined predominantly for general joinery applications.
Demand from the joinery sector has also boosted prices of sipo/utile, supplies of which are also relatively thin on the ground. “If you have got it you can sell it. There is very little unsold material knocking around,” TTJ was assured this week.
Iroko prices have also gained ground in 2007 although they have not been caught up in the same dizzying spiral as framire. Availability has been reasonable despite rising demand from, among other regions, the south of Europe.
Sapele firm
As for sapele, forward prices have also continued to rise against a backdrop of difficult supply, although one or two contacts pointed to evidence of “some weak selling in the UK market by people who are not looking at replacement prices”.
The price of wawa out of Ghana has jumped 10% in the last couple of months on the back of an upturn in demand as well as the impact of heavy rain on logging activity and therefore supply. In addition, power cuts of reportedly 18 in every 48 hours have been adversely affecting not only mill production levels, but also investor confidence. Mills are understood to have become more prescriptive in what they are prepared to produce while deliveries to the UK were described as “sporadic”.
On a more general note, UK buyers have reported instances of African hardwood suppliers attempting to renegotiate prices on consignments that were booked several months ago.
The firmness of the sapele market is being quoted as one possible reason behind the recent improvement in prices of Far Eastern dark red meranti, although its value remains short of the peak levels recorded towards the start of the fourth quarter of 2006. With the rains coming to an end in the region, the volume of logs entering the mills has been rising and overall availability has improved. Stocks in the UK are seen as adequate to meet demand. As for keruing, sellers continue to adopt a take-it-or-leave-it approach to asking prices in the face of limited availability. It was also suggested this week that producers are being highly prescriptive – one contact used the word dictatorial – in terms of the specifications that they are willing to produce. Prices are said to have gained around 10% during the year and the trend remains firmly upwards.
Keruing alternatives
High prices and the difficulties in obtaining ready supplies have persuaded many UK users of keruing to adopt alternatives; remaining buyers may be few in number, but they are continuing to snap up supplies as soon as a shipper notifies availability.
As noted in TTJ in March, international hardwood trader DLH Group is phasing out Burmese teak in response to concerns that suppliers would not be able to provide required human rights guarantees. As the company and others have stressed, this species has not represented a significant volume business generator for many years.
News from the Brazilian hardwood market no longer contains information on once traditional standbys of mahogany and cedar. The emphasis of exports to the UK has shifted to decking species such as ipe and garapa, prices of which have been increasing, partly from the weakness of the US dollar to the Brazilian real. Also the rainy season is not due to end for several weeks and most of the main suppliers’ volumes are already committed. Other problems in Brazil include delays in the issuing of permits and forest management plans.
According to several contacts, UK demand for hardwood decking has been “quite disappointing” so far this year.
