The effects of the rather dramatic alterations in demand in the West African log market over the past three months or so were very much mitigated by the pre-emptive actions taken by the producers earlier in the year to curtail their forest operations for log production quite severely.
In mid-second quarter there were some low-priced sales because, during a lull in demand, some producers and exporters cleared out stocks while the logs were still fresh, at prices that gave buyers some bargains for a mix of top species sold at the same prices as the ‘also rans’.
Buying for China was particularly slow and okoumé log prices dropped €5-10/m³. This was not helped by the around 100,000m³ of older okoumé logs remaining in the stocks of the SNBG in Gabon. In the event, SNBG was able to negotiate a clearance sale to China, albeit at a price between €50-55 below the price for fresh logs. Almost all of this was shipped out by the end of August and the normal buying pattern has resumed, but at prices which have stayed low.
Morocco proved to be an alternative market, with some moderate log sales, but at keenly negotiated prices. Vietnam also has started to figure in the West African log trade for non-premium species at the low priced end.
Log prices
No-one has been able to increase their log prices over the past four months and, although there have been some fluctuations, many prices have remained stable.
Moabi fell out of favour, dropping €16/m³. Some countries are considering a ban on the export of moabi as the fruits of these trees are good for animal feed and the bark used for medicinal purposes.
Iroko log prices moved down then up and ended the period unchanged. Sapele log prices have been all over the place and are now a further €15/m³ lower. Log and lumber stocks in France and Germany are reportedly quite high and importers and merchants are reducing their normal stockholding volumes to minimum levels in anticipation of the downturn continuing through the fourth quarter.
Producers also are not expecting the usual autumn surge in new sales and appear prepared to hold output to very low levels, hoping to maintain price stability by matching available volumes closely to the lower demand. So far this strategy has been fairly successful, though unchanged prices for many species are perhaps at the default level rather than being tested by any serious new business.
Pretty much the same market conditions have applied to most sectors of the sawn lumber trade through the second quarter and up to the end of the third. Producers are not forecasting any change in the current levels of business. Some sawmills and plywood lines remain temporarily closed, one large producer has closed two sawmills and, with the exception of sapele lumber, producers are not sitting on any excess stocks.
Sapele sold, not shipped
Sapele has been, and still is, a separate case. There are reports of quite large volumes of already sold sawn sapele lumber sitting in ports ready for shipment but buyers have not been willing to give instructions for loading. Production has been relatively high in northern Congo Brazzaville and some mills in the region are busy cutting smaller volume, detailed specifications for buyers requiring prompt shipment to cover gaps in stock or for special orders not available from stock.
The usual supplies of high quality sapele from Central African Republic have not been available because of the high transport costs to the ports and rains are now beginning to affect production in Congo and Cameroon too.
As to sapele prices, exporters report that producers have been willing to accept very low offers to keep mills running and shift unsold stocks. Sawn sapele prices dropped by €40/m³ for FAS GMS and e55 for scantlings. Moabi is still out of favour as stocks in France are high. Padouk had a good run earlier in the year but ran out of steam and fell by €20 for GMS and by €35/m³ for scantlings. Finally, even sipo succumbed to the market downturn and is again showing a further drop of €20/m³ for GMS.
Other species did not experience changes after the notable price falls in mid-May and June, although there is little doubt that any serious buyer would be able to negotiate below the current guideline level.
Perhaps surprisingly, producers and exporters are now marginally less pessimistic than they were back in June. At that time there was a severe drop off in volumes, largely because both China and India held back on new purchases, and some traders were predicting disaster. Now the feeling is that this slowdown might well have been a strategy aimed at forcing prices down. Certainly there was an effect on okoumé prices but the market has now steadied because demand improved through August.
Construction downturn
The severe downturn in building construction in Spain and the UK will have an ongoing influence on tropical timber markets for some time to come, although the results of the financial problems are almost totally reversed. Spain has too many new dwellings built and unsold while the UK is desperately short of new housing. The effects for tropical hardwoods are more severe in Spain where most buildings feature hardwood carpentry, joinery and mouldings.
Investors from China actively continue to invest in West African timber businesses, notably in Gabon, and the Chinese government’s forestry section was involved in a meeting in Libreville in June to discuss management plans for the forests in the Congo Basin. ATIBT, sawmillers and logging companies also attended. Among the subjects discussed was the question of certification.
There has been some interest in schemes to use sawmill waste in Africa to provide power, though this appears to be in the early stages. Most sawmill and forest waste in African countries is gathered by local people for domestic use; removing this invaluable source of fuel wood might well cause more problems than would be solved. FAO calculated that in African countries the use of fuel wood for cooking and other uses amounts to 1m³ per person per year. Management plans need to take factors of this kind well into consideration.
