It is still something of a mixed bag when viewing current markets for Central and West African timber.

European buyers are interested mainly in just replacing stock rather than, as would be normal at this time of the year, starting to build up forward contracts in anticipation of higher demand for spring and summer sales.

Stocks of some timbers in Continental Europe are reported to be relatively high, with padouk and sapele being mentioned. So no change there over the past three months and many are distracted by the looming elections in France, Netherlands and Germany, feeling that neither an outgoing nor any new government is this year going to suddenly trigger vast infrastructure projects to support the construction industry.

All this leaves most prices looking less strong than producers had expected for the first quarter.

Sapele and sipo, plus padouk and okan have not recoverd from the 2016 price weakness and European buyers for these ex-favourites are still nowhere to be seen. France has been a quiet market for several months and lately even favoured species such as niangon, douka/makore and moabi are in low demand.

In spite of this, the economic forecasts for the French economy are for stronger growth in 2017. Producers say that the European markets have been and are now just very dull but they are not about to cut prices as this would not stimulate any increase in demand. But at the same time they acknowledge that some of the very largest continental importer/distributor buyers have reduced their offer prices for new contracts.

NGO report on deforestation

An important and unexpected event which, strangely, appears to have passed by without exciting comment or wild celebrations by the timber industry, was the admission by a respected NGO, the Union of Concerned Scientists (UCS) that by far the largest cause of deforestation is beef, followed a long way back by soya, and way back further the two least causes, palm oil and timber.

The UCS also poses the question; did they and other NGOs get their priorities wrong on deforestation?

The author of the report effectively says yes, they did get it wrong by seeking to blame all deforestation on the timber industry, mentioning that of course this was an easy target.

Another finding in the report was contained in the words: “The more important a commodity is, the less likely that a company will have pledged to eliminate the deforestation that it’s causing.”

There is little doubt that after years of adverse publicity, demonstrations and gross allegations of wrongdoing made against the timber trade by NGOs, that the general public and many public authorities have been convinced that the forests of the world, especially the tropical forests, are being destroyed by timber companies.

The report puts the lion’s share of the blame on beef and soya.

Chinese recovery

It has been clear that the gradual recovery in China’s economy with an ongoing increase in timber purchases is a major factor in keeping most log and lumber prices steady over the past months. China is still not much interested in sapele but okume logs and lumber purchases have greatly improved in volume, plus okan, dabema and padouk.

A notable change in pattern is strong interest in larger sized baulks and flitches for both the flooring industry and for sliced veneers.

China is now much more using low cost peeled veneers for plywood cores with okume now only for the face and back and there is a move to import peeler veneers causing some of the smaller Chinese peeler mills to close.

It is known that both Chinese and Indian potential investors recently have visited West Africa with a view to setting up veneer production, initiatives that are welcomed by African producer countries looking for new employment opportunities for growing populations.

A number of investors from India have opened new peeler veneer mills in Gabon’s Special Economic Zone and are complaining that there is a shortage of okume peeler logs. Log producers say this is caused by heavy rains restricting logging and transport operations and it is affecting processing mills throughout the country.

The recently appointed minister for forests in Congo Brazzaville has tightened up still further on the log export quota system and is said to have been considering much greater emphasis on tertiary processing, furniture in particular.

This is always a difficult step-change for African producers because of limited local markets and often long distances to potential neighbouring countries that as well may have high import tariffs.

For example, furniture exports from Gabon’s tax free zone attract a tax of 33%, plus a tariff of 18% for entry into neighbouring CEMAC countries. One large foreign owned producer has now left Congo Brazzaville and moved operations to Gabon. Producers in Gabon report continuing problems with sales of overlying stocks of sawn kevazingo/bubinga that last year had been subject of a government directed halt in export.

This is one of the most favoured species for China and apart from being restricted to export only by special dispensation from the Gabon government kevazingo/bubinga is now subject to CITES. Because of a breakdown of container scanners at the port there have been reports of unsuccessful attempts to smuggle kevazingo sawn lumber for export.

Gabon and Congo Brazzaville have not yet signed up for the CITES restrictions and Gabon authorities are inspecting containers to ensure kevazingo lumber is in compliance with strict limited export size regulations introduced last year. Gabon also has a relatively new minister and many decisions on policy are still outstanding, including the proposal that all export lumber must be kiln dried.

Middle East markets are active despite news and TV reports of foreign construction workers being laid off.

There has been a move towards imports of higher-grade timber that has favoured okume from West African exporters, although importers are reluctant to pay more for the higher qualities. The current battleground between okume and meranti exporters is South Africa where trade is reported brisk but importers are gloomy over business later in the year though unable to pinpoint any reasons.

Price competition is fierce and meranti low prices appear for the time being to be winning the majority share of business.

Minor markets are North America, and US purchases of khaya and other mahogany type species disappointed by falling slightly in 2016, albeit from a low level. Canadian imports grew but for African exporters, mainly from Cameroon, it is clear these markets are heavily orientated towards South American hardwoods, balsa being a major import.

Although there has been a slight set back in producer expectations for early 2017 business, following on from less active European buying in the third and fourth quarters of 2016, an examination of West and Central African prices over 2016 into January 2017 shows that most log and lumber prices remained remarkably steady and the ups and – mostly – downs were confined to fewer than a dozen species.

Logs tend to hold value because of increasing regulation and lower available volumes, in Asia and as well as Africa.

Ayous logs are €20/m3 lower, most others are €10 -15/m3 up or down, with sapele minus €15/m3 over the year but around €75/ m3 lower than the peak prices of former years. Okume logs have varied +/- €10/m3 but are minus €125/m3 compared with their peak. Sipo logs are minus €30/m3 over 2016 but some €70/m3 lower than peak levels. Tali performed well, up €25/m3 over the year and €10/m3 better than past peak price.

Sawn lumber didn’t do so well although ayous and movingui added €10/m3. Sipo dropped €60/m3 over the year, sapele was minus €90/m3 and padouk was down €70/ m3. Okume held firm and unchanged over the year because of improved demand but was €140/m3 less than three years ago.

How does 2017 look? Hard to forecast, but producers are still optimistic, encouraged by the outlook in Asia plus the Middle and Far East.