Summary
¦ Log prices are still stable.
¦ Cameroon and Congo Brazzaville have relaxed their log export restrictions.
¦ Many sawmills have strong order books through to the fourth quarter.
¦ Mills have been asking higher prices for sawn timber.
The stable price trend for the third quarter forecast by West African log producers and traders has continued as expected.
Most of the action is still with Asian buyers, with China by far the largest player, closely followed by steady exports to India for this market’s limited, but important, range of species. Vietnam has also always been in the market for quite modest volumes shipped by container.
On the production side, Cameroon and Congo Brazzaville rallied round with perhaps slightly relaxed log export regulations and seemed able to meet the demand which softened slightly mid-term but has since recovered to what are now normal volumes.
There are reports that Democratic Republic of Congo will, has already, or could re-enter the log export trade, with France a likely target market. Certainly with Gabon producers out of the log export business there is room for another moderate volume log exporter. As and when Cameroon and Congo Brazzaville re-tighten their log export policies, the major Asian buyers will need to examine more closely the future content of raw material imports to feed the extensive, fast-growing joinery and furniture industries.
Gabon logs
From time to time Gabon log traders still speculate that the government may eventually rethink the policy on the overall mix for timber exports, but it does appear that most have accepted the situation and are already well advanced in maximising their production and actively seeking to develop and expand their market for sawn lumber and semi-finished components. If their target markets are in Europe, traders will need to speed up the process of achieving certification.
Log prices have held very stable through the quarter. Iroko logs performed quite well after a longish period of low demand and, with renewed interest from Italy, China and the Netherlands, prices increased by €20-30/m³ since the beginning of June. The log price increase is in part due to higher demand for sawn iroko, particularly for the Netherlands. Sapele and sipo logs retained the recently improved interest from both Asian and European importers and rises of €30-35/m³ have been sustained. Movingui managed a rise of around €10/m³ when buyers for France came into the market. Other species, such as douka/makore and okan, have held on to price gains made through the second quarter.
Through the quarter there were very similar results for sawn lumber prices and demand. It’s not clear if there is any influence caused by Cameroon and Congo Brazzaville producers’ stronger focus on log business rather than sawmilling and processing, but traders do report that many sawmills in the region have strong order books for deliveries well into the fourth quarter. It is now many weeks since there were minus signs anywhere in the sawn lumber price lists. Sawmillers have been very firm on price since quite early in the year and have no compunction in asking quite substantially increased prices when buyers are looking to close new contracts for favourite species.
Sawn lumber prices
The pricing pattern seen during the past months has left the majority of sawn lumber species unchanged as importers were forced to reduce stock to the minimum, becoming more selective and virtually buying against firm orders from their end users. This gave producers the opportunity to ask higher prices for the very few timbers which came into demand. Iroko is a good example, with an increase of up to €60-80/m³ in the past two months. The steady demand for padouk throughout the year is maintained and GMS and scantlings have gained another €20/m³ after earlier increases, while sipo and sapele lumber rested firm on their previous substantial price hikes. Okoumé lumber has continued a firm favourite in markets other than Europe and is currently marginally higher by €5/m³. The biggest gain has been bubinga, up by €100-150/m³ due to higher demand and lower availability.
The recent regional emphasis on the West African log trade has to an extent obscured the forward planning by the existing producers and new investment prospects. It is certain that producer countries will in time return to their policies of curtailing log exports and encouraging processing, though possibly not following Gabon into a complete log export ban. Already there are signs of companies actively stepping up sawmill output and there are reports of new investment by way of larger trading companies rethinking their policies for integrated processing and marketing packages.
South Africa is well stocked but still buying, and the Middle East is showing very good demand and firm prices but shipments were a little slower during Ramadan. The US is now more interested in khaya and sapele and this market may develop when the housing market begins to recover. European buyers remain slow and cautious, while the UK awaits the government’s spending review next month.
