There are just one or two anomalies in what is a general firming of prices for South-east Asian producers and their customers. In Japan, pressure from the plywood industry persuaded tropical hardwood log importers to concede a modest price reduction for landed stock. This is against a background of Malaysian log prices, both for export and for domestic consumption, on a rising trend, plus tighter supplies in the monsoon season. The weak and falling US dollar rate is cited as justification.
The other anomaly is in export log prices from Papua New Guinea, where current levels reported appear to be somewhere around 50% or less than comparable Malaysian or West African exports, and do not seem to have shared the recent upwards market trend.
Malaysian meranti SQ and up logs are US$5/m3 higher over the past few weeks, with smalls US$20 dearer and super smalls up US$10. Kapur logs are up US$5 but despite rumours of shortages in supply of keruing and selangan batu these have remained unchanged. Some forecasts have been predicting that keruing logs would reach US$200/m3 free on board (fob) and overtake meranti prices and it is still on the cards that a US$20-25/m3 keruing price increase will be seen in the next month or so. Overall, Malaysian log prices are now within US$5-10 of the 1997 baseline index prices shown on the MIS/ITTO graphs.
In Peninsular Malaysia, domestic DRM prices moved higher once again by US$20 and balau and rubberwood logs are up US$10, pushing domestic prices US$15-20 higher than export logs. Indonesian logs for domestic use also moved up between US$5-10/m3 though they are still far below the Malaysian domestic prices.
Merbau log and lumber supply is very tight and Netherlands importers say they are almost out of stock of merbau lumber with no offers coming forward from shippers and little prospect of being able to re-stock in the near future.
All the pointers indicate a more difficult log supply situation as governments tighten controls on concessions and curtail illegal logging and trading.
AF&PA report
A report commissioned by the American Forest & Paper Association attempts to quantify illegally produced roundwood. Perhaps the most surprising estimate is of the high volume of illegal roundwood said to be used for plywood manufacture. The report can be viewed at www.afandpa.org
The sheer scale of log imports into China is difficult to envisage. ITTO quotes figures for January to September 2004 of 19.6 million m3, up 1% in volume but 12.7% in value. Of this, hardwoods were 7.7 million m3, including 5.4 million m3 of tropical hardwood. Recent log imports from Congo Brazzaville have overtaken Gabon as the largest West African supplier. Another small West African news snippet is that Ghana processors say they are finding log supplies increasingly difficult to source. It is also notable that the reported prices for domestically traded logs within Ghana are very low compared even with Indonesia.
Sawn lumber fob export prices seem to have reached a plateau and have remained virtually unchanged through November. It’s possibly a little surprising that exporters have not been able to push prices higher to compensate for the steadily increasing log prices. It is likely that, for West African exporters, freight charges and bunker surcharges have taken up any available value increases to buyers, with importers complaining of less favourable trading conditions and heavy competition.
The Netherlands market is now said to have firmed up a little and price discounting is not so prevalent now. Stocks in some items such as nemesu and bukit are reported to be low.
European fashion
In Europe the latest furniture designs are concentrating on ‘colours’, in other words a strong move away from the lighter species which have dominated designs for the past few years. This would indicate much more interest in the darker and/or red and red/brown timbers in the next year or so. This should favour tropical hardwoods over the European and American temperate species.
In other furniture news, the US has modified six of the proposed tariff impositions on imports from China, which is now the world’s third largest furniture producer, after the US and Italy.
Malaysian sawn lumber export prices are little changed; meranti is stable, seraya scants down US$10 and sessendok down US$20/m3. Domestic lumber prices in Indonesia and Malaysia are unchanged through November.
There is substantial hardwood business conducted regionally with the Philippines, Thailand and Vietnam, and also with the Middle East, which buy significant volumes of mixed hardwoods in lower grade to feed their furniture and woodworking industries. This trade is bread and butter to producers and exporters, especially while the more exacting European markets are dull.
Overall in the Asian region, there is some disappointment that sawn lumber prices have stagnated and failed to keep up with log costs, not to mention inflation and higher fuel charges. West African lumber prices are also stuck firm, but are unmoving at third quarter levels.
Plywood moves up
Plywood prices in Asia have once again moved higher. In fact the material has achieved the steepest, steady rise among panel products and also appears stable at the current levels, with export prices being well supported by strong internal demand at good prices for the lower, domestic grades.
Producer volumes seem balanced by normal demand levels and, although China has reduced ply imports, it is still a large player in the market.
While there has been some attempt in Japan to persuade traders to reduce prices on landed stocks this has not been successful as this stock was purchased at higher dollar/yen exchange rates and, anyway, importers may well have to average out stock sales prices with new imports bought at the now very favourable rate.
For export, Indonesian 2.7mm is up another US$10-15/m3, 3mm up US$10 and 6mm also up US$10-20/m3. Malaysian 2.7mm is US$15-20 higher, 3mm up another US$30/m3 and 9mm and thicker moved up US$20. While in Japan the market is still a little uncertain, our September report that forecast prices were likely to level out at the then highs was not borne out and prices continued the steady climb right through October and November.
Other panel products in the region (MDF and particleboards) are also stable or just a little weaker, though in some areas demand is reported to be good.
Chinese imports of veneer are recently well down in volume but substantially up in average prices, as buyers and end users opt for higher value species.
