While trading conditions for West African log producers and sawmills have continued to be tough, log export prices from the region have held reasonably steady over the last six months of 2001. The six-month ban on log exports brought in by Indonesia in November was a very positive influence, taking away what had been intense competition at the low price end of the market.
The log export ban on the 20 or so major species from Cameroon continues as another stabilising factor and, as from January 1, Cameroon has also banned log exports of azobe and ayous. It is thought possible that the Cameroon government might consider a limited export quota system for these two species, or even for log export in general, though many observers question whether this might in fact cause more market problems in an already difficult trading climate.
Congo Brazzaville resumed some limited log exports through Point Noire, and high quality, high-priced sapele and khaya logs from Central African Republic are also reaching the market, mostly through the port of Douala. In spite of some ongoing unrest in the northern region, Liberian log exports are increasing steadily, with niangon being a favourite in the French market as an alternative to sapele, and azobe also for Netherlands buyers. The availability of niangon is one factor in the continued weakness in prices for sapele.
The Gabon state selling organisation, SNBG, made low price clearance sales of over-lying, older stocks of okoume logs to China. This did not affect the general market price but did relieve the pressure on new sales. SNBG then announced a reduction of 17% in the prices it would pay to producers for their logs, which caused some consternation but seems to have been accepted without so far causing the expected bankruptcies among the logging companies.
Possible upturn
Log producers in the region are not optimistic for any major change in market conditions and having managed, just, to hold prices and volumes relatively steady through the latter half of 2001, would look for a possible upturn towards the end of the first quarter of 2002.
The recent trend for strong, short-term price rises for particular species that come into sudden demand is expected to remain as a market factor as neither producers, nor log importers, are prepared these days to hold high stocks. Demand-led price movements in the past two to three weeks have been in such species as azobe, ayous, movingui and bilinga.
For sawn lumber, as with round logs, pretty much the same market conditions have held through from mid-2001 to date. There has been a pattern of a modest decline in some prices, some species holding firm and then sudden demand surges for particular species as shortages developed in importing countries and buyers had to rush to cover their end users’ requirements.
Price increases
It has to be said the ‘shortage’ factor, which some years ago was forecast to bring tropical timber prices up much closer to their true value, has not been realised. Perhaps the current trend of sudden demand-led price increases could be, at long last, the first straws in the wind, though looking back only a few years, when log prices overall were double the current levels, there is some way to go. A pointer in the right direction may be Brazilian mahogany sawnwood which has risen very steadily in price over the past years through restrictions in supply, while khaya and other African ‘mahogany’ species have seen lower prices and weak markets.
There is little doubt that African timbers do suffer from a lack of a coherent, central marketing effort; only Ghana has a formal, well-organised export marketing board. The Francophone exporters are poorly represented, if at all, in the way that the Malaysian and the American timber industries approach their major market partners. Promotion and marketing of African timbers remains fragmented and virtu-ally non-existent in any formal sense – with no signs of any initiative to improve.
Sapele from Cameroon is around FFr100/m³ lower than in mid-2001, and still trending lower. Sipo is unchanged. Scantlings and strips are just a little lower and are weak with poor demand. Ayous fixed sizes are now FFr100/m³ lower and prices are under pressure; bubinga strips are almost FFr200 up over the past month or two while doussie FAS scantlings are lower by up to FFr300/m3 in spite of higher demand.
Khaya, moabi, movingui and bosse are in moderate demand and these and others have held prices quite firm through the past three months.
Okoume
One casualty of intense competition is okoume sawn lumber. The many new sawmills in Gabon have been making serious efforts to export this mild red species, which is rather new to the sawnwood market. Although there has been limited business in the UK, there has been some success, with regular business in the Netherlands and France, but sales pressure has built up because of the large volumes now being produced and this has impacted badly on prices.
Standard specification okoume has declined by FFr100/m³ in the past month and fixed sizes by between FFr100-150/m³, with some exporters complaining that others are dumping parcels on the market, making prices even more volatile. As okoume is by far the major species in Gabon, this price competitive problem is not likely to go away.
Congo Brazzaville is back in the sawnwood export market with sapele, moabi and khaya, all at prices similar to Cameroon and Gabon.
The Central African Republic did have some internal unrest in the south-west during 2001 but this did not disrupt small volumes of sapele, doussie and iroko being exported through the Cameroon port of Douala. The vast road distance from CAR through to Douala will always make this expensive, limited to top quality in rather limited volumes.
The price levels for export sawn lumber in the region now vary very little between the producing countries and this has assisted in holding most prices steady during the past months.
The market problems now encountered by okoume sawmillers are to an extent being mirrored in Cameroon where the increase in sawnwood production over the past year or two is quite substantial, with many new mills coming into production. However, here a major complaint by sawmill owners is the high internal price for logs and a change to an auction system for buying logs. This means that mills without their own logging concession feel they are at a heavy disadvantage and the squeeze on export prices has in turn squeezed margins to almost nothing. One or two mills in the region have begun to offer FSC-certified lumber, limited currently to only two or three species, and while some has been sold, Continental importers report great difficulty in on-selling this at quite a high premium to cover the extra costs in competition with non-certified lumber.
The market for certified timber products is growing but only slowly, though in contrast a Ghana exporter of secondary processed timber found there was no market in the UK for his products in the DIY shed sector unless his timber was certified.
European demand
In summary, West African producers have held prices quite steady during the difficult market conditions in the second half of 2001. The new investments in sawmilling and processing in the region are finding great difficulty in making adequate returns while being squeezed on export markets and having to pay high prices for log supplies. This situation will remain through the next year or two, or at least until there is an upturn in demand and consumption in Europe. The recent slightly improved prices for plywood in Japan and the Far East may encourage Indonesia to keep its log export ban in place. African log exporters hope the ban will be extended indefinitely, helping to maintain price stability in a market which is overall in decline.
There are no forecasts of a substantial improvement in market conditions, but there are hopes for modest gains in volume and price towards the European spring.
As from our next report, prices will be quoted in euros.
Related Files
West African log FOB price trends 2001
West African sawnwood FAS 25mm FOB price trends 2001
Tropical Hardwood Log FOB price trends 2001
