By consensus, many UK firms involved in the hardwood trade have grown accustomed to unspectacular demand and tight margins. The early weeks of 2003 have underlined this sense of a business which, as one trader put it, “is doing OK, but not great”. Sales volumes appear to have met what were generally low expectations for January and the first half of February. The widespread trend among customers is to order small but regular volumes, and to expect reasonably smart delivery.
“Some of our customers are very busy,” said a contact, “but they are the smaller ones doing bespoke business.” In general, he added, there was sufficient stock around to meet temperate and tropical hardwood needs, and this was helping to persuade many buyers not to commit forward.
However, despite the generally lacklustre demand patterns in the UK, there is still a major issue surrounding supply. Failed attempts to quell unrest in the Ivory Coast have resulted in problems for UK interests in securing sufficient supplies of two particular species. “There are bread queues for any iroko or framire arriving in the UK,” said one trader. An importer commented: “We are lacking thicker sizes of framire and iroko supplies have also been hard hit.”
Recent efforts by France to broker a deal in the Ivory Coast appear to have foundered on a proposal to offer more of a political voice to the rebel faction. Some sawmills have been closed down but, with fighting said to be “limited” as TTJ went to press, a number of operators were said to be struggling on and to be achieving almost normal production in some instances. However, some lack of willingness to enter the forests has adversely affected the supply of logs, while energy requirements are failing to be met in some instances. Furthermore, some trading office staff have opted either to stay away or to leave the country altogether.
Unfulfilled demand
Back in the UK, some traders spoke of their “frustration” at having “good orders on the books” but being unable to service them in many instances. “There is a lot of unfulfilled demand out there – we are getting enquiries on a daily basis for major joinery sizes,” said one trader. Another confirmed: “I have got a regular demand for kiln-dried iroko – I have been trying for three weeks and I can’t get anything.”
While operators in the Ivory Coast have been continuing to take on orders, “they are not committing themselves to any delivery time at all,” TTJ was informed this week. Several contacts said they were unwilling to place forward orders because of the dearth of information coming out of the Ivory Coast itself and, taking a more global perspective, because of the uncertainty created by the possibility of a war against Iraq.
Traders are left with few alternatives. “Iroko is available from other African countries,” said one, “but it will be some time before we see it and we don’t know whether it will be comparable material.”
Partly as a result of the situation in the Ivory Coast, some importers are said to be prepared to pay higher prices for supplies of certain West African hardwoods, although it was generally felt that prices offered to end users were unlikely to feel any long-term effect. Commenting for example on the wawa price out of Ghana, one trader confirmed: “I am being quoted prices at least 10% higher than they were before.” In general, however, the role of Ghana as a supplier of sawn timber was continuing to diminish, it was added.
The most popular of the West African hardwoods – namely sapele – has emerged almost unscathed from the events affecting iroko and framire. Supplies from the Cameroon are understood to be tight, but relatively slack demand in the UK and most of Europe has produced largely stable market conditions at virtually unchanged price levels. No major problems were reported this week with regard to delivery schedules.
The market is emerging from a slow trading period for Far East hardwoods, a situation dictated to an extent by the recently-ended Chinese new year celebrations. Supplies of dark red meranti have been affected by the rainy season while the material’s US dollar price is said to have dropped slightly over the last couple of months.
The UK market for meranti was described this week as “subdued”, with buyers said to be reasonably well stocked and importers unimpressed by the margins. “If anyone in the UK wants meranti, they tend to pick it up off the ground or from the Continent,” according to one contact.
|
“There is obvious delight on the other side of the Atlantic at the continuing strength of the euro in relation to the US dollar, since this provides welcome assistance for US exporters competing against European hardwoods” |
UK demand for keruing has been quite poor while ramin has been attracting its normal volume of business.
The new year has seen a continuation of the slow UK demand for North American hardwoods witnessed throughout most of last year. Calculating that sales completed by his own company had dropped by at least 15% in volume terms last year, one trader attributed the decline to the effects of economic downturn on commercial operations, including the postponement and even cancellation of certain refurbishment and new build projects. “A large proportion of the North American hardwood used in the UK is for refurbishment of hotels, restaurants, offices and public buildings – very little is used in the domestic situation,” he said.
Cutting output
The UK is continuing to see the results of efforts by North American producers to cut output in order to bring supply and demand into greater balance. Supply has also been restricted to some degree by the particularly harsh winter affecting many parts of the US. Some sources suggested that quick delivery was not always available on certain items, pointing in particular to white oak and cherry. One trader believed the situation to be quite patchy: for example, he said, 6/4 white oak was difficult to obtain but there appeared to be plenty of availability on 8/4.
North American shippers have been keen to talk up these supply issues, with some claiming that there will be “desperate” shortages of North American hardwoods towards the spring. For the moment, however, the UK market appears unruffled by these warning shots and is not reflecting any major supply worries. White oak was described this week as “steady to slightly firming”, whereas most of the other major species were either “holding their own” or “slightly softer”. As has been the case for some time, the walnut market remains strong with supply falling short of healthy demand from, for example, China.
From the US perspective, hardwood stocks are said to have reduced. And there is obvious delight on the other side of the Atlantic at the continuing strength of the euro in relation to the US dollar, since this provides welcome assistance for US exporters competing against European hardwoods.
UK hardwood interests are generally agreed that eastern European oak and beech will have an increasing influence on the market in the coming years, especially when grade and infrastructure issues are resolved. One trader observed: “There is a growing market for European beech and oak, but the Americans are able to offer more consistency on their grades.”
One source suggested there was currently an excess of European beech available in the UK market, while another reported “a lot of interest in square-edged European oak for external joinery work”.
Brazilian mahogany
According to a UK-based trader with Brazil, he had been given the impression that the country’s authorities might shortly allow mahogany to be shipped overseas for a limited period, although there was no talk of this possibility elsewhere. The US has been taking significant volumes of mahogany from Peru although the grades in question are generally thought to be unsuitable for the UK market.
Meanwhile, UK sales of Brazilian cedar have been quite steady – albeit at a low level.
