There is lots of ‘reshuffling’ going on in the timber trade in West African producer countries, with some companies closing or downsizing forest and sawmill production; one company is reducing its workforce by more than 50%.
Others, smaller businesses, with forest concessions and fully approved Forest Management Plans, are now deciding that, rather than export directly, to sell their sawmill output to the larger operators which have the number of staff and procedures capable of generating the correct paperwork and due diligence to comply with the EUTR. Other concession holders have ceased processing and sell their logs on to other mills.
There is no doubt the downturn in exports to European destinations is hitting hard. There was already a decline in tropical hardwood volumes sold into Europe and this is now exacerbated by the significant extra costs and complications caused by the EUTR.
The EU Sustainable Tropical Timber Coalition, set up by the Dutch government to boost the sales of sustainable tropical timber in the EU, could help but since it is said to be backed by the regulating and green lobby organisations, producing countries might consider this could lead to further extension of controls and outside surveillance of their operations, which are already very tightly regulated by in-country forest departments. As previously noted, Gabon has forest officers stationed at every sawmill, quite apart from those checking operations in the forest areas.
Gabon sawmillers and plywood mills are complaining of log shortages, particularly good quality okoumé peeler logs for face veneers. Of the limited number of log price increases over the past six months okoumé gained most with a rise to date of €60/m³. The log shortage is reported to be limiting sawmill production, and North African plywood manufacturers, traditional buyers of okoumé logs, are complaining they can obtain only low quality logs from exporters. There is also large, unfilled demand for okoumé logs for China.
Heavy rains in Cameroon have not yet affected log supply. As elsewhere, sawmill production is geared to current low demand and exporters searching for niche markets outside the EU.
Cameroon continues to export logs, and demand is high and the volume said to be increasing. The Congo Brazzaville government is actively seeking new investments in the forest industries, although some existing operators affected by the EUTR are downsizing and temporarily limiting sawmill production. There are reports of some new investors already signed up or ready to sign up for new concession areas.
Congo Brazzaville imposes a quota system of 85% processing to 15% log export and there are strict controls. Transport to ports is one of the main cost constraints, with very long distances – up to 1,200km – from the northern areas.
The Central African Republic has once more closed borders following civil unrest and is allowing only food supplies. This will again stop exports of high quality sawn sapele. There are mixed messages on sapele supply and demand. Some sawmillers say they are nervous, believing that there is risk of oversupply and this may depress prices, but demand from China and other destinations is strong and, after a long stagnation, sapele lumber prices increased recently by only a modest €20/m³ over the price at the end of January – a rise of around 4% after six months. It is scarcely sufficient to keep pace either with inflation or the extra costs of compliance with the EUTR.
Interestingly, African prime joinery timbers such as sapele and sipo are priced at just about 50% of the current prices of American oak, while the much sought-after prime padouk is one-third lower than American red cherry lumber.
Strong meranti competition Some producers in West Africa are meeting stronger competition from meranti in the Middle East and in South Africa and there are some worries this could result in price pressure on joinery timber sapele, sipo and others.
Over the past six months, the prices of only a very few log species have changed. Acajou is up €20/m³, as are bilinga and moabi. Azobe logs managed to finish up on a €30/m³ increase after several ups and downs; andoung is now €50/m³ higher; while iroko logs are €10/m³ lower than in January for Asian destinations and €20/m³ less for European buyers. Padouk logs also lost ground and are now €10/m³ lower but are likely to move up shortly as demand for sawn lumber is improving.
The picture for sawn lumber is only a litt brighter and there are no price falls after the six months although, as always, some species have shown only modest changes down as well as up through the period.
Best performers are doussie, where GMS increased by €150/m³, and for flooring strips which rose by €100, while scants are up €250/m³. Padouk lumber is now higher by €100 for both GMS and scantlings. Padouk has been subject to quite large up and down changes over the period but demand is now firmer and producers are more confident of holding on to the recent gains. Ovangkol continues to be in high demand, with prices for GMS and strips both up by €100/m³.
Iroko prices are up €30/m³ and scantlings up €20/m3. Khaya is also €20/m3 higher.
The Chinese government is planning for strong growth and acceleration of urbanisation. This will ensure the property markets continue to boom and demand for timber continues. A recent survey says that China is already a major force in the import and export of timber and timber products and predicts this influence will grow, eventually possibly setting world prices for logs and lumber.
Asian destinations are showing firm demand for logs for China and India but producers do not appear to be optimistic of much change in prices in the third quarter, even though supply is said to be becoming more difficult and in some areas available species are limited.
European demand for sawn lumber is low and producers are generally looking to other markets. China is increasing purchases of sawn lumber and there is more interest in the more expensive and decorative timbers. Price changes are likely to be relatively small in the third quarter and, as usual, very much down to variations in demand rather than producers feeling able increase asking prices
