Early in August the New Straits Times reported that Indonesia has proposed that ramin in both raw and finished products should be placed on the endangered list of CITES Appendix II. At present it is on Appendix III which requires that trade in tropical hardwood must be accompanied by an export permit and a certificate of origin to verify that the timber was legally harvested. Appendix II would require additional documentation and a much more stringent study as to whether exports would affect the survival of the species, plus a possible limit on the number of permits allowed.
Indonesia’s proposal has been greeted with scepticism as, apart from one concession in Riau province, Indonesia had already banned the export of ramin in early 2001. It is suspected that illegal logging has continued to deplete this already scarce resource and possibly it is felt that an Appendix II listing would restrict purchases on world markets as a roundabout method to curb illegal production and sales. However, legitimate ramin traders are concerned that Appendix II listing would adversely affect Malaysia’s ramin sales.
Malaysia had already banned the import of logs and squares from Indonesia.
There are thoughts that more stringent control is required in Malaysia to eliminate small sawmills and processors that rely almost entirely on illegal log supply, through enforcing a certification process from forest through to export of all timber-based products. The Malaysian government has been firm on pushing its national certification scheme but perhaps there is still some debate over whether it would be politic to join in other international schemes.
Log prices
Log prices have continued firmly on a rising trend. Meranti sq and up has risen by a further US$10/m3 over the past couple of months; meranti smalls are unchanged but super small are higher by US$15/m3. Keruing log prices have also moved higher by US$10 for sq and up while the super small price increased by US$15/m3. Kapur logs are unchanged and selangan batu is slightly weaker in spite of reported short supply.
Japan has dropped to third in volume of log imports, following leaders China and India. One reason for the strong prices for super small logs is buying for India and China which both take a wide variety of sizes and grades, while Japan prefers larger sizes and much tighter grading. India and China also import large volumes of New Zealand radiata pine logs and India maintains its long-term, high import tax regime for sawn lumber.
Sawn lumber prices generally have been on a slowly rising trend over the past three months, with dark red meranti particularly firm. Current trend lines are moderately upwards, now asking plus US$5-10/m3 for new contracts. Prices for Malaysian and Indonesian mouldings are higher and producers are again asking for modest increases. Supply problems are compounded by ever-increasing freight costs as oil prices remain near their peak, and some traders report more difficulties with freights on existing contracts than in making new sales. As with the west coast Africa trade, sawn lumber prices have not yet reflected the higher log costs and in Indonesia and Malaysia the prices for logs traded for domestic use are still moving up.
Re-stocking
Exporters expect the normal purchase pattern for European importers re-stocking for the winter months, but warn that it is unlikely that supply will be more than just about sufficient to meet demand and that prices will remain firm. Merbau and meranti bukit are particularly scarce.
Plywood prices in Asia have continued to move quite strongly upwards. Indonesian 2.7mm is up US$30/m3, 3mm up US$15 and 6mm also up US$30/m3. Malaysian 2.7mm is US$15-20 higher, 3mm up US$35/m3 while 9mm and thicker did rise but levelled off and is slightly weaker. In Japan the market is still rather uncertain, with consumers exerting downwards pressure, causing price reductions for some products while ply imports are costing more and the increased prices for log supply for Japan’s domestic ply manufacturers are squeezing margins. Except for good demand and higher prices for thicker boards 19-25mm, the market is expecting difficult trading and weaker prices through the next month or two.
Other panel products are also at better prices and in some areas supply is tight and demand reported to be brisk. The price of Malaysian MDF 12mm and thicker on the home market is now virtually the same as for export.
Chinese production
In other news, China is now the world’s largest producer of wood-based panels at 45.4 million m3 per year, of which around 20 million m3 is plywood.
Producers have seen a steady increase in log, lumber and panel prices over the past two or three months. Demand has been only moderate which indicates that prices are now being driven by supply factors more than by any surge in demand. The Japanese plywood market seems to indicate that there may be a levelling off at the current higher prices anyway for plywood but probably extending to sawn lumber.
The fact that for most West African species sawn lumber prices have remained stable may also hold back any further increase for Far East products, at least for the time being. Continued strong economic growth in China and India will sustain demand for timber products and is likely to keep the overall market stable in both demand and price.
