Summary
¦ Some species achieved substantial log and lumber price increases last year.
¦ Cameroon and Congo Brazzaville relaxed their log export quota rules.
¦ There are rumours that Gabon may resume log exports.
¦ Gabon has reinstated some capacity and is building new mills.
¦ China and India are keen for logs but European demand for sawn timber is at a standstill.
West African timber producers and traders are feeling just a tad more optimistic than they were in January 2010. At that time no-one was certain of how the year would develop but in the event, after a shaky start, business picked up and some of the prime species in logs and lumber achieved substantial price increases through the year.
The major talking point was the long-running proposal by the government of Gabon to ban all log exports. This on/off, maybe/maybe not saga was finally resolved when it was announced in February that the total ban would be implemented at the end of April 2010.
Although Gabon’s log export volumes had declined from previous highs there was much speculation on the effects of the sudden removal of several hundred thousand cubic metres of logs from the market. Not least would be the problems for plywood manufacturers in several countries that were reliant on the supply of high quality okoumé logs.
Export quotas
Cameroon had relaxed the log export quota rules for some time and allowed controlled volumes of non-premium species. This was very quickly relaxed still further and log buyers swooped. It seems likely some premium species also managed to bypass the system and, shortly afterwards, Congo Brazzaville joined in by allowing log exports outside its quota on payment of a levy. Equatorial Guinea had banned log exports but this ban also was relaxed.
By June, supplies were well able to keep pace with demand from the main buyers, China and India. The immediate effect on prices was not dramatic but steady increases followed on through the rest of the year for those species that were in demand. Comparing today’s prices for LM quality logs with January 2010 shows ayous unchanged, azobe now only €10 higher, while the biggest winner was bubinga gaining €150/m³. Niove, padouk and moabi put on €40/m³, iroko €60, sipo €55, sapele a whopping €90, movingui and makore is just €30/m³ higher.
Many others in the non-premium category moved either marginally or not at all through 2010, but overall it was a satisfactory year for exporters whilst importers too were kept supplied without interruption.
Once again there are rumours that Gabon may allow resumption of log exports on a quota system. Observers say that discussions between the government and the timber industry are ongoing.
Meanwhile, Cameroon is reinstating the log export quota for premium species and Congo Brazzaville may follow with a return to the previous strict quota system.
As with the log trade, sawn lumber results for 2010 turned out better than expected. Perhaps Ghana had been the worst affected by the 2008/9 economic downturn as processed product markets were badly hit and results for Ghana had showed a decline in exports. Ghana has no log exports that might have mitigated the downturn but the policy of promoting lumber and product exports to neighbouring countries has been successful and is growing still further.
Capacity reinstated
Gabon sawmillers began slowly to reinstate mothballed capacity and some restarted construction of new mills. Plywood production increased and sawn exports to the Middle East and north Africa made considerable progress. Exports of sawn okoumé to South Africa went well until year end when a couple of bankruptcies left exporters who had given extended credit with unpaid bills.
Prices for species that came into sudden demand made substantial gains. Currently, FAS GMS bubinga lumber is €250/m³ higher than a year ago, iroko is up €160, moabi and padouk up €100, agba up €70 and azobe, bilinga and khaya higher by €40-45/m³. Ayous was out of favour and prices did not change through the year. Only Italy was a regular buyer but was very tough on prices.
Doussie also failed to make progress, as did okan following reports of some European end users complaining of warp and twist. Sipo managed an increase of only €20/m³, and sapele, with a €30 increase in price, failed to match the corresponding higher price for logs, although the latest reports are that sapele log prices are dropping again.
Sawmillers report good order books. Cameroon mills say log supply is tight but it is expected to improve as the log export quota system becomes effective.
Processing zone
Gabon sawmills are busy and are concentrating on the premium red species where margins are higher. Gabon has started work on the proposed tax- and duty-free timber processing zone, but so far only groundworks are under way and there is no news of companies yet signing up to build new factories on the site. A large new sawmill is under construction in Equatorial Guinea with production intended for export.
Log exporters are confident of continued market stability, with some further increases in prices for the premium species toward the end of the first quarter. China and India are active buyers and India in particular is achieving very high growth in the economy, while China has been indicating the need for much higher rates of housebuilding. Vietnam too is a regular log buyer as its furniture and woodworking exports continue to grow.
For sawn lumber exporters the picture may not be quite so brilliant as main market Europe has not yet recovered from the economic downturn. Business is at a virtual standstill and the recent cold weather has not helped short-term prospects. At the same time, when buyers have had to buy they have not been constrained by shippers asking for increased prices.
On the supply side, there is still much progress to be made in producers moving on with the quite slow process towards full certification.
