Trading conditions are tough say West African producers. Some species were in demand during late August into September and shippers did manage to achieve higher spot prices for azobe, doussie and iroko logs until European buyers had re-filled their supplies. In mid to late September prices fell back to their previous levels and have remained there. Some others such as padouk and movingui have weakened and log exporters are under pressure to find sales in reluctant markets in both Europe and the Far East.
News that the Netherlands market has almost dried up and lower log prices are being paid by Japanese importers while Portuguese buyers are out of the market for iroko are yet further problems for exporters. At the same time, log prices on domestic markets in some producer countries are relatively high, moving even higher while supplies are often quite low, especially in Cameroon. The development of new sawmills in Cameroon and Gabon has been swift, with five new mills in one year in Gabon, while there are now around 52 sawmills in Cameroon.
Congo Brazzaville continues exports through Douala port, with sapele predominant, plus khaya and sipo. Prices are firm and it is reported that a major supplier is asking a premium of FFr100/m³ for certified timber but there are very few takers.
The development of processing in-country is, in principle, economically sound but success for the mills depends on adequate and regular log supply and on there being sufficient margin between log and milling costs and the sawn lumber selling prices. Many of the new sawmills in Cameroon have had difficulties in buying sufficient logs as the government introduced auctions for concessions and for logs from government-owned concessions. This meant the larger operators could afford to outbid the smaller mills and some without concession areas have been unable to maintain full production. Even some larger sawmillers have been forced to consider buying in logs from neighbouring Congo where transport costs to the mill alone are as high as FFr300/m³.
Margins squeezed
With sawn lumber export prices under heavy pressure, margins are being squeezed but sawmills are managing to hold most prices steady. As with log prices, sawn lumber prices in the second half of the year are reacting much more quickly than normal to fluctuations in demand. This is certainly a reflection at both ends of the supply chain where importers and merchants have pared down stock to the bare minimum, while loggers and mills are doing the same so that any sudden increase in demand can trigger higher prices for brief periods. Another effect of this reduction of inventories is the temptation for buyers to take up cheap offers for goods ‘on the water’, often to their regret when the quality and condition are not up to expectations.
Generally, export prices of sawn moabi, douka, izombe, sapele, khaya spp and bilinga are stable and shippers firm, though the downwards pressure on sapele continues, no doubt because of competition from Far East meranti. Prices for GMS are around FFr100/m³ lower but fixed sizes are holding firm. Padouk is now firm after a fall from the June/July prices of up to FFr400/m³ for scantlings.
Okoumé lumber, a newcomer to the market, is not faring well and prices have dropped around FFr150-200/m³ since June/July. There are reports of some burnt fingers from low price offers of okoumé lumber which turned out to be low quality as well, and this is handicapping promotion of exports into Europe of this mild textured pale red species, best known for use in plywood. There is little doubt the reliable shippers of quality okoumé lumber will find markets for a very versatile ‘new’ timber.
Central African Republic sawmills are exporting through Douala, with main production in sapele, iroko, sipo, ayous and tiama. Prices are similar to those in Cameroon in spite of the higher transport costs.
Equatorial Guinea also is a small exporter, sending some standard and better okoumé lumber for Spain, plus sipo, khaya, padouk and tali for France and Germany.
Prices steady
There are few weak spots in prices for logs or lumber, especially as the smaller export countries base their prices on those of the major regional exporters and, with generally good demand on local markets causing firm to higher log prices, producers and exporters have managed to hold prices steady.
Related Files
Tropical log FOB price trends 2000 -2001
West African log FOB price trends