Fuelled by strong demand and restricted availability, West African sapele has achieved something of a landmark in that its price is now broadly similar to that of iroko – a situation that few experts would have predicted not so long ago. The sipo price has also risen while shipment delays and supply limitations have also leant further upward momentum to the framire market.
Given that supply constraints are also affecting hardwoods from other leading producer regions of the world, one contact said: “This has been the year of the shortage – 2005 was a Sunday afternoon tea party by comparison. Any company which knows how to buy wood cannot have failed to make a profit this year.” And more of the same appears likely in 2007.
Having gained between 25-30% in value during 2006, sapele is said to have become fractionally easier to source over recent weeks. However, most experts believe this to be only a temporary phenomenon. The species has never known such globally high levels of demand – not least from the massive Chinese and US markets. This has meant that, in Europe, even some of the largest hardwood-buying enterprises have struggled with supply. And in the UK itself, supplies of 2in and 2.5in sapele are said to be particularly tight, while all specifications are likely to remain subject to strong buying competition for the foreseeable future.
Maintaining its approximately 10-15% price premium over sapele, sipo supply is also falling short of demand. “We could have sold a lot more this year had we been able to get hold of it,” was a commonly heard refrain among buyers.
Market imbalance
The market imbalance is just as acute for framire, with one regional expert commenting: “Demand exceeds supply by several forests.” Buyers had been receiving old contracts only “in dribs and drabs”, with the medium-to-thicker general joinery grades proving particularly difficult to secure. It is understood that some suppliers have not been taking on new orders because of the backlog of existing contracts. However, some buyers have been left to wonder whether they will ever take delivery of the lower-priced timber which they booked, in some cases, as far back as May this year.
In fob terms, framire prices out of the Ivory Coast or the near Continent are claimed in some quarters to have leapt more than 30% since March this year. Since supply to the UK is expected to remain tight throughout the first half of next year at least, “framire prices will continue to firm”, TTJ was told this week.
According to regional experts, many operators in Africa have opted to cut iroko at the expense of framire. The former appears to have been more readily available of late at reasonably stable price levels. Given that its price has failed to make the same gains as other species from the region, many experts are anticipating an upturn in demand for iroko during next year, notably in southern Europe.
This month hardwood representatives gathered in Ghana for the Race Wood conference. The country has seen a significant reduction in its timber exports this year; availability has slightly improved of late following the onset of drier weather, but the longer-term trend is still towards very restricted supply of the major hardwoods. Some of the larger mill enterprises in Ghana are working towards certification and are receiving a larger proportion of forest concessions. At the same time, there is evidence of foreign money – for example, from China and Japan – being invested in the country’s infrastructure, including its mills.
Turning to the Far East, dark red meranti made strong gains in the first half of the year, but a subsequent increase in production has meant prices have dropped some 5-7% below their peaks for 2006. Prices were described this week as “negotiable” in West Malaysia, but firm in Sabah. With heavy rains in parts of the Far East and loggers looking to push up their prices, UK buyers are warning of a possible rebound in sales values in the new year and also of possible shortages by early February given the low levels of stocks in this country.
Keruing prices have jumped some 10% over recent months. Following a temporary upturn in availability in the UK, buyers are once again struggling to obtain their preferred specifications. Meanwhile, mouldings out of the Far East are attracting very firm prices due in part to limited availability.
American white oak
According to a spokesperson for The American Hardwood Export Council (AHEC), sales have been slow in some markets where white oak is the major species “due to shortages of dry lumber to ship”. Latest figures from the organisation reveal that, in the first three quarters of this year, UK imports of white oak jumped 5% in value to US$30m.
According to feedback from some traders, supply has improved marginally and certain suppliers are said to be “listening to counter offers”. Nevertheless, this species remains a hot property and prices have shown continued firmness. Not for the first time, white oak strips are reportedly very difficult to secure.
Over the same period, imports of walnut and tulipwood rose 25% and 15% respectively.
Cherry imports were 15% lower in volume and 21% in value terms during January-September this year “in response to high prices and changing fashions”. Red oak “continues to disappoint”, added the AHEC spokesperson, in that sales were down 7% in volume and 4% in value in the first nine months of this year. However, he expressed confidence that a renewed promotional push in 2007 would boost red oak consumption in the UK.
Overall, total direct exports of hardwood from the US to the UK increased 7.5% in value terms during September. It was also “a big month for veneer”, added the AHEC spokesperson, in that UK imports soared 64% in value terms. In the first nine months of this year, shipments of US sawn lumber were up 6.1% in volume and 4.6% in value terms compared with January-September 2005. “These percentages reflect lower export prices this year,” he said.
Chinese demand
As with white oak, it is China’s voracious appetite, which has helped to maintain a firm tone to the American black walnut market; problems have been reported in sourcing 8/4, 10/4 and 12/4 material in particular. One contact noted: “Some American walnut logs exported to China are now appearing in Europe as kiln-dried FAS sawn lumber.”
Availability of tulipwood has improved over recent weeks and prices have remained stable. Similarly, stable prices are reported for cherry while ash has been rather slow to move, with several contacts indicating a certain amount of downside price flexibility among some buyers. An element of weakness was also identified in the hard maple market as white oak; stocks on this side of the Atlantic are described as adequate.
Prices of European oak have also enjoyed steady upward momentum during 2006, with several experts pointing to a recent upturn in demand for the thicker sizes. Chinese buyers have been absorbing large volumes of good quality logs with the result that European purchasers have been struggling to meet their own needs.
Meanwhile, very few offers of sawn timber are emerging from Brazil. The country’s exporters have been undermined by currency factors and by ongoing difficulties in obtaining transport and export permits. Virola is proving difficult to source while only limited volumes of cedar are journeying over to the UK at prices well above those of dark red meranti or sapele. “Cedar is too expensive and too much can go wrong if you don’t get the documentation right,” TTJ was told.
UK imports of Brazilian hardwood are confined largely to the decking timbers such as ipe and garapa, prices of which have advanced by 5%-plus over recent weeks.
