For most UK hardwood concerns, the encouraging trading momentum developed during January appeared to fizzle out the following month, with buying levels in February widely described as “unexciting” and “inconsistent”. According to many sources, orders have been generally small in scale and have been designed to satisfy immediate needs rather than for future planning. “Everything is wanted yesterday,” was a familiar complaint.
However, feedback from the market place has not been universally negative: one operator, for example, expressed concern over a disappearance of stocks after a recent run of excellent sales, centring notably on Far Eastern dark red meranti and 4/4 white oak from North America; another claimed a healthy level of business for North American white oak and black walnut, as well as for West African sapele accompanied by proof of legality.
Indeed, North American hardwoods seem to have provided the momentum that has been absent from many other parts of the market, with the price firmness evident across many species attributed in part to higher freight rates.
White oak has continued to attract particularly strong demand from UK and Irish buyers, with prices improving by around 3% since our previous hardwood report. Difficulties in sourcing supplies have been reported not only for the thicker sizes of 8/4 and above, but also for “bread and butter” 4/4 material. The impact of wet winter weather on the accumulation of log reserves has attracted some of the blame for these supply issues. Amid these generally bullish comments, however, there were also reports this week that, perhaps for cash flow reasons, some sellers have been offering cheaper prices on white oak, particularly in the 6/4 and 8/4 sizes.
North American species
Other North American species have also firmed over recent times. Hard maple prices have made gains, partly because production tends to be lower during the winter months, with several contacts reporting “good demand for stock that we just haven’t got”. Tulipwood prices are said to have improved by as much as 5% since the end of last year – thanks in part to strong demand from the Italians – but there is also some evidence of lower prices being offered, notably for higher volume sales.
Black walnut remains firm and is not readily available; in particular, longer waiting times are reported for customers buying smaller volumes. The market remains somewhat under the spell of the Chinese, who have become avid buyers of walnut logs.
By comparison, the cherry market has remained largely unchanged in the light of muted demand from UK buyers. Ash prices have also been generally stable although higher prices and reasonable demand have been reported for some of the thicker sizes such as 16/4. Meanwhile, many producers are understood to be having difficulty in moving red oak, particularly the lower grades.
US red oak shipments
As reported at last November’s American Hardwood Export Council (AHEC) convention in Barcelona, increases in US shipments of red oak were being driven largely by demand from developing markets whereas Europe continued to favour white oak to a considerable extent. Nevertheless, AHEC believes there is potential for increasing red oak’s penetration of the European market.
Similarly, the Québec Wood Export Bureau has launched a marketing initiative designed to boost UK sales of Canadian white cedar. The species does not splinter and is considered to be a good option for products such as shingles and garden furniture.
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“It is still difficult to obtain hardwood out of Brazil. If you succeed in interesting a customer in Brazilian hardwoods, they get put off again by the regular interruptions to supply” |
More recently, AHEC has issued figures which underline the popularity of US hardwoods in the UK. After the first 10 months of last year, US hardwood exports to the UK were already approaching the US$66m mark. UK imports of sawn hardwoods increased by just short of 10% in the January-October period, while the value of shipments leapt 13.2%. The value of UK solid hardwood flooring imports more than doubled from US$2.7m to US$6.2m over the same period.
Commenting on the positive UK demand trends for North American hardwoods, one expert expressed the hope that, going forward, the availability of FSC-certified material would be sufficient to meet ever-growing demand in the UK.
Chinese demand
China is having an impact not only on the North American hardwoods sector but also in European circles. A major manufacturer of both solid and engineered oak flooring, it has developed a healthy appetite for European oak, leading to concerns that UK sawmillers may struggle to obtain sufficient quality logs during the course of this year. European oak log and lumber costs are understood to have risen by around 5% over the past three months.
Elsewhere, Chinese and Indian buyers have emerged as key drivers of the West African Hardwoods market while the Europeans have taken something of a back seat in the early part of the year.
Importers are warning that, to date, UK consumers have been largely shielded from the sapele price increases that have been taking place in West Africa thanks to the impact of heavy purchasing from, among others, China and the US.
According to one source, the price of this species at the sawmill has increased by between 12-15% over the past three months. The time delay on consignments booked well into last year and the ongoing availability of supplies of kiln-dried material from the Continent have combined to create a false sense of security among end users in the UK, it has been claimed. However, several sources believe that selling prices could rise substantially in this country by the summer.
By contrast, the iroko market has shown no signs of price progress while framire has enjoyed reasonably stable market conditions despite evidence of some cheap offers. As for wawa, UK demand has been steady even though import flows appear to be set on a long-term downward trend. Recent statistics indicate that UK imports of kiln-dried lumber from Ghana fell from 15,305m3 in 2004 to 13,700m3 last year. According to a regional expert, wawa is likely to have accounted for most of the decline.
Higher sapele prices will serve to enhance the attractiveness of Far Eastern dark red meranti. The price of the latter, which has been steadily gaining ground for more than a year, is estimated to have advanced by a further 5-6% since our previous hardwood report, partly on the back of concession reductions and higher freight rates. Further price impetus could be provided by the news that emerged in mid-February that Pehang state – a key source of meranti – was imposing a freeze on logging activities. At the time of writing, it was unclear how long this measure would remain in place.
At present, the UK appears uninterested in buying large volumes of keruing – a fact attributed partly to over-stocking in some quarters. Prices are generally firm but some cheaper offers have been reported, resulting in variations in the C&F price of up to US$80/m3. “There is a massive price difference, depending on whether you are a user who needs the material or a stockholder who needs to get rid of the wood,” TTJ was told. “A lot of material has come into the UK over the last six months and it needs more consumption to underpin prices.”
Brazilian supply
Secondary species for decking and flooring – such as ipe, garapa and tatajuba – are proving to be the main focus of purchases from Brazil, while the few offers received on cedar are being pitched at “very high prices”. It is understood that, in some parts of Brazil, movements of logs and lumber have been adversely affected by problems relating to the issuing of transport permits. “It is still difficult to obtain hardwood out of Brazil,” one source said this week. “If you succeed in interesting a customer in Brazilian hardwoods, they get put off again by the regular interruptions to supply.”
