Sapele logs had a slight resurgence of €7/m3 over the past six months thanks to China beginning to buy. Far East demand also pushed up douka/makore by €38/m3 for LM grade and €53/m3 for B grade logs.
Similarly, moabi log prices ran into competitive buying for Asia as well as Europe and increased by €53 for LM, €76 for B grade and €30 for BC/C grades – reflecting that Asian buyers are willing to pay good prices for the lower grades that European buyers won’t take.
As reported in the summer, bubinga was another sought-after log species with buyers for Germany, India and China bidding prices up by €90/m3.
Apart from these more exciting species, most of the rest remained unchanged and stable through the final quarter of 2006, though iroko continues weak and limba/frake dropped €15 for LM and €30/m3 for B grade.
Right now there is little indication of which way the market will move in the first quarter of 2007, although it seems unlikely much will disturb the current firm and stable conditions and the constant reports of supply shortages in South-east Asia are indicators of an upwards trend.
In Gabon it is still raining when it should be dry, and the new export quota scheme came into effect as from January 1 under which only producers with sawmilling or other processing facilities are permitted to export a proportion of their production as logs. Around 75% of export logs from Gabon are for Asian destinations, mainly China, just 15% to Europe and 10% to others.
There is continued investment from China into Gabon and other West African countries, notably into the timber industry.
Sawn lumber
As with logs, prices for West African sawn lumber have remained remarkably steady through 2006 into the first quarter of 2007 but there are now some indications of selective price increases for red species and padouk.
Reports indicate that European importers are still dominant with around 42% of the West African sawn lumber exports, up to 30% now to South Africa and the rest spread amongst Far East and North African importers. Although producers have really not managed to push prices upwards across the board, there is no doubt the stability in the price structure has been maintained by the steady price rises for meranti and other Far East species. West African producers appear to have been content to moderate their needs for higher prices and settled instead for full production on repeat contracts coupled with lower grade uptake from South Africa that gives producers a less wasteful and overall better sawmill recovery rate from the log.
In such a long-term stable market, finding a reasonably interesting, comparative overview of how sawn prices moved means looking as far back as mid-2005. Since then, to date, bilinga FAS GMS is €60/m3 higher, bubinga is up a massive €196/m3 and doussie is plus €122 with scantlings plus €101/m3.
In contrast iroko FAS GMS is €30/m3 down and strips are down by €73/m3 though now seeming once more to be returning to an upwards trend. Ayous is still at the same price, having had only minor ups and downs over the period. Padouk moved up €113 for GMS and €87 for strips while okoumé lumber managed only a modest plus of €10-15/m3. Sapele has managed to hold on to the rapid gain of 2006 and has been steady over the past months with a plus of €91 over the mid-2005 price, and as noted above is now once again moving upwards. Apart from those few species which suddenly come into demand or are constrained by supply over the past three months, there has been very little price movement for most West African sawn lumber species.
Prospects for 2007
There are a few pointers on market development, such as Ghana reporting lower exports and a difficult supply situation and their producers and exporters complaining about high tax rates and continuation of the unpopular 3% export levy. The recent increasing domination by Chinese plywood and veneer in the European market may well hit Ghana’s ply and the more important veneer exports.
It is still quite difficult to tempt producers in the region to take on new business for sawn lumber and, while during 2006 Spain has proved a slowly declining market for logs and lumber, the UK and the Netherlands have been more active, although sometimes finding it frustratingly difficult to locate supply. Meanwhile, housing starts in Japan have held onto the recent improved demand and some Japanese traders say they are not certain of being able to source sufficient logs and lumber for their projected demand this year.
Throughout the global timber markets there appears to be every sign that prices will remain very firm for logs, lumber and panel products in the next few months and producers are now always swift to impose higher prices as soon as buyers from different regions start to compete for limited availability.
