Far East timber trading has been a rather mixed bag over the past three months. Inter-regional trade has been brisk at normal levels; Europe has been very dull, with the slow decline in volume continuing and prices scarcely moving either way; in the Middle East there’s been moderate to good demand with prices for MLH and red meranti that can be variable depending on destination.
In comparison with September 2012, the September 2013 prices for MLH have drifted down by around 7%, and by about the same for red meranti, in this very competitive market in which almost every supply country – Africa, Brazil, Germany, Romania, Malaysia, to name just a few – is actively marketing softwoods and hardwoods to Middle East importers. This appears to confirm that from the start of the year Malaysian exporters decided to moderate asking prices in order to more strongly meet the competition from West African species that have been gaining ground and a very firm foothold over the past couple of years or so.
Plywood prices
Plywood prices in all markets have continued to improve, with Malaysian and Indonesian 12-18mm now some 20% above the average of prices at the beginning of the year and reported to be firming up once again through October. Japanese importers report they are expecting to pay higher plywood prices as the year progresses.
China is by far the largest supplier of plywood but, as elsewhere, importers in the Middle East are finding increasing demand for the high quality Malaysian and Indonesian plywood which is seen as more reliable in make-up of cores and faces. Film-faced ply from German and other Continental producers is also in demand for newbuild upmarket apartments and houses. The US is considering a substantial increase in countervailing, anti-dumping duties on Chinese ply imports, possibly more than doubling the current temporary level.
At a recent meeting of the forest ministers of APEC, the organisation for Asia-Pacific Economic Co-operation, it was resolved to ‘isolate’ Australia and the US for legislating trade bans to tackle illegal logging. It was felt the bans did not comply with the UN and World Trade Organisation (WTO) rules on anti protectionism and promotion of sustainable forest management. It is not clear what ‘isolation’ would entail and, anyway, Indonesia says it will continue to trade forest products with Australia and the US, which are both major markets for Indonesian timber and products.
The Indonesian VPA has been signed after six years of work on the internal regulatory procedures (TTJ October 5/12). Ratification by the EU and the Indonesian government is expected in the next few months.
ISO opposition
In other news, there appears some acrimony over the ISO proposal for a timber product chain of custody. Supported by the UK Timber Trade Federation, FSC and PEFC argue that an ISO chain of custody won’t work unless they are involved. Cogent reasons why this should be so were not reported other than these NGOs might become sidetracked and lose revenue if an official ISO inter-governmental standard was implemented. In Germany the FSC and PEFC have refused to co-operate and work on a chain of custody with the German DIN standard authority.
In the Netherlands the FSC is to advise builders’ clients that if they wish FSC-certified timber to be used in their projects then the appointed building company must also be registered with FSC.
India is experiencing a rather sudden recovery of confidence following a month or two of uncertainty over the currency and possible new government taxation. Exports have recovered quickly in the past month and the fears of downside currency and government policy changes have receded. The lower US dollar rate has encouraged overseas investors to resume buying properties even though there remain a fair number of unsold spec-built houses. This renewed confidence will go far towards reviving timber import demands that have gone through a dull patch in the past three months.
The tighter supply of sapele, plus new sales initiatives and realistic offer prices, have helped meranti to regain ground in Europe, especially in Germany where the species is the favourite in timber window manufacturing.
Bangkirai decking is less in demand in Continental Europe as end users try various new treated and modified timber products. Consequently, prices are unchanged but supply is now more easily available.
In the UK, business continues to be very slow and imports from both Cameroon and Malaysia were down by some 25% over the past three months.
Japanese economy
The Japanese economy is forecast for very slow or no growth for 2014 but for the timber trade there have been some improvements in house and apartment construction. Timber importers say they are not willing to pay higher log or lumber prices but concede that if India’s buying increases this may well push up log prices.
After a slower period in the third quarter China has resumed a more positive growth and construction is again featuring strongly. Thailand has now begun production of MDF, providing lower priced competition against Malaysian and Indonesian producers and exporters. Sri Lanka also manufactures MDF and offers 6x12ft as well as the standard 4x8ft.
In terms of the overall Far East market it is in a ‘steady as you go’ phase. Prices have hardly changed through the past two months and no-one is forecasting any significant variation in volumes or prices through to the year end.
Perhaps a discerning observer might notice the slightly less worried attitude of timber producers and exporters in the region.
