It would be reassuring to feel that West African exporter countries and their export timber companies are fully geared up for their products to be able to comply with the European Timber Regulation (EUTR) which comes into force in March next year.
However, it is not clear which of the major export countries have fully taken on board the new law’s stringent requirements and taken the necessary steps to make sure their timber exports will be able to enter the EU.
At the European end it is clear that importers are very serious about compliance; after all, the risk and any penalties would fall on them, not on the producer.
For some time many European importers have insisted on full chain of custody, plus appropriate certification and documentation before they will sign up to purchase from suppliers. Some buyers will not accept FSC certification alone and insist on further proof of legality of supply.
This has begun to impact, with reports that some importers will not now buy from Gabon for European destinations because compliance procedures are not yet in place.
Gabon’s exporters complain that the Forestry Department has been slow to take action and it appears likely that Gabon will not be able to comply by March.
Cameroon is much further advanced and exporters should have little difficulty in continued access to EU markets.
For Congo Brazzaville it is understood that work on FLEGT procedures is ongoing although it is not yet clear whether compliance with EUTR will be achieved before the regulations come into force. The government is actively encouraging new investments in the timberindustry and has large concession areas available, with at least one new large operator signed up for a concession in the north of the country preparing to build a new sawmill and setting up plantations in the savannah area. Congo Brazzaville allows log exports on a quota system tied to volumes processed. Out of quota logs can be exported but at a high premium charge. The quota for 2012 has been completed.
Right now the largest markets for West African logs and lumber are outside the EU. The repair and rebuilding needed in areas of recent conflicts in the Middle East are creating very strong demand for sawn lumber in selected species at keen prices.
The largest market, China, has slowed, much of this because of the government’s tightening of fiscal controls to curb speculative building. There are reports of apartments standing empty in some cities as owners speculate on eventual higher rents or capital gains on sales.
The controls have been relaxed in the past two or three months, however, log and lumber exporters report a more difficult market than in the past. Importers had already become more restrictive on species and acceptable grading standards, while now there are reports of slower payments, and an increase in claims, some of which suppliers consider not entirely justified.
Chinese manufacturers of plywood and other timber products are also conscious of the need for their processed products to comply with the EUTR to ensure access to their major markets in the EU and this will impact back to the supplying countries in West Africa being able to provide the necessary documentation.
Indian demand subsided
Up to the end of 2011 India was a booming market for African timber exporters and drove a substantial increase in demand for logs and particularly for padouk boules. This has subsided and the prices of boules fell from highs of over €600/m3 to the current €450/m3. This mini boom pushed up prices for sawn padouk to around the €1,000/m3 mark but current prices are €800-850/m3.
South Africa has been a steady buyer of sawn lumber, but prices are very keen and have to compete with the low cost local plantation pine timber. The pine, coupled with the West African hardwood supply, appears to have largely pushed South-east Asia’s meranti out of this market.
Lumber shipments to South Africa traditionally close at this time of the year and new purchases resume in January.
Market prices have continued to be very stable through the year, with the majority of more regularly traded species almost unchanged. Log prices have been the most stable and, after some ups and downs, the net result compared with the start of the year is douka/ makore and sipo LM and B grades €20/m3 higher; the lower grades are unchanged, while padouk LM and B grade logs fell by €40/m3, and iroko LM and B grades €20/m3. Okoumé LM has fallen by €10/m3 and B grade is €20/m3 lower.
France has been a very steady and consistent log buyer throughout the year but by far the largest log market is still China. Papua New Guinea is also a very substantial log supplier to China and, as well, China is buying European beech logs with reports of one German company alone shipping up to 100 containers per month.
The log market gave no surprises during the year and, as far as can been determined, that stability looks set to continue through into 2013.
Sawn lumber markets have been slightly more volatile and perhaps most noticeable has been some rather large price movements instead of the more usual shifts of between €5-10/m3 up or down.
Looking at the comparison with the start of the year, almost all movements have been downwards. In recent years sapele has had a long period of being out of favour, but this year buyers returned and sapele FAS is €30/m3 higher than in February, but the scantlings are lower by €40/m3. That said, production of sapele lumber in Cameroon is increasing as the annual rains
end and producers say there may well be an overproduction, leading to downwards price pressure.
Azobe had a similar price experience and planks and sleepers ended up without change, with the exception of the large squares, 4×4 and 6×6, which are €60/m3 higher than in January/February.
On the downside, doussie prices initially shot up but have fallen again; the FAS GMS and scantlings are €50/m3 lower and flooring strips have lost €200/m3.
Iroko is another variable performer but now the FAS GMS and scantlings are lower by €70/m3 and the strips down €20/m3. Padouk FAS GMS and scantlings have fallen by €125/m3 since January/February.
Sipo has been in good demand over the past months and prices very stable, with FAS GMS gaining €20/m3.
Okoumé sawn lumber has performed well; demand and price have been very strong and consistent, with the exception being the merchantable grade for South African buyers which is around €10/m3 weaker.
If there is a discernable trend in all this it is, on balance, a downwards drift in prices, although demand has held up and producers seem to have been quite satisfied with the trading year so far and the continued stability.
It is recognised that price negotiations have become tougher and competition often quite fierce but some producers say their present order books will see them well into the first uarter of 2013, with a plus factor that many customer countries recognise – as has China – that stimulating the building and construction industries is one of the quickest ways to provide growth in the economy.
