Summary
• Log and lumber business continues to be dominated by a small number of premium species.
• Gabon’s president has announced a log export ban from January 1.
• There is uncertainty over the implementation of Gabon’s log ban and how it will effect business which is already under way.
• During 2009 log prices on the majority of species made solid gains and only two declined.
It isn’t easy to find much in the way of optimism in the West African timber industry. Trade conditions moved slowly retrograde during November and December – this after the rather more positive outlook reported in September – although log and lumber prices overall didn’t change during the period mid-November to end-December and logs held on to the gains made by selected species.
Log and lumber business has continued to be dominated by a very small number of so-called premium species. In the recession-led generally poor trading conditions through 2009, importer countries have tended to stick very closely to only their best-known timbers despite the strong efforts over several years by various organisations and exporters to promote the lesser-known and lesser-used species found in many tropical forests. Surprising exceptions are sipo and sapele that have seen low demand and consistently poor prices over the past two years, possibly due to reduced demand from Continental Europe and the UK.
The news that created most interest was the announcement in November by the recently elected president of Gabon that all log exports from the country would be banned as from January 1. There was no follow-up official proclamation, although confirmation is said to have been given to reporters during the president’s visit to France.
With a lack of formal departmental protocols, government officials appeared unsure as to how the ban was to be processed in relation to the existing contracts with major buyers in China and India and how the 370,000m³ of logs in ports, in transit and already felled in the forest were to be disposed of. Towards the end of the year there were already around 16 vessels loading or waiting to load logs and possibly others on voyage. The timber industry was very lacking in information as to how to proceed, but in meetings with senior officials they were told the ban would be imposed as announced, while other information was to the effect that the matter was still under negotiation.
The motive for this sudden change in policy to a virtually immediate log export ban was said to be because the industry had failed to comply with the long term agreements for forest concessions that required a percentage of the allowed harvest volume to be processed in return for the balance to be exported as logs. The processed percentage was to rise to 75% by 2011 but the industry hasn’t even reached the first target of 25%.
Gabon mill closures
This is partly because of the impact of the global recession. Many sawmills in Gabon were closed in 2008/2009 and construction on new mills was halted. On an ad-hoc, informal basis, exporters were allowed to continue to ship logs to maintain government revenues and keep the industry in business until better times. There is a similar processing policy in Congo Brazzaville but in mid-year Congo also relaxed what had become an almost total ban.
Another reason for Gabon’s proposed ban was said to be the expectation of receiving very large payments under the REDD scheme, with talk of vast sums being available to tropical countries conserving their forests and qualifying for carbon capture payments that would be invested in agricultural projects, affordable housing and other capital projects outside the timber sector. The present situation remains unclear – there has been a report of a further presidential radio message saying the ban will now be imposed as from January 1, 2011, but there is no conformation of this as yet. Any postponement may well be tied to the failure of the recent climate change conference in Copenhagen, as although there were some pledges of funding by the UK and a very few other potential donor countries, no timetables or procedures were put forward as to how or when the money might be disbursed.
The uncertainty of a potential log ban by Gabon did not unsettle the market place as both buyers and sellers appeared to consider it best to sit back and see what happened. In any event this is the dullest trading period and with European buyers showing little interest in making any forward commitments and China and India well covered by existing contracts, prices just stagnated. Until there is news if and when the Gabon log export ban will be implemented there is no reason to speculate on how prices might be affected.
Price review
However, a look back to January 2009 to compare prices then and now explains where the market stands at the start of 2010. The resumption of some log exports from Congo Brazzaville plus steady exports from the Democratic Republic of Congo and the recent lifting of the log ban in Cameroon for secondary species only made for ongoing price stability.
Log prices did make some substantial gains through 2009, basically all driven by demand from China, India and Vietnam. Looking back to January 2009, in round numbers of the 25 most traded log species 15 had good solid gains while only two declined and the rest were unchanged or moved only by €2-3/m³ up or down. Acajou, ayous/obeche, sapele and sipo and iroko are the most prominent species that ended the year at the same price. Ayous had a poor year with only Italy staying in the market with any regularity, but being very tough on prices. Movingui ended up around €20/m³ lower and dabema was down by €32/m³. Strongest gains were belli at plus €110-115/m³ and padouk and tali ending up with gains of €60 to €70/m³ on competitive demands by China and India. Okoumé also fared well after a very weak and shaky start to the year and steadily improved to finish at €55/m³ higher. Niove also came into strong demand from Asian markets with a gain of €20 and, as the European demand for azobe fell away, Asian buyers came to the rescue resulting in a plus of €20/m³ by year end. Of the species more orientated towards European markets there were few real movements. Douka/makore made the best gain of €45/m³ by year end, though demand has since slackened; bubinga finished up the year just over €40/m³ better, as did mansonia. Okan had a number of ups and downs through the year caused by steep fluctuations in demand, but finally ended up at €30/m³ higher.
Sawn lumber stability
As usual, sawn lumber prices in no way reflected the changes in log prices and there were far fewer gains and losses through from January 2009 to the present. Although this may indicate a stable market it is more likely to be due to poor demand and a matching decline in availability as producers closed or slowed production rather than trying to push volumes into countries suffering from real declines in building and in timber-based industries.
As mentioned, azobe lumber was hard hit and was lower by €15-25/m³ by year, while douka/makore was some €90/m³ lower and moabi also down by €70/m³. European buyers also didn’t want padouk or sipo lumber, with prices finishing the year €40-60 lower. Sapele never established a basic price and exporters were said to have accepted some very low offers. The only real gain was seen late in the year as okoumé lumber finally came into more favour in a number of markets as GMS ended around €50-60 higher. Other okoumé grades rose less but were still €5-15 better than in January 2009.
