News for the Far East/Asia Pacific region this month is pretty well all about price increases and tight supply. From the end of April to mid-May meranti and keruing SQ small and super small log prices all rose again by around US$10/m3 and have held firm. Kapur moved US$5 higher and selangan batu was up US$15/m3. The increases applied to both export and logs for domestic consumption in Indonesia and Malaysia.
The trade consensus is that log prices will continue on a firm to rising trend through the coming months, supported by sawn lumber and plywood prices also moving higher in May. Japanese log buyers and importers have had to hold off purchases because of pressure from plywood manufacturers who have been insisting they cannot afford to pay more for their logs because domestic market selling prices for ordinary plywood only just cover costs.
Freight charges
In the meantime, log freights have moved up US$3/m3 and are likely to go higher, and a steep price hike for resin has forced even Japanese manufacturers of faced plywood to put up their selling prices.
Log stocks in Japan are quite low and it is likely that Japanese plywood manufacturers will grumble but accept that modest log price increases are in place and likely to remain firm. For further confirmation on the market TTJ readers will have noted the comments in the plywood and OSB report that some ply mills in the region may have to cut production due to log shortages.
The new market leader, China, gives a sound impression of the recent trend lines. In the first quarter, China increased log imports by 2.5% to almost 6.5 million m3, while the increase in value was up 4.8% in comparison with the same period last year. Of this volume hardwood logs were 2.7 million m3, up 4.8%, with value up by 0.5%. It seems likely the second quarter figures will demonstrate even more clearly that prices are rising. The last West African report noted that the recent higher prices for African logs have been maintained and some species have continued modest price gains. About the only adverse prospect is the effect of the EU anti-dumping measure on China’s exports of okoumé-faced plywood. If this impacted on China’s purchases of okoumé logs from Gabon, in reality rather unlikely, it could hold prices much steadier than forecast.
Meranti and serayah prices continue firmly on a rising trend. Reports are of tight log supply and of few, if any, shippers making forward offers. Responses to buyer enquiries seem to be quoting delivery times of September/October or even as far ahead as November as producers are well sold forward. Merbau is in short supply and prices have shot up by 15-20%.
Dutch market
Market demand is reported to be good, though most Dutch buyers have been reluctant to commit to the higher prices. The Netherlands market is still said to be very poor, although recent statistics show that there has been a small but positive growth in the overall economy. Some importers have reduced prices in order to gain market share, giving away the slight advantage gained by the recently favourable dollar/euro exchange rate.
Stocks of Far East species are low and traders who had the courage to make some modest purchases are likely to find they’ve made a good deal. Other European markets for Far East species are reported as active, with a little less competition from Brazil due to the current shipping difficulties.
Buyers for China are also heavily into purchases of sawn lumber; in the first quarter import volumes were more than 9% over last year, and value was up by almost 14%.
Over the past two months plywood prices in Asia have continued to rise. Indonesian export prices are around US$10-15 below Malaysia, but Indonesian mills are pushing for increases and are reported as asking US$390-400 for Japan spec concrete panel, with Malaysia US$10 lower. Prices for MDF, particleboard and other panel products are also higher in price and reporting good demand.
Log supply
In conclusion, market prices for logs, lumber and plywood have all risen through the second quarter. Trade is good and supply in most cases is just about meeting needs. Log supply is definitely the major constraint as efforts to curb illegal logging are becoming more effective. Added to this is the steady change to in-country processing and inter-country trading of value added products. Even China is importing more timber goods as well as increasing its exports. Japan, Korea and Europe are all buying more timber products from China, with especially strong growth in the furniture sector.
