Consumer markets are once again very quiet, especially in Europe. The normal surge in demand after the summer vacation did not produce significant increases in traded volumes. Prices have continued the upward trend reported in August, but the current higher asking prices are not attracting much new business.

UK and Continental buyers say they are able to buy ex landed stocks at lower than shippers’ current offers. This is the standard scenario repeated over the years, with some traders complaining that others are selling at or below cost just to gain turnover and not making any effort to push up prices towards replacement cost or profit. Reports are that the Netherlands in particular is suffering badly from this type of trading.

Many Far East producers must be wondering why, in spite of reducing log supplies and higher costs, prices for hardwood timbers are so much lower than they were even a few years ago.

Meranti prices

Since August, prices for meranti KD Selbet DRM/DUC 6in and wider x 8ft and longer have risen by US$35 per ton for 1-11/4in, US$10 for 1.5in, while 2in is up by US$20 and the thicker dimensions much higher because of a shortage of larger diameter logs, with 2.5in now asking US$35 more and 3in US$40-60 higher.

Container space from Port Kelang has become tighter again as ships are picking up larger volumes of light goods in East Asia destined for the European Christmas festivities and this restricts the volumes of heavy goods such as timber which can be loaded at Kelang, the last loading port.

The Malaysian government has demonstrated very firm support for Indonesia’s ban on log exports, especially from Kalimantan, by stopping imports of both sawn lumber and flitches also. With difficult and remote terrain it is likely there could be some remote, ‘porous’ areas where minor volumes might leak through but the results have been very positive and reports are of a severe raw material supply problem in both Sarawak and Sabah.

At least one of the major Malaysian timber groups is known to be setting up downstream processing operations in Indonesia, no doubt to ensure adequate raw material supplies over the long term. It is reported that discussions are being held between the Malaysian government and the timber industry to determine if it will be possible to lift the ban on cross border imports of sawn lumber and flitches.

&#8220Many Far East producers must be wondering why, in spite of reducing log supplies and higher costs, prices for hardwood timbers are so much lower than they were even a few years ago”

Rubberwood supplies

There are still problems with rubberwood supply. Recent changes in employment policy in Malaysia have restricted the availability of the foreign labour which operated the small bush sawmills, the largest producers in total of sawn rubberwood from plantations. It seems likely the industry will have to rethink the whole scenario which is based on the need for speed in sawing and immediate delivery to the mills for preservative treatment to avoid deterioration.

For the Indonesian industry the devolution through the recently introduced regional autonomy, which included responsibility for the forest sector, is having some surprising effects on timber product prices. Export prices used to be fairly consistent throughout the country but now some large price differences are being quoted. For example door jamb prices can vary by US$40 or even US$50/m3 and one correspondent believes this may be caused by the differing revenue sources of local authorities. Those that depend on timber revenues pressure industry to push prices higher.

Japan’s imports of logs and lumber continue to decline. Even softwood imports are affected and the plywood industry is still in a difficult situation as log importers try to push prices higher to offset the now less favourable yen to US dollar exchange rate.

Chinese growth

China is becoming the dominant importer of raw timber from the Far East and West Africa. Recent policy statements on the forest sector emphasise that China is to move quickly towards growing and using plantation timbers rather than natural forest resources. Imports are likely to be necessary in increasing volumes in the mid-term to sustain the growth in housing and other domestic use and for the equally fast-growing export trades such as furniture manufacturing.

Log supply in the Far East and West Africa is expected to remain difficult, and prices for all timber based products, after moving noticeably higher, are still firm in spite of very slow demand from the major local and European markets.