The stable but slowly advancing price trend for Central and West African timber over the past year or so has changed suddenly, with substantially higher asking prices for some prime species.
For several months sapele lumber has been undervalued, considering the steadily deteriorating short supply situation which has been exacerbated recently by the ongoing civil war in Central African Republic. Sapele and many other log prices have been moving up and, with a moderate increase in demand for sawn lumber during March and April, producers raised prices for new contracts. After previous increases, sapele logs rose another €20/m³ in April and sipo logs, which had already been in high demand, put on more than €50/m³. Demand for iroko logs strengthened and the price moved €50/m³ higher.
The general trend over the past six months and more has been for much more selective buying by European importers, with some concentrating heavily on red-coloured timbers. Last year’s Wood Awards in the UK were all about light-coloured temperate wood, mainly American oak, while Continental European timber fashions are open to darker and more varied species. Sapele is a long-term favourite for door and window frames in the Netherlands and Germany although merchants complain that plastics are becoming more prevalent.
Other log price changes in the past few weeks include moabi, up by €20-40/m³ and okan, which is once again back in favour for buyers in China. New asking prices are at more than €40/m³.
On the supply side, new developments are few. New investments appear limited to Congo Brazzaville where relatively few new companies are completing the mandated processing facilities and meanwhile can export up to 40% of log production on quota. In recent months two large concessions have been withdrawn by the government because the companies did not comply with the terms of their forest agreements. The concessions have been offered to other existing or to new investors. New concessions are being negotiated in the Sangha province in the far north and these will include agricultural developments in some of the many extensive swamp areas. The Congo government is very keen to encourage employment opportunities in the rather remote northern provinces for both timber processing and large-scale farming. Transport distances of well over 1,000km to the nearest port are the problem.
Elsewhere in the country, timber exports are increasing, mainly to the Far East. Okoumé logs and sawn lumber account for the largest volumes but sapele and okan are also significant. The government maintains very close checks on exports to ensure compliance with quotas and is known to quickly uncover any discrepancies in species identification or paperwork.
Disputes in Gabon
Timber and other processing companies in Gabon are complaining that for more than a year the government has failed to refund VAT payments and this is causing financial headaches for many exporters. Also strike action by port workers and customs during the past months has added to cash flow problems and inhibited the movement of goods internally and for imports and exports. At least two longestablished timber companies have sold out to new investors.
Gabon producers report that production is at full capacity and exporters have been in the forefront of developing lumber exports to the Middle East. Very strong business has resulted for the favourite – sawn okoumé – and buyers are accepting red-coloured mixed species, competing successfully with Malaysian MLH and the lower grades of meranti. The Middle East markets have grown consistently over the past year and appear to be settled and stable, taking in a large number of different species from almost all exporting countries.
Cameroon exports have performed particularly successfully in the past few months, recovering quickly after a heavier rainy season than usual brought logging almost to a close. Currently log exports of the permitted, so-called secondary non-premium species are at a high level, as is sawn lumber in several species, including okan and the primary timbers such as sapele. Like Congo Brazzaville, Cameroon carries out stringent checks on timber exports and any attempt to export banned species, such as kevazingo or bubinga, is met with heavy fines.
European preferences
The main markets are in the Far East but European buyers are also regularly in the market for azobe, moabi and iroko.
Other species in demand for Europe include iroko, which is set for further price rises, and azobe, moabi and padouk. Iroko logs have moved up a further €20/m³ in the past week. Okan is out of favour with European buyers but China has resumed purchases after a pause that failed to bring down prices. It is easy to underestimate the importance of Middle East markets and their influence on prices, not only for Africa but also for many other supplying countries. Although okoumé and meranti are by far the largest volumes traded, importers stock dabema, khaya, sapele, iroko, acajou, tiama and kossipo.
The US has recently shown a little more interest in sipo and sapele, with some supply sourced from Ghana, which is probably the only African country that has taken the time, effort and expense necessary to promote its timber into the US market. Ghana has concentrated successfully in recent times on supplying timber to neighbouring African countries.
Buyers of African species for India are quiet.
Reports from the region say there are no overlying stocks of unsold logs or lumber, while producers point to ongoing shortages of logs in some species, plus higher logging and transport costs. Consequently they are not minded to increase production beyond what is a reasonable balance between supply and demand, with supply for once being the limiting factor. Exporters say that for the few premium species demand now outstrips the possible production and that unfortunately European importers are reluctant to search for alternatives amongst the many lesser-used species.
While there’s been little movement in the majority of sawn lumber prices in the past month, so far this year the general direction has been a hardening of asking prices and through April exporters have pushed through substantial increases for the species most in demand.
Douka (makore), not available from Gabon, is now €30/m³ higher for FAS GMS and scantlings are up by €20/m³. Sawn iroko is up by around €40/m³ for GMS and there are increases of up to €80/m³ for scantlings. Sapele GMS producers are now asking for an increase of €40-60/m³ and scantlings are now €60-75/m³ higher. Sipo sawn lumber prices have increased by at least the same as for sapele, building on an already very strong demand.
Rises continue
This upwards price surge for sawn lumber seems to have stabilised but it is clear that log prices for the premium species will continue moving up and this will force further prices rises for sawn lumber as the year progresses. For the time being markets are driven by high demand rather than sales pressure from producers and this situation is likely to prevail while the economies in the Far East and Middle East hold their steady growth.
European demand is good and lead times for new imports are extended as some producers are already quoting three months or more for new business.
