The latest statistics on Chinese imports of okoume logs confirm our recent reports that the long stand-off between buyers for China and exporters in Gabon did result in much lower volumes traded in late 2003 and early 2004.
Business is brisk at SNBG‘s current rates and the higher freight rates which have been such a feature in the past three months. Freight rates for the Far East now stand at US$70/m3 for okoume and at US$90/m3 for other redwood logs, this latter down by US$5 in the past weeks, after being as high as US$100/110 in April/May. Exporters say that they are now able to negotiate rates on a ship by ship basis.
West African shippers are also reporting good trading conditions with Thailand and India. These countries do not buy all species, however, producers report that supply of the so-called primary species continues to fall away in many of the region’s supplying countries; only Congo Brazzaville, Central African Republic and Zaire are now able to supply the full range of top species on a regular basis. Congo Brazzaville is in full production ahead of the September rains but it is not expected that volumes will return to the levels once exported through Point Noir. From the north of the country, Congo Brazza production is shipped through Douala, currently with sipo, sapele, assamela, moabi and kevazingo the prominent species. Shipments over Point Noir are slow as some exporters are taking a break over the European holidays.
Shipments elsewhere in the region are also quiet because of the European vacations and one report is of ships for European destinations now calling at lesser ports looking for cargo to complete, a dramatic change from only two or three months back when few vessels were to be seen and shippers were becoming desperate to move exports.
Freight rates
Freight rates for Europe have not come down and owners are not willing to negotiate. This has caused some problems for exporters who found their buyers refusing to pay increased prices, leaving them no choice but to try to absorb the extra costs. One prominent shipper of okoume lumber says this makes it uneconomic to ship to most European destinations, though he is still shipping to Italian buyers who have agreed to cover some of the extra cost and have been increasing their intake of okoume. Many Italian importers are well advanced in substituting this versatile species for their previous imports of ayous and, as a consequence, production of ayous logs is much below normal. UK buyers have not yet taken to okoume lumber, although many will have handled okoume plywood at some time. This is surprising as UK buyers are usually very price conscious and okoume lumber can be lower in price than similar looking medium weight red species.
Log prices have not changed through the past few weeks following the rises reported in May. Far East buyers are very active for a wide range of species, while European importers grumble but still have to pay the going rate for their more limited selection of log species. Meanwhile the log trade to Europe continues to decline and, if anything, the pace of decline will accelerate. Here, Cameroon leads the pack with its now well-established ban on exports of 20 or so primary species. This was a tough policy to implement, with much protest from the industry, but has proved successful in inducing companies to invest in sawmilling and further processing. In the event, profits from processing have been hard to come by, the proof being the rise in log prices seen back in May not yet resulting in any matching increase in sawn lumber prices. It is also true to say that timber and timber product prices received by producers have not kept pace even with moderate rates of inflation in importing countries.
Overall, West African export lumber prices continue stable, firm and unchanged over the past two months. Mills in Cameroon and Gabon are still busy, especially since Liberia and the Ivory Coast are still very much out of the market. The Cameroon ‘family log cutting rights’ are in the news as the resultant chainsawn production from small, bush operators is virtually tax free. Some large mills buy in the rough sawn lumber, regularise by surfacing to size and find this a profitable additional volume for export with their own, regular, highly taxed production.
Confident mood
In spite of the usual July/August European holiday slowdown, log and lumber markets continue quite active, with trade to the Far East market leaders leaving West African producers in a more confident mood. China in particular is becoming more influential in trade other than in timber and timber products, making agreements with the Gabon government to exploit iron ore and oil, and this extra involvement is likely to contribute to continued development and stability in the region’s timber industries.
Prices for logs and lumber are firm and likely to remain so through to the fourth quarter.
