No surprise that West African log prices made substantial price gains in the first quarter. Lumber prices did not fare so well, though there have been some prices rises for a select few species. Sapele managed to hold on to a climb out of a long-term depression, revived by some buyers for Germany recognising as early as January that the supplies of low priced overproduction had begun to dry up.
Another sound judgment was the move by major South African importers through a market changeover from South-east Asian suppliers to long-term regular contracts with West African producers.
Log prices are driven by ongoing demands from India and China, and some of the notable price increases have been for species that are perhaps not well appreciated by end users in UK and Europe. Species such as onzabilli, beli, dabema and niove all had good price hikes through February and March, while in the first two weeks of April log prices for ayous/ wawa, olon, ekop and andoung gained further increases. Okan continues a firm favourite, with log prices up from €183/m3 FOB for LM grade in January to current €252/m3, while B grade is now also at €252 from €168 in January. There are no signs of the log market levelling out as West African producers understand full well the short supply situation reported from South-east Asia.
A glance at the latest ITTO Market Information Service report shows all the price indicator arrows pointing upwards for all regions, even including small increases for some Papua New Guinea logs which are still selling for between one-third and half the prices of comparable species from Sarawak. There has been much NGO comment of illegal logging in Papua New Guinea but no mention of the astoundingly low price of logs which are subsequently sold for export.
West Africa export log prices too have some catching up to do to match the year-on-year rises for Far East logs, with meranti SQ and up 30% higher than May 2005, keruing up 35% and selangan batu 44%. In contrast, iroko logs are roughly the same price as last May, sapele and ayous/wawa are up 7%. Only padouk managed a comparable 30% price increase.
With few exceptions, sawn lumber prices did less well. Log export prices are below those of some years ago when meranti export logs reached close to US$400/m3. It’s difficult to find another major world commodity that has failed to keep up with inflation. Perhaps the South-east Asia supply shortages and more determined approach to stop illegal logging and regulate harvests to more sustainable levels will move prices towards true value.
Gabon wait and see
There is no firm news on the proposed freeing up of okoumé and ozigo log sales in Gabon. The SNBG still holds the monopoly that was supposed to be relinquished in January – a relief for smaller producers who had feared that a removal of the government fixed prices may have led to a price fall. It is said that SNBG once again had to be bailed out of financial difficulty to the tune of 2-3bn CFA, but this does show the government’s determination to keep log prices under control. The implementation of Gabon’s new regulations on log export quotas and processing requirements has been postponed until July to give timber companies time to restructure.
Recent reports have been of very high production and export of okoumé logs. However, heavy rain in some areas is curtailing output. It is known that because of low log supply from their own concessions some Cameroon exporters had been buying in Gabon.
In Cameroon there is more news of the government crackdown on corruption in both public and private sectors and several senior bureaucrats detained. Also, Cameroon’s policies to promote further processing are succeeding and products including high-quality finished windows and door frames in framire and moabi, plus garden furniture in bilinga and okan, are now being exported.
Lumber price increases have as usual been more selective in choice of the species in demand, but often quite large. Among the price gains since the beginning of the year bubinga FAS was up from €504/m3 to €580/m3 FOB, iroko fas and khaya mahogany are more than €30 higher, movingui FAS GMS now up by €34 and padouk with a massive rise of €93/m3 on very heavy demand.
Some sapele specifications are now higher by €60, as is bilinga fas GMS including 30% fixed sizes. By the end of March okan sawn squares had reached US$750/m3 FOB and both douka and tali strips are up to US$500/m3 FOB. Ro-ro freight rates for Europe have eased by a few dollars but it is likely that bunker surcharges will rise. Shipping lines have now sufficient vessels on the West African service for European and Far East destinations.
Bilinga and tali have been in demand as alternatives for the now expensive and almost unobtainable bangkirai for use in decking in a much revived Netherlands market where some shortages have developed not only in decking timbers but also in favourite sizes in 3×5 PHND and other DRM specifications. There has also been a restoration of confidence in the Italian market, hence the rising prices for ayous and a surge in demand for okoumé lumber, with some Italian buyers now fixing long-term regular shipments.
