Recent weeks have brought an increase in the price of Far East dark red meranti and early signs of an upturn in North American green lumber prices. However, many UK hardwood importers and agents have been complaining of merely “patchy” buying interest as the trade heads into the summer.
This lull in buying activity was ascribed to a number of factors, not least the distraction of the football World Cup. “It has been hard to raise anyone on the phone,” TTJ was told this week. “It was as if everybody was taking their summer holidays earlier.”
It would be wrong to accuse a football tournament of totally undermining the hardwood market. More realistically, UK buyers have sufficient stocks for their immediate needs and are prepared in many instances to postpone purchasing decisions until after the summer holidays. Also many end user sectors are far from buoyant and are therefore looking increasingly to buy raw material on a ‘hand to mouth’ basis.
In the case of dark red meranti it has been suggested that some buyers are waiting for prices to fall before booking fresh orders. After a prolonged period in the doldrums, the price has jumped markedly over recent months. A Far East hardwood expert estimated that prices of 2in, 2.5in and 3in meranti had all risen by 20% or more since the beginning of the year, and that 1.25in material had gone up in price by around 8%. This reflects the fact that thicker sizes have been harder to obtain, he said.
Meranti supply
The same picture was painted by other Far East market specialists, with one suggesting that 2.5in meranti was in particularly short supply. Malaysians have been pointing to higher container rates as the main reason behind the price increases but there was also strong evidence of a shortage of ready availability, he said.
The recent price increases have also affected keruing but not on the same scale as meranti. Demand for the species in the UK was described as ‘lousy’, mainly because of low demand from key consumers such as truck manufacturers. US demand has suffered for the same reasons.
Another UK operator acknowledged low stocks of dark red meranti in this country – notably on the 2.5in and 3in thicknesses –- but rejected the suggestion that the situation had been created by supply difficulties in the Far East.
He expressed concern that, if prices failed to level out or fall, the ever-decreasing differential with sapele would push even more buyers in the direction of African species. Sapele itself has been seeing relatively stable shipping prices but the strength of the euro in relation to the pound has effectively made the species more expensive.
Supply from most West African nations has been relatively untroubled although in Cameroon there is a smaller supply of logs for processing owing to quota restrictions resulting from environmental pressure. As reported previously, mills are understood to be sourcing additional supplies from the Congo and the Central African Republic.
Meanwhile, iroko has suffered some price weakness, most notably in random sizes although fixed sizes are said to remain “hard to get”. Framire has been claiming some of the iroko market share in the UK, while sapele is said to be doing likewise in the important Irish market. Ireland is now said to be purchasing mainly ‘top up’ volumes of selected iroko specifications. The utile market is said to be in reasonable balance, with a reduction in supply mirroring a slight downturn in demand.
Overall, UK and European requirements for African hardwoods are both uninspiring and unlikely to improve before September or even October because of the holiday lull. Compared with 2001, there has been a dip in demand for African hardwoods “but supply has fallen too”, noted a regional expert.
North America
Turning to North America, a recent tour of UK importers’ yards revealed “more stocks than I had expected”, according to a regional specialist. With sales “at a very low ebb”, it has clearly proved difficult for importers to reduce their stocks, with the result that “they are buying nothing more than they actually need and are waiting until the last minute before they actually buy”. Low business confidence in the UK had led to delays, postponements and even cancellations of many of the commercial projects that consume large volumes of hardwood, he said.
Of all the North American species, low-volume black walnut continues to enjoy strong demand – particularly 1in material – as fashion trends continue to favour this dark wood. There has been evidence of some shortages in white oak and a strengthening in the upper grades of red oak. The prices of cherry and maple have remained relatively firm, while increases have been reported at the thinner end of the tulipwood market.
The Brazilian mahogany market was best described this week as “a bit of a mess”, given that cargoes are continuing to be held in The Netherlands pending verification of the validity of the shipments (TTJ April 6). This situation has created uncertainty and prompted would-be buyers in the UK to stand back from the species until clarity returns.
Among the other Brazilian hardwood species, cedar remains available although there has been no appreciable improvement in UK sales. Reasonable demand has also been reported for virola and for the iroko substitute tatajuba.
A rather more bullish tone was adopted this week with regard to UK imports of beech and oak from both the near Continent and eastern Europe. These are being bought on a far smaller scale compared with North American hardwoods but their impact on the market is expected to increase substantially over the coming years, not least because of the availability of a wide range of qualities and thicknesses.
One trader noted that the principal difference between buying from Europe compared with North America and Brazil is that large volumes are not available from a single source. “You have to go to a number of them to build a major volume and it gets more fragmented the further east you go,” he said.
