Asia and Far East timber and wood products traders had a relatively much improved business in 2014 compared with 2012 and 2013.

Firstly it must be remembered that for Malaysia some two thirds of timber product trade stays within the region, and for Indonesia the figure is close to three quarters of the trade.

Indonesia managed a moderate increase of just under 4% in timber products export value in 2014. Of the total value, only 10% went to EU countries and 10% to USA.

By value, Malaysia’s timber and products export business is around 45% furniture, 37% plywood and 11.5% sawn lumber, the balance various other products.

Clearly the total timber export business is supported by the substantial interregional sales plus strong demand from home markets in Asia/Pacific economies that are growing annually far more quickly than those in EU and other western economies.

With such diverse markets it is more difficult to be precise and definitive on price movements, however it is clear that in 2014 meranti prices for the top quality DRM did not shoot upwards with the same velocity as have FAS sipo and sapele. These two are now moving downwards while meranti had more gradual and steady price rises through the past few months and appears to have maintained stability through into 2015.

DRM prices in 2014 moved up by as much as US$40 – 50 per m3 and MLH rather less. Current prices are tending to move marginally downwards.

Major South East Asia import markets include Japan, (big for plywood), Thailand (low-cost sawn lumber) and the Philippines – once an exporter and now an importer – while the largest in the region is China. There was much speculation during 2014 on how well the Chinese economy could maintain the high annual growth of recent years. While there has been a reduction in growth, down to 7.4%, just missing the 2014 target by 0.1%, China remains one of the top performers in the international league tables.

Reports suggest a recent tendency for smaller businesses to perform less well while larger size enterprises continue to prosper.

For timber businesses there is the usual slow down in demand ahead of the traditional Chinese New Year celebrations, and according to reports this has been more marked than usual. Possible reasons for this may include high stocks in China for some products, concerns over the future level of housing and construction, and as always an opportunity for buyers to review prices and seek a new round of purchasing at lower benchmark levels. Right now timber exporters report a significant drop in new business for China as well as requests to delay current shipment schedules until mid- March or early April.

However, most producing countries say the supply of logs is limited and that there are regional differences affecting log supply for log buyers and more importantly to processing mills.

The biggest shake up in recent times was the Myanmar ban on log exports. This action reduced Myamar’s 2014 wood products exports to only about 10% of the total for 2013.

This affected Indian buyers more than any other importer country and has led to India switching to increased imports of other tropical hardwood logs as well as importing veneers for manufacture of plywood.

The Indian government is to take steps to stimulate massive increase in building of affordable housing and planning to ease financing for homebuyers and infrastructure projects. A spokesman recently stated that 50% of all the wood used in India is for firewood. Log supply from Sarawak is currently in difficulties due to extensive flooding and buyers are expecting prices to increase by as much as US$10 per m3 while at the same time plywood manufacturers are reporting slower export business with a possible price fall as Japanese buyers have been hit by a drop in the value of the yen against the US dollar. This may signal a halt in the steady rise in Malaysian and Indonesian export plywood prices that were achieved through the second half of 2014.

While Malaysian log supply is affected by the weather and is currently lower, in contrast West and Central African countries are entering their dry season and logging is back in full swing.

Market prospects

The market prospects for 2015 are less clear than what was a generally optimistic outlook by producers at the beginning of 2014. The EU and UK are still important destinations for Asian timber products exporters but with direct imports from Malaysia and Indonesia of only around 10% of their exports and with low growth prospects exacerbated by a negative attitude in the EU and UK towards tropical timber coupled with stringent regulations, these exporters will continue to concentrate on their traditional, regional bulk market buyers.

As noted, Japan is the major market for quality plywood but importers say the lower value of the yen will slow still further a market that is already sluggish, and some imported plywood is more expensive than local production. House construction, one of the most important economic performance indicators in Japan, did not reach its target in 2014 but at close to 900,000 housing starts dwarfs the 200,000 starts needed in the UK.

Most market concentration is on China, such a huge importer of logs and lumber from so many different sources that changes in consumption within China or its export markets can affect producers the world over. Chinese plywood has had a good market in Europe and in the Middle East countries in 2014 and there is no reason why this should change in 2015.

The proposed curtailment in new build low cost houses may have less effect on consumption of the top quality hardwood species used for high end housing and infrastructure projects.

China is the number one exporter of furniture, followed very closely in some markets by Vietnam, a producing country perhaps less well known but which has made great strides in furniture manufacture over the past few years.

In the timber world East meets West in the Middle East markets which have been and still are very active.

Okoume remains a favourite for general purpose joinery but meranti is well favoured for door frames and other joinery in luxury apartments and hotels and is preferred to sapele which joiners find difficult to plane. Here there is competition from French and German beech especially in UAE and Dubai, while merchants in Bahrain will take only meranti.

In Bahrain contractors have around one billion US dollars worth of hotel and apartment construction projects in the pipeline. MLH and ungraded lumber is the general purpose material and is now being strongly challenged by mixed redwoods from West Africa.

This competition is beginning to drive prices marginally downwards in spite of ongoing good demand throughout the region. The price of oil may have fallen but it appears not to have affected the Middle East consumption and timber producers say they are confident demand will remain strong. India also is a growing market for imports of logs, Sarawak being the major supplier.

Overall, producers are perhaps the most concerned in case of any ‘knock-on’ effects should there be more substantial decline of the economy in China, but at the same time being well aware that the Chinese government has always carefully managed and controlled the variations and fluctuations affecting their economic performance. For the EU and UK, until architects and designers can be persuaded to specify these timbers there seems little opportunity for a marked increased in use of tropical hardwoods