The gradual improvement in Asian markets began with firming demand for plywood, providing opportunities for Malaysian and Indonesian manufacturers to achieve steadily increasing prices. At the same time other manufactured board products came into higher demand and although prices were subject to heavy competition, not least from new MDF plants in Thailand, business held firm with very good demand for Middle East and East African importers.
Japanese plywood imports appear to have been the catalyst that brought about a change in market orientation, moving from a long period of stagnation in prices and demand for sawn lumber and board products.
Middle East buyers had held off from purchases of meranti sawnwood for a long time, in the expectation that exporters would reduce prices. There was a slow but very minor decline in price in the last couple of months of 2013 and buyers gave in and meranti began the fight back against the now strongly entrenched African okoumé, gradually regaining better prices levels through the first quarter and into the second quarter of 2014.
There is good market support from South Africa and the relatively small but loyal meranti market in Oman, where buyers prefer the species to any alternatives.
In contrast to the poor and declining markets of the EU, demand in the Asia-Pacific region continued strong, with Malaysia’s substantial ongoing exports of plywood and sawn lumber to China, Japan, Taiwan and the Philippines.
The US also buys quite large volumes of Sabah plywood, while India is absorbing some 60% of Sarawak’s log exports.
Sarawak reports that its log harvest is still declining, with last year’s at just over 8 million m³ – almost 2 million m³ below 2011.
In the last two months product price increases have been moderate, with plywood moving up again by around another US$20- 30/m³ for 2.7 and 3mm thicknesses. Meranti sawlogs are also higher by US$15-20/m³.
Many observers continue to speculate that China’s economy will falter, from time to time citing slowdowns in furniture sales or housing, but economic growth remains high and timber and product imports and exports are well maintained. It is perhaps surprising to note from the ITTO’s MIS that China imported more than twice as much chipboard as it exported.
So is all well in the Asia-Pacific region? Well yes, but it would be unusual in the timber industry if all problems had disappeared just because the market has moved from slow into an upcycle trend line.
The smaller producers in Indonesia complain they cannot afford the high costs resulting from Indonesia’s long road to finalising its FLEGT VPA compliance. This puts them at a disadvantage and favours only the large companies. This is quite a common cause of complaint in other producer regions too.
Another common factor is the warning of supply shortages, and some Far East producers have said that for the more popular species there may be a limit on their capacity to meet all demands. This does accord with West African producers who are warning that the current very high demand for sapele and sipo exceeds supply.
Of course, when business is slow, importers tend to concentrate only on the best sellers and no-one wants to hold on to slow-moving stock. It is true that promotion of tropical hardwoods is virtually non-existent. All publicity in recent years has been driven by negative allegations of illegality and it would be an uphill task to turn this impression around, even if there was any organised, centralised, co-ordinated marketing effort – which there is not.
This leaves diversification into nonmainstream species a distant and unlikely proposition. Much of the timber industry is now controlled through non-state market-driven governance systems, which focus minds on legality and have tended to inhibit specifiers from looking beyond the safe and towards the innovative.
In the first month or two this year EU demand for Far East tropical timber fell even below the record lows of the same period in 2013 but has since recovered as economic confidence has grown, especially in the UK.
French buyers also returned to the market although,as in other EU nations, tropical logs are a declining product and buyers are concentrating on sawn lumber in selected species.
Prices for European destinations have risen and Far East exporters say that higher freight costs are making sales more difficult. However, they appear optimistic at least for the spring and summer months.
There are already some moves, especially in Indonesia, to promote and introduce biomass fuel. Wood pellets seem to be a major target product, with the proposition that this and biofuel could be significant export products as well as fuelling local industries.
Although the target is to use what was previously waste wood from forests, plantation-grown wood mass and other sources, the same concerns raised in Europe are also mentioned in the ASEAN region – that this might grow into competition for wood used by other industries.
Economies in the Far East are relatively buoyant, growth is at much higher rates than Europe and the timber trade appears well set for continued stability and considerably better prospects than at this time last year .
