A minor slowdown in demand in most import markets during mid-September to the end of October caused concern to some West and Central African producers who worried that this would turn into a general market downturn, accompanied by pressure on prices.
In the event, although most producers say that business is dull (except for the Middle East), there have only been a very few minor adjustments in price for a small number of the less popular species and production has continued at normal levels. Market traders and analysts may be beginning to question why, with some exceptions, there has been such a very long and unprecedented period of price stability and to speculate whether the past price volatility has gone for good.
For Continental European and UK markets answers may lie in the concentration on purchases of a very limited number of tropical timbers. Official statistics seldom give indicators on specific timber species and for the EU the importer countries each have a preference for a set of particular species based on their specific local market demands. For example, the Netherlands has azobe for marine use, with sometimes okan as a substitute, while Belgium seems to have specialised in padauk.
A further influence on price stability may be the effects of the EUTR and FLEGT regulations and the voluntary rules of the NGO ‘licensing’ activities causing buyers to purchase only from a very limited number of producers that are known and, following the costs of carrying out due diligence, are trusted fully to comply. Buyers could be reluctant to risk going elsewhere for what may be a small price advantage. Possibly this constraint may be reduced when more producer countries become fully compliant with FLEGT and buyers will have a wide choice of suppliers.
For the UK, imports of African species appear to concentrate on only around seven well-known favourites, including sapele, sipo, obeche, iroko and idigbo.
In world trade terms the UK is an important market but a relatively a modest volume importer of non-coniferous hardwood sawn lumber. In the EU context, the UK is the fourth largest importer on non-coniferous sawn timber after Italy, Belgium and Germany. Data on the proportion of this which is tropical hardwood sawn is difficult to determine.
In contrast, the UK is by far the largest EU importer of coniferous sawn timber. Figures show that the UK’s average price is noticeably higher than other EU import countries, possibly because UK buyers are more stringent on quality and specification, although the choice of trending towards the more highly priced species may be another factor.
UK purchases of non-coniferous sawn lumber did pick up in 2016 over 2015 but are thought to now be declining once again and even the 2016 import volume was still 40% lower than in 2014. The 2016 average price was the lowest in the past five years. France has the lowest average price and the decline in use of tropical hardwoods in that country is reported to be more pronounced.
News from producer countries includes Gabon’s newly appointed minister for forests halting the export of bubinga/kevazingo, a species that is now regulated under CITES and is very much sought after for the Chinese market. The export ban applies even to fully loaded containers already at the port and is expected to continue for two or three months, or until the government has devised more effective regulations to control and limit exports to further processed products. Possibly this will allow only the larger processors to access this valuable timber resource.
International rade in the larger sized ‘slabs’ continues strong with good demand for belli in 50mm thickness merchantable grade at around €490m3 and demand also for mixed mostly red species in sizes 100-200mm x 1000-1950mm, 3m and longer. China is the major buyer.
Other news from the region is of continued unrest in the southern Central African Republic tending to restrict transport of sawn sapele through to the coast and in the Republic of Congo reports are of ongoing financial problems for the government causing delays in the funding of new roads and other infrastructure projects. Heavy rains in Cameroon caused the usual logging and transport to mill problems but the rains are now over and business is back to normal.
A look at the markets and price levels does reveal a relatively ‘steady state’ situation. Demand overall is a little less than during the mid-year upwards trend, but producers report they are at normal full production and, if anything, are more concerned on log supply then on forward order books.
The EU and UK markets are described as dull and producers noted that this year there was no autumn surge in demand. Far East markets are strong, with China active and, noting the diminishing supply of logs from Malaysia, is looking for other sources such as a possible increased volume from Papua New Guinea and also the Solomon Islands. African producers are gearing up for an expected surge in demand from the Middle East countries where more settled conditions and return to central government control will lead to programmes of rebuilding cities and towns and infrastructure. Meanwhile, demand in the region is good and prices are firm. Pricing levels through from January show that, to date, the gains outnumber the losses. Most of the major traded species in the UK market, sapele, sipo, iroko and other favourites, finish up largely unchanged.
But prices of other species traded in global markets have moved, some quite dramatically. First some losers (prices relate to average global market price changes): abura and ayous are down €20/m3, doussie is as much as €100/m3 lower, patchyloba is down €50/m3. Major gains include okume GMS and padauk, while azobe, bilinga and niangon are up by €20/m3; okan is higher by €20-40/m3 and tali is up by €30/m3.
Producers report prices are firm and as log supplies become tighter and more expensive in taxes, levies and labour costs they are not currently minded to consider changing their prices. Market prospects for Europe look to be settled or dull through to the end of the year.
