It will be no consolation to those affected by the flooding in UK to learn that there are heavy rains in Sarawak resulting in extensive flooding and causing problems in log supply. In Indonesia the city of Jakarta has also flooded again this year.
The floods in the region have affected log supplies, and the slowdown through the Chinese New Year vacations has also had an impact. That said, reports are that timber business has continued more strongly than usual at this time of year. The feel-good business factor in the Asia/Pacific region is shared by the timber trade.
The weaker trend line for red meranti sawnwood prices that began about this time last year and stayed depressed throughout 2013 did manage to show a slight upwards turn in November/December, and in January there was a further gain of around US$10/m3. The current tight log supply may well ensure this upwards price trend continues.
The lower prices did result in increased volumes shipped to the Middle East and almost completely pushed West African exporters out from the South African business.
Light red meranti prices changed little last year, apart from a slight weakness mid-year, but they are becoming more settled.
EU demand
There is a slow decline in EU imports of tropical timbers, and in the US last year Malaysian lumber imports were around 30% lower, losing some ground to West African sapele. However, it has to be remembered that most of the sawn lumber and plywood exports from the region stay within the region; for example, Thailand is the largest importer of sawn lumber from Sabah. China, Japan and South Korea are also major importers of plywood and logs with Papua New Guinea alone a long-term supplier of well over 1 million m3 of logs to China each year.
China continues to be the largest player by far. Recent reports point to increased consumption of imported timber and products during 2013 and the economy is forecast to keep on growing at a rate of up to 8% this year.
Much of this growth is said to be on the back of the continuing strength of the construction sector, with residential housing leading the field. However, backing this is the strong growth in consumer spending in the past three months. It’s a similar situation to that in the UK, as China is keeping a close eye on the housing sector to avoid inflationary price speculation.
India has now exempted logs, lumber and some timber products from import duties for imports from the ASEAN countries and this is bound to stimulate what is already a wellestablished market. India also has been experiencing a strong domestic market for timber and timber products fuelled by a very active housebuilding sector, partly as a result of Indian residents overseas funding houses to be built in India for themselves and their families.
The Indian economy is also expected to show a sustained increase of around 5% this year and timber business is reported as satisfactory, except for domestic plywood manufacturers who are complaining they have not been able to increase selling prices to match increased raw material costs. India’s exports of wood products have continued to expand.
Although EU countries remain a hugely important market for wood products from the Far East, more particularly at this time perhaps for other further manufactured timber products, plywood, furniture and more selective joinery timbers, it is clear a main thrust of marketing for many producers and exporters is either for importer countries within the ASEAN region or for the Middle East. This is where east meets west as meranti and okoumé sawn lumber compete for the very substantial volume trade for the importers who redistribute timber through those Middle East countries with huge construction projects, with the budgets to match these aspirations.
Plywood exports
In contrast to the more difficult marketing of exports of sawn lumber, plywood export business from Malaysian and Indonesian producers has had a long and ongoing period of steady volumes and gradually rising prices.
Japan continues as a major importer and once again the Middle East markets have been strong buyers from Malaysia for the quality end of the market while the much lower cost plywood from China is a strong competitor. There are also plywood trans-shipments through the Middle East ports and reports are of regular shipments each of some 4,000- 5,000m³ film-faced and other plywood to east African importers.
In addition, substantial volumes of MDF business are traded throughout the regions. Thailand is a notable and fairly new and fastgrowing manufacturer and exporter of MDF at very competitive prices and there are known to be shipments of up to 6,000m³ of Malaysian MDF to Middle East buyers.
Asian traders and exporters benefit from excellent market intelligence, including that provided through their various trade associations, all of which are very supportive of their particular sector of the industry. This assistance in supporting regular, in-depth analysis of existing and potential new markets as well as keeping an eye on possible noncommercial restraints on trade is an essential and unique marketing tool for exporters.
Steady and stable
Looking at the overall picture, the Asia/Pacific timber and wood products outlook appears optimistic for a steady and stable level of trade through 2014. There are some concerns over log supplies and no-one is expecting any sudden surge in demand for sawn lumber for European destinations. Inter-trading within the region is very steady and likely to remain good as the forecasts for economic growth in the ASEAN countries are far above those of any European country. China and Middle East countries show positive indications of at least a steady state in business development. Both these major markets grew last year and seem well set to increase timber and wood products imports even further during 2014.
