The summer brought varying fortunes for UK companies involved in the hardwood sector although, as a general comment, sales have fallen far short of record-breaking.

While some firms reported that order levels over the last three months had shown something of an improvement compared to the corresponding period last year, others claimed to have experienced the exact opposite. “We have seen small but regular volumes being ordered – but nothing that exciting,” noted one source. “It’s a rather cautious market at the moment.” Another added: “There is business out there and the market is jogging along – but at far too slow a pace.”

Several leading UK-based hardwood sellers said this week that enquiries and order levels had improved significantly since early September after what had been a largely “low-key” summer trading period. However, there is no disguising a general dissatisfaction with sales and a belief that the recent reduction in interest rates was a case of “too little far too late”.

The ever-rising cost of transport has added to this sense of caution. Sellers are being forced to offer contracts left open-ended for freight costs, prompting many buyers not in immediate need of material to bide their time before placing an order. Freight costs are expected to remain a major buying factor given the current oil price volatility, the ongoing impact of China on world shipping, and war risks in some key regions.

Although hardwood stocks in the UK may not be too high in some instances, they still appear sufficient to satisfy lacklustre demand. Few traders were particularly bullish about near-term consumption prospects, with many key consuming industries – such as high-quality joinery and furniture manufacturing – expected to continue to feel the pinch of reluctant consumer spending.

One operator said : “Hardwoods are at the luxury end of the timber trade and so get used in projects that, in many cases, don’t have to be done today. Therefore, hardwoods are affected more than most by any economic downturn.”

That said, some hardwood users do appear to be bucking the general market trend. For instance, several contacts said that high-quality kitchen manufacturers continue to be performing very well at present.

Brazilian hardwoods

Following the arrest of forestry officials in Mato Grosso, Brazil, covered in the last hardwood report, supply of Brazilian cedar has become a major problem. Licences were suspended at the time and are continuing to undergo checks. Management plans are also awaiting approval as the authorities step up their campaign against illegal logging.

It is reported that some leading Brazilian suppliers will not be in the cedar market this season.

“There is an interest in cedar and in this season’s production – but it looks like there isn’t going to be any,” said one UK contact. “Some people are looking at sapele and even sipo as an alternative.”

By contrast, the UK is receiving a reasonable flow of the secondary Brazilian species used, for example, in decking.

Shortages in some areas have enlivened the market for North American hardwoods during 2005. White oak has remained firm although earlier supply pressure on 8/4 and 6/4 appears to have abated to a limited extent over the summer months.

&#8220There is business out there and the market is jogging along – but at far too slow a pace”

Noting that thicker sizes remain more difficult to obtain, one contact added: “It takes a long time to process the thicker sizes and so fewer companies are doing it.”

Black walnut has also been witnessing some shortages whereas red oak and tulipwood were described this week as “plentiful” but “stable” in price terms. Hard maple has remained quite expensive despite reasonably good availability; red oak has weakened a little and cherry demand has continued to suffer the effects of prices having been driven “too high”.

Competition in oak

Sales of European oak have remained steady, although several sources argued that prices would have to fall or exchange rates to change to persuade buyers to move away from North American species in larger numbers. Particularly good availability was reported in thinner sizes of European oak “because not everyone wants to produce the thicker sizes”, said one contact.

Prices for Far Eastern dark red meranti have continued to firm – although at a slightly slower pace recently compared to earlier in the year. There were reports this week of an increase in the flow of offers, One importer said: “We have seen a good bit of business for meranti. Prices have been firming over recent months but we have had trouble maintaining our margins because we can’t always get the price from our customers.” If this carried on, he said, there could be a significant shift towards West African sapele.

MTCC-certified material has continued to secure increasing share of the market, contradicting those UK hardwood specialists who insist that most buyers are interested only in the purchase price.

Replacement prices for keruing remain firm but some of the heat has been taken out of the market following the arrival of significant volumes in the UK over recent months. But according to one specialist, however, shipments have been insufficient to wipe out shortages. It should be stressed that the UK is by no means a leading player in the keruing market, with Far East mills preferring to sell to buyers in the US and Japan because of their easier specification requirements. At the same time, it has been reported that some US buyers have diverted their attention to South America “because they can’t get the keruing they want from the Far East”.

West African species

Among the West African hardwoods, iroko prices remain at very high levels, although they have weakened of late. According to one source, the price of shipping dry material had dropped by 4-5%, while the decline for kiln-dried iroko, had been slightly greater, although other contacts had experienced less severe decreases. The weakness in iroko was attributed in the main to a lack of consumption in relation to supply, notably in Ireland; “which has been quiet this year despite the lack of supply”. Part of the reason is that Ireland’s hardwood door manufacturers have met stiff competition from China.

Sapele prices have held fairly stable over recent times although warnings have been issued about the need for higher prices to take account of ever-rising freight costs. One source said that sapele remains something of a “loss leader for many companies”: “A lot of people are buying certified sapele from the Congo – they are prepared to pay more for it and offer it as a premium product to help improve the margin on what is otherwise quite a disappointing species in commercial terms.”

Staying with the African hardwoods, there were reports that framire had been the focus of “cheap selling” by some importers against a backdrop of reasonably fluid availability. Meanwhile, wawa exports to the UK appear to have been coming through fairly well with buyers generally resisting mill attempts to raise prices.

In terms of supply from Africa, few contacts noted any major problems this week – despite ongoing instability in the Ivory Coast. Opposition leader and former president Henri Konan Bediehas has returned to the country after a year in self-imposed exile and has called on incumbent Laurent Gbagbo to hand over power to a transitional government if planned elections do not take place on October 30. At the same time, United Nations chief Kofi Annan has said that elections may have to be postponed. Many voters have still to be identified and an electoral commission has yet to be set up.