Summary
• The log trade has remained stable but sawn lumber prices continue to rise.
• The Middle Eastern markets remain West Africa’s mainstay.
• China’s purchases have slowed over recent weeks.
• Gabon has withdrawn concessions that don’t have an approved forest management plan.

Straws in the marketing wind for West African producers are blowing in several directions, making it difficult to determine any major trend lines at halfway through the first quarter.

Buyers for China being a little more choosy in selection of species, occasional overstocks in some countries due to over enthusiastic purchasing? All pretty normal as importers and end users struggle to keep stocks low and in line with expected demand.

In the past year the major emphasis has been firmly on the business in sawn lumber and processed products. The log trade has been remarkably stable. Available export log volume is limited by export restrictions imposed by producer countries, while changes in ownership of some producer companies in the past year or so and fewer wild cards in the equation have led to a far more mature market ethos than was the case only four or five years ago.

Having said that, there is still a search for alternative or new sources of log supply as there is without doubt still an unfilled demand for a number of species to be exported as logs. As mentioned in our September 2011 report some added supply from the Democratic Republic of Congo (former Zaire) has been coming on stream but long distances from forest to port are a handicap, as are poor facilities and the restricted port access for large vessels.

Liberia more active

Liberia also has become a more active exporter after a re-entry into the market a couple of years ago. What were relatively small volumes are now slowly increasing, in the main aimed at the French market. Both these sources are likely to produce steadily higher volumes over the coming years.

Export log prices have changed little since early 2011. There are basically only around 30 or so species exported by the West and Central African producers and of these only around 20% showed any real movements during the past 12 months. Variations up or down were usually only in the range of €5-10/m³ although the downsides for okan down US$40/m³, padouk down €30/m³ and sipo logs down by €20/m³ at the end of January 2012 compared with January 2011 meant the losers outstripped the few winners that ended up only gaining around €10/m³.

This price stability closely mirrors the performance of logs in the Asia Pacific region but, quite surprisingly, seems to bear little relationship to the prices of sawn lumber and other processed timber products. For West and Central African producers there has been a resurgence of buyer interest in boules and the clean-cut through-and-through sawn logs. This business grew very strongly during late 2010 and through 2011 and producers say these have been very profitable products. At the same time, buyers appear to have found this an economic, less wasteful semi-processed proposition. To some extent it was a way round the log export bans or limitations, particularly for Gabon where the government eventually imposed some restrictions.

In the past few months there have been rumours that Gabon was about to relax the total ban on log exports. To date the ban stays in place and seems well established in spite of the stated intention of one or two major producers that they will sell up and move elsewhere.

Meanwhile the Gabon government has been cracking down on concession holders that have not received Forestry Department approval for a formal Forest Management Plan. There was recent news of one large producer being stripped of a very large concession and incurring a substantial fine for non-compliance. Other recent awards of concessions are said to have been revoked because of a stop on further sales of concession areas.

The stable prices for logs in the more popular species are of great surprise considering the massive rise in price of the resultant sawn lumber. As TTJ reported throughout 2011, there have been some unprecedented increases in sawn timber prices. Of the most traded sawn lumber species only iroko started 2012 at the same prices as in January 2011. There were no losers in sawn lumber price levels and since the log prices did not increase it might well be assumed by independent observers that sawmilling in 2011 in the region was a quite profitable business.

Price movements

Starting at the low end of the price scale, wawa/obeche, khaya and azobe and a few others managed an increase of €10-20/m³ FOB. In the mid-scale, makore, sapele, sipo, okan and okoumé ended up between €60-100/m³ higher than in January 2011. Sapele and sipo both did better than expected as these two had for a very long period languished in the ‘not wanted’ file with previously intense competition to secure any contract by offering the lowest price.

Wawa/obeche seems to have fallen out of favour in recent months while okoumé sawn lumber has been gaining ground in many markets as a general purpose lumber that is clear, straight grained and easily worked. It’s not durable but is useful for interior applications.

Okan is currently out of favour for China, which had been buying it for flooring and is said to be overstocked because new restrictions were placed on some sectors of new build construction projects and as a result the flooring inputs were much reduced. Some European buyers complained of drying and stability problems with sawn okan but it still managed to put on €50/m³ during 2011.

For the really high flyers, although padouk logs fell by €30/m³ the lumber scored an increase through 2011 totalling over €250/m³. Doussie also had a good run and went up by close to €200/m³ and bubinga also ran close to an increase of €200/m³.

So far so good, but producers now say that although they have orders in the pipeline through to around end March to mid-April, there is rather less certainty beyond the first quarter. Already one sawmiller in Cameroon has reduced production and complains of high prices that had to be paid in the recent round of auctions for forest concessions. Certainly, sawmillers in the region are expecting a higher level of competition in the next three months, and the uncertainty in the financial prospects for some EU countries is of concern.

Europe quiet

The European market is quiet and has become even less active during the current spell of very cold weather. Possibly Italy has been the most consistent of the European importers, with France also active the year round and always in the market.

Middle East markets have been and still are the mainstay for some West and Central African sawmillers and they appear likely to remain so for at least the first half of 2012. India is very much a steady market of course for round logs but recently it has also shown more interest in boules and clean sawn through-and-through logs, although these have been less in demand temporarily because of some over-optimistic buying in the final months of last year.

China has slowed purchases in the last few weeks and buyers have become more picky regarding species and specifications. Although they are still buying, there is no doubt the underlying prospects are sound for African producers for logs and sawn lumber for China.

Vietnam is quietly a regular buyer and its furniture industry has become well established in export markets and is very much here to stay.

So far as progress towards compliance with the EU Timber Regulation (EUTR) due to be implemented in March next year, reports of the meeting last year in Point Noire to discuss FLEGT and the new EUTR are that little or no progress was made or interest shown, but it was a good forum for traders and producers to meet and talk about markets.