Ingredients for Malaysian price rise
International demand for Malaysian sawn lumber remained subdued throughout the last quarter of 2001. However, it appears that some of the ingredients for price rises are now in place. Tightening regulatory controls meant that many Malaysian mills were struggling to obtain adequate stocks of logs last year. These problems have been compounded by Indonesia’s ban on log exports. The recent arrival of the monsoon has further slowed log production, while production will also be curtailed for around three weeks during the Chinese New Year holiday season starting at the end of January. If there is a significant upturn in demand in early 2002, these factors could quickly translate into price rises. Page 4

Consensus indicates U.S. recovery
Prospects for the U.S. economy in 2002 remain as obscure as ever. However, leaving aside the possibility of another serious setback (such as another serious terror attack or a substantial rise in oil prices), most analysts now forecast that the American economy will stage a modest recovery by the middle of next year. The U.S. housing sector continues to perform well. Page 6

U.S. production continues to fall
If U.S. sawmills cease production for lengthy periods over the Christmas holiday season, and if sawmills continue to close as many analysts expect, production of American lumber, both green and kiln dried, is likely to continue to decline over the winter months. Many analysts are also forecasting that North American hardwood demand may increase in the first half of 2002. If so, the supply of lumber could tighten quite quickly. Page 6

€uro launch goes smoothly
This New Year has seen the greatest transfer to a currency system that the world has ever witnessed. Three hundred million people deserted the coinage of their birth in favour of the €uro, without much of a murmur and apparently with few problems. The effects will be powerful, although as yet not entirely predictable. Page 10 & Editorial Page 2

Mixed market for European hardwood
Demand for European beech logs and lumber remained subdued at the end of last year. Demand for oak has been better, particularly from the stave sector, but is down on previous years. Demand for higher grade birch lumber from the Baltic States has been rising. Pages 10 & 11

EU hardwood imports at high levels during 1st half of 2001
Although there was weakening in EU-wide imports of some hardwood products during the first half of 2001 compared to the previous year, overall levels of trade remained reasonably buoyant. However anecdotal evidence suggests that imports cooled significantly during the second half of 2001. Pages 12 & 13

Tony Blair endorses WWF Group
A recent event to mark the 10th Anniversary of the WWF 1995+ Group highlighted the high level of political support in the UK for forest certification. Tony Blair, the British Prime Minister, congratulated the Group on their success. However a UK Minister also declared that the government had no intention of making an exclusive commitment to the FSC. Pages 8/9/10

Mahogany harvests suspended
With the rainy season now underway in the Brazilian Amazon, attention is turning to longer term aspects of tropical forest management in Brazil. In early December the Brazilian government suspended all mahogany forest management plans in the States of Para, Mato Grosso and Acre. The Brazilian government is also trying to increase the proportion of tropical lumber supplied from state-owned as opposed to private forests. Page 7

Cambodia suspends logging
Under heavy pressure from international donors, the Cambodian government has ordered that all commercial logging be suspended from 1 January 2002. Page 5

The transformation of China
Over the next 12 months, China will undergo a major political and economic transformation. China has just joined the WTO which means the country’s exporters will gain greater access to world markets and there will also be greater opportunities for inward investment in China. At the same time, almost every sector of the Chinese economy will be opened up to foreign competition. As a result, unemployment in China is expected to rise rapidly, which will hit domestic consumer demand and may create social tension. To counter-act this, the government is commited to heavy spending on infra-structure this year. On balance, underlying Chinese demand for hardwoods is expected to remain good during 2002. Page 4

Japan’s imports continue to slide
Forecasts suggest that overall demand for imported wood in Japan will shrink by 4.5% during 2002. Imports of tropical logs are expected to fall particularly dramatically. However new quality requirements are expected to ensure that demand for kiln dried lumber and engineered wood products in 2002 remains stable. Page 5

Better news from the Congo
The Democratic Republic of Congo contains over half of Africa’s remaining tropical rainforest. After three years of civil war, there are signs that the country may be heading towards a brighter future. The UN has deployed a peace keeping force and the economy may start to grow again in 2002. This may open the way for DRC to once again play a more important role in the international timber trade. Page 3

PNG lifts logging moratorium
Despite howls of protest from the environmental movement, the government of Papua New Guinea announced that the moratorium on new logging licenses and extensions would be lifted from the beginning of December 2002. Page 15




African logs: ayous price rise
International demand for African tropical logs remains subdued. Prices for most species have been reasonably stable, owing to relatively restricted production and continuing good demand from African sawmills. However azobe and ayous stand out as exceptions. The Cameroon authorities decision to ban export of these species in log form from 31 March has increased purchases of these species and pushed prices higher. Page 3

African sawn: tight margins
Sawmillers throughout Cameroon, Ivory Coast and Ghana are still complaining of high log prices and of subdued and highly competitive export markets. Log harvesting in Cameoon this season is expected to be down at least 25% on last year. Demand for African sawn lumber is reasonably steady in the UK, but is down in France, central and southern Europe. Buyers throughout Europe are cutting stocks and are not engaging in long term contracts. Page 3/4

Malaysian downturn
The Malaysian authorities are forecasting a drop of 10 to 15 per cent in export earnings from timber products and furniture in 2001 compared to the previous year, raising concerns over the possibility of widespread closures in the Malaysian industry during 2002. Pages 1 & 4

Malaysian prices rise, slowly
European demand for Malaysian sawn lumber has been slow to pick up in the new year. However inventories are reported to be low in Malaysia. Prices for Malaysian sawn lumber appear now to have reached bottom and to be strengthening, but only slowly. Page 5

US production down 35%
Mills in the U.S. have quickly reacted to market volatility by regulating production as much as possible. The Hardwood Review estimates that U.S. hardwood lumber production during 2001 declined at least 35% or an estimated 5 billion board feet (11.8 million m3) compared to 2000. Page 6

U.S. recession over?
Statistical data released at the end of January suggests that America’s recession may already be over. Overall the outlook is for economic recovery in the U.S. during 2002, but the heavy debt burden may lead to several years of relatively slow growth. U.S. performance in sectors of direct relevance to the wood industry, such as house constructioon and flooring remained reasonably good throughout the downturn. Page 6 & 7

US export markets very competitive
Global markets for American hardwoods are extremely competitive. Although there are reports that inventories of North American hardwoods are relatively low in Europe, few buyers are looking to increase inventories at this time. Sales into China are likely to slow in the short term due to Chinese New Year in February, but long term prospects are good in China. Pages 7 & 8

Certified mahogany only?
The production, trade and export of Brazilian mahogany continues to be prohibited by IBAMA, with only small volumes being shipped under special arrangements following legal appeals. It now seems possible that, in future, the Brazilian mahogany trade will be entirely restricted to certified wood. With the mahogany trade effectively stalled, European traders are focusing more on the opportunities presented by a range of other Brazilian hardwoods. Page 9

Some pick-up in beech markets
After a very slow end to the 2001, there were signs of a slight pick-up in demand for European beech logs in January. Stocks of steamed and lower grade sawn beech lumber, which were at high levels throughout 2001, are being slowly worked out. However demand for beech sawn lumber remains subdued throughout much of Europe. Demand in China is also subdued, but long term prospects in China for beech logs and unedged lumber remain reasonably good. Pages 9 & 10

Paris and Cologne furniture fairs
The opening furniture shows of the 2002 in Paris and Cologne highlight major shifts in the structure of the international furniture sector. Amongst hardwood species, oak comes out a winner. Meanwhile, rubberwood is losing ground. Page 10

World’s forest resources
FAO has just released the most comprehensive review of the world’s forests ever undertake. While the Forest Resource Assessment 2000 (FRA 2000) emphasises the huge challenges still to be faced in the management of the world’s forests, it also suggests there are grounds for optimism. Pages 11 and 12, Editorial page 2

UK: difficult year during 2001
By most accounts, 2001 was a difficult year for the UK hardwood trade. Imports of tropical hardwood declined significantly. Imports of American hardwoods just about held their own, but the market has become more crowded, particularly with rising availability of better quality European hardwoods. Imports of plywood were at high levels during 2001, but trading conditions were difficult, and by the end of the year there were widespread reports of overstocking. The UK’s domestic furniture sector continues to come under pressure from imports. More positive are the signs of continuing good activity in the construction and joinery sectors. Pages 12/13/14/15

Teak board consumption falls
Consumption of teak in European countries such as the UK has continued to fall and trade in teak boards is now a speciality business with so many teak products such as flooring and garden furniture being produced in the source countries. The U.S. market for teak lumber continues to thrive in various niche sectors, although recently demand has been relatively thin which may account for slight price weakness. Page 5




African log demand down
African log demand in Europe is subdued due to economic uncertainty. There has been a pick-up in China’s log demand, but demand in Japan remains weak. Some reports suggest that weak demand led to price falls for some species during January and early February. However relatively low levels of production have kept price reductions within limits. Page 2

African sawn shippers push for more
Due to limited availability, many West African shippers are seeking higher prices. However export demand has been subdued and importers have been unreceptive. Prices for most species remain reasonably stable. Page 3

Congo production to double
According to the nation’s Forest Minister, in two to three years time log production in Congo (Brazzaville) will double, perhaps even triple. Page 3

Zimbabwe timber deal
In a new report, the environmental group Global Witness describe the details of the timber deal between the governments of Congo (Kinshasa) and Zimbabwe which covers 33 million hectares of forest. Global Witness suggest that projected rates of production and returns from the project may be over-estimated. Page 3/4

Malaysian prices strengthen
There are signs that C&F prices for Malaysian sawn lumber have begun to strengthen. Despite weak demand, most analysts predict this trend will continuedue to restricted supplies in Malaysia, and lower availability of Indonesian lumber this year. Page 4/5

Asian log prices firming
FOB prices for SE Asian tropical logs have been firming in response to tightening supply. The log export ban from Indonesia has also helped to stabilise export prices. In major markets, China’s tropical log imports continue at a high level. However the Japanese market is slow. Page 5

American hardwood production
Log supplies in the U.S. have improved slightly since the start of the year, notably of hard maple which tends to be harvested during the winter months. However overall log availability is down on previous years. Kiln dried inventories are still quite high relative to demand, but are falling. Page 7

Slow upturn in U.S. domestic sales
The U.S. domestic hardwood market remains very competitive. Buyers are sensitive to price, margins are tight and traders throughout the chain are keeping inventories low. However the underlying pace of sales is reasonably good. There are reports that hardwood purchases may be rising slowly in some sectors. Activity in the housing, kitchen cabinet and flooring sectors remains good, but reports from the furniture sector are less favorable. Page 6

EU importers keep American hardwood inventories low
Demand for American hardwoods in the EU is subdued. Inventories are being kept at low levels as importers await clearer signals of future market demand and likely changes in exchange rates. Demand is good into China/Hong Kong. However trading conditions are extremely competitive as many exporters have identified these regions as growth markets. During 2001, U.S. exports of hardwood sawn lumber were down 11% by volume and 14% by value compared to 2000. Pages 7/8

Beech trade well down
Trade statistics indicate that the trade in Western European beech logs and lumber was well down in 2001. This was due to overstocking in the aftermath of the December 1999 storms; to economic problems, notably in Germany; and to a partial shift from beech in China. This year, the market for Western European beech logs and lumber has remained weak. The market for higher grades has been more stable than for lower grades. The European oak market has also been more stable. Page 9

Italian imports tumble
Italian imports of nearly all hardwood products were buoyant in the first and second quarters of 2001, but there was a big drop in the third quarter. Growth of the Italian furniture sector has been slowing since mid 2001. Forecasts are for a slow recovery beginning in the second half of 2002. Pages 1/10/11

German market weakness
The latest German import data highlights the extent of market weakness last year. The import value of just about all hardwood products - including logs, sawn lumber, plywood, veneers and further processed products - were well down on the previous year. Recent economic news from Germany has not been good. Pages 11/12

Spain’s imports higher than most
Spanish imports of hardwood products held up better than most other European countries during 2001. Although there is still underlying activity, demand has cooled in Spain this year. Pages 12/13

Greenpeace step up mahogany campaigns
Greenpeace have stepped up their campaign to eliminate uncertified Brazilian mahogany from the European hardwood trade by blocking the unloading of vessels. Meanwhile Brazilian shippers are gearing up to supply more decking and flooring lumber to the international market. Page 14

Philippines still depends on wood
As the Philippines’ forest resources have been depleted, the country’s furniture sector has seen some substitution of wood by a myriad of other fibre based materials. However, wood remains the number one material for finished furniture, and for the export of furniture parts, which is an increasing business. Opportunities for the supply of quality hardwoods to the Philippines are increasing. Page 15




African markets stable
Markets for African tropical logs and sawn lumber were stable during March, balanced between unspectacular demand and constrained supply. Log prices are steady with most analysts forecasting they are likely to remain so through to the end of the second quarter. Limited supply and the prospect of rising demand as the global economy recovers has led to widespread expectations that prices for sawn lumber may firm in the second half of the year. Page 2/3

Meranti prices tending to rise
Prices for sawn lumber of Malaysian meranti species are still finely balanced between low supply and weak demand. But most analysts forecast that prices will firm over coming weeks. Shippers stocks of lumber throughout Malaysia are reported to be very low. Although low stocks are typical at the end of the wet season and in the immediate aftermath of the Chinese New Year, constraints on availability are particularly tight this year. Page 4

Asian log suppliers bullish
Log supplies in the Far East are very limited. Shippers are bullish and determined to obtain higher prices for their logs. Log demand in China continues to increase, but the Japanese market is very weak. Page 4

Asian furniture fairs
There was a lot of rubberwood on show during the annual round of Asian furniture fairs in Malaysia, Thailand, Singapore and the Philippines, but a wide range of other species are now being used in new combinations including European beech, a variety of American hardwoods, teak, and softwoods from New Zealand, South Africa and Australia. Page 5/6

Moderate rebound in the U.S.
Economists are generally projecting a moderate rebound in the U.S. economy as the year progresses. Housing starts in February were at their highest level since December 1998. Some U.S. hardwood suppliers have been shifting reasonable volumes of lumber. However many in the industry are still cautious about the future. Various factors including the competitive nature of business, the prolonged downturn, difficult supply conditions and the contracting U.S. furniture sector have meant many operations are struggling financially. Page 6

American export markets hesitate
There is still a perception amongst overseas buyers that they can purchase American lumber as and when required. This combined with the strong dollar and a generally cautious attitude to future economic development, has meant buyers are hesitant about placing large orders. Efforts by American hardwood mills to push through price increases on the back of a fall in production have met with widespread resistance amongst importers. Page 7/8

Romania rebuilds wood industry
Over the last 10 years, the Romanian wood sector has suffered severe problems resulting from under-investment, declining domestic consumption, and erratic raw material supplies. However, privatization and foreign investment have laid a solid foundation for future growth. The industry is now heavily oriented towards sawn lumber exports which increased from a low of 1.7 million m3 in 1994 to 2.4 million m3 in 2000 - including 700,000 m3 of sawn hardwood. By 2000, Romania was exporting over 80% of it’s total sawn lumber production. Page 8

Yugoslavia continues to struggle
Yugoslavian hardwood lumber production fell progressively during the 1990s. After a brief revival with the end of the Kosovo crises in 2000, when sawn hardwood production reached around 350,000 m3, production fell again last year to around 245,000 m3 due to the privatization process and the closure of numerous state-run enterprises. Page 9

Poland’s influence increases
Poland is becoming increasingly influential in the international hardwood trade. Poland is a significant exporter of sawn hardwood lumber to the EU, but more significant has been the rapid growth in Poland’s furniture sector. Poland is becoming an increasingly vigourous competitor to the furniture industry in the EU. Growth in the sector is also stimulating Polish hardwood imports. Pages 10/11

Beech down, oak recovers
Demand for western European beech is still subdued. In Europe demand has been hit by weak economic conditions, particularly in Germany. The Chinese market for beech is still substantial, but there has been a partial shift in fashion away from beech. Demand for higher grades of European oak is showing signs of strengthening, boosted by a fashion for oak in furniture, the weak euro which has contributed to a partial switch away from American oak, and good demand from the stave sector. However demand for lower grades of oak is still subdued, notably from the European parquet sector. Page 10

France slows, but prospects good
France’s economy slowed dramatically in the second half of 2001, a trend which is reflected by a decline in hardwood imports. However, some leading economic indicators in France are already turning more positive and the slowdown in France seems less pronounced than in Germany and Italy. The dominance of tropical logs in the French hardwood import data is gradually being eroded as there are signs of a shift towards imports of further processed products, but at a slower rate than other European countries. Pages 1/10/11

Belgium hit hard
Belgium’s economy has been hit hard by the global economic slowdown. The furniture sector, the major user of hardwoods in Belgium, is also coming under pressure from imports. Belgium’s imports of tropical sawn lumber, much of which is re-exported to neighbouring countries, declined sharply during 2001 due to over-stocking in Europe. Pages 11/12

Dutch tropical imports slide
Dutch imports of tropical sawn lumber were down 27% in value during the first nine months of 2001, mostly due to falling imports of Malaysian wood. Pages 12/13




African market stable….
Prices for African logs and lumber are stable as the fragile balance between subdued demand and tight supplies continues. Prospects are that prices will edge higher over the next few months. Availability is likely to become tighter as the rainy season sets in. At the same time buying usually picks up in Europe during the early summer period. Recent rises in East Asian tropical log and lumber prices due to low availability may also boost demand and prices for African tropical lumber. Page 2/3

….Meranti market unstable
The market for Malaysian meranti is very unstable with reports of rapid price increases emerging from the middle of April. The immediate reasons are a severe lack of supply combined with efforts by European buyers to obtain available stocks. Page 4/5

Asian log supplies very tight
Supplies for South East Asian logs are still tight. Intermittent rain has disrupted logging in Sarawak, government controls have reduced harvesting in Sabah, and the Indonesian logging sector is hampered by labour and political disputes. Indonesia has also announced that it will extend the log export ban indefinitely. South East Asian log exporters continue to push for higher prices. In Japan, tropical log demand remains very weak, but there are forecasts of rising demand in China. Page 5/6

Asian furniture fairs
Closing reports from the recent round of furniture fairs in Malaysia, Singapore, Thailand and the Philippines suggest this year will be a better one for the ASEAN furniture industry. In 2001, the ASEAN furniture fairs generated sales of US$2.4 billion, and this figure is expected to be up 15% during 2002. However there is serious concern over the price war now being waged between manufacturers. Page 6

U.S. trading still challenging
The U.S. downturn has been less severe than expected, but the rebound may be subdued. Some sectors of the U.S. hardwood industry, notably flooring, continue to benefit from strong home starts. Prospects in the U.S. furniture sector look better in 2002 after a terrible year in 2001. Reasonable volumes of hardwood lumber are being shifted in the U.S., but trading conditions are still difficult. High stumpage prices and intense competition for orders are keeping margins tight. Page 7/8

U.S. export markets subdued
Although there are signs that the American export business in hardwood lumber is slowly improving, overseas demand remains subdued overall. Exports have been constrained by the continuing high dollar value, by the rising level of competition, notably from Eastern Europe, and by economic uncertainty in buying countries. Page 8

Beech market still difficult
Harvesting of good quality new season beech logs was restricted during the winter logging season in Western Europe. European beech sawn lumber markets are still challenging, characterised by high stocks and slow demand. Chinese demand for beech is still well down on previous years, but there are signs of improvement. Demand for good quality European oak lumber has been more stable. Page 10

Brazilian bounce
Production of solid wood products is expected to increase in Brazil during 2002 due to the forecast rebound in the Brazilian economy. The Brazilian forest products sector is likely to benefit from stronger growth in the domestic construction sector, and from higher exports of lumber, plywood, and furniture. Page 13/14

President undermines mahogany
The entire legal status of the Brazilian mahogany trade, not to mention Brazil’s regulatory framework, has been undermined by the Brazilian President who, in a speech on April 9th, agreed with Greenpeace that much of the wood derived from illegal sources. Page 14/15

Indonesia-UK joint agreement
The Indonesian government has signed a memorandum of understanding (MoU) with the United Kingdom designed to help curb widespread illegal logging in Indonesia. Indonesia also expressed a desire to establish similar agreements with other countries and announced ambitious targets to reduce the level of logging. Page 12/13

America’s competitive edge
Analysis of forest resource trends indicates that, in the long term, American hardwood suppliers will have a competitive edge over Eastern European and Russian suppliers in international hardwood markets. However, there is is likely to be a protracted period when the intensity of competition in temperate hardwood markets increases as Eastern European suppliers develop more efficient processing capacity and distribution networks, and as they seek to develop lucrative overseas sales at a time when domestic consumption is still low. Page 1/10/11

Investing in hardwood forests
Institutional investors are becoming more interested in American natural hardwood forests, encouraged by solid rates of natural growth and the ability of these forests to supply some of the finest quality hardwood lumber in the world. The new owners are bringing about changes in the way the forests are managed, particularly by increasing the focus on high quality production. Page 12

Oak much in evidence
Oak was much in evidence at the recent furniture shows in Italy and Germany, particularly in light, natural, or limed finishes. Designers looking for contrast or an alternative to light colours were turning to American walnut and African wenge. Page 9




Log stocks low in Africa….
Prices for tropical African logs and sawn lumber remain stable, finely balanced between slow demand and restricted supply. The rains have now started throughout the major producing regions north of the equator. Log stocks were generally low even before the onset of the rain, so a minor increase in demand may be sufficient to tip the balance towards rising prices. Page 2/3

….and in the Far East
It is now the logging season in Sarawak but extraction is restricted by tighter regulation. In Sabah the weather has improved and logging is underway, but overall levels of harvest are expected to be well down this year. Levels of log extraction in Indonesia are also down this year due to efforts to combat illegal logging, resource constraints, labour disputes and political problems. Tight supplies has meant rising Far Eastern log prices. Demand for tropical logs in China continues to rise, but is falling away rapidly in Japan. Page 5/6

Meranti prices more stable
Overall, the market for Malaysian dark red meranti (DRM) is characterised by very tight supplies and patchy overseas demand. FOB prices were more stable during May after the rapid gains in April. Page 4/5

Signs of strengthening in the U.S.
There are clear signs of stronger economic growth in the U.S. Although residential construction activity cooled during the spring, levels of activity in this sector are expected to remain good this year. U.S. flooring and cabinet manufacturers continue to report strong buying activity. There are signs that overall U.S. demand for furniture will rebound this year, although a higher proportion of product will be imported. Reasonable activity in end-use markets has meant that most hardwood mills and distributors are finding outlets for new production. However, trading conditions remain challenging for many in the U.S. hardwood sector. Page 6

Shifting U.S. export markets
Overall U.S. hardwood exports this year have remained sluggish to Canada, the EU, and Japan, but have been rising to China and South East Asia. Page 6/7

U.S. export markets subdued
The rainy season ended in the Brazilian Amazon during May and logging is underway. With the exception of mahogany, supply of tropical hardwoods is not expected to be a problem over the next few months. Prices for sawn lumber of most Brazilian hardwoods remain stable. However the Brazilian Government restrictions on the mahogany trade continue. No mahogany logs are expected to be harvested in Brazil this year. Page 8

EU hardwood harvests well down
The harvesting season for hardwood logs in Western Europe has ended. Weak demand encouraged most forest owners to curtail log harvests and overall levels of extraction were well down in both Germany and France last season. Page 8/9

Beech depression
Demand for European beech sawn lumber is still slow and over-stocking remains a problem. Although Chinese importers are buying steadily, volumes are well down on previous years. Page 9

European oak’s rising influence
European oak is now very much in favour and it’s influence in the overall European hardwood market is on the rise. In part this reflects the weakness of the euro against the dollar, which has meant that European oak prices have been relatively competitive in relation to American oak, but equally important is the growing influence of Eastern Europe. Page 9

Patchy U.K. performance
Hardwood import performance in the U.K. was very patchy during 2001. Winners in the market include oak, European hardwood suppliers, Finnish birch plywood, and overseas manufacturers of value-added products. Losers include tropical sawn lumber and hardwood veneer. Page 1/10/11

Germany in the doldrums
The value of German imports of most hardwood products declined during 2002. The German economy was weak last year, construction activity was slow, and furniture sales were declining both domestically and abroad. The shift in manufacturing investment to Eastern Europe, notably Poland, continued. Page 11/12

Italy’s imports fall sharply
Italian imports of hardwood products which held up reasonably well during the first half of 2001, declined sharply in the second half of the year as economic uncertainty began to mount. Page 12/13

Poland’s developing industry
More than 34,000 exhibitors from 43 countries attended the annual Poznan show this year. With Poland’s emerging importance as a furniture producer and wood processor, this event is taking on ever increasing significance. Species trends in Poznan were fairly obvious. The days of Polish pine furniture are clearly over. Beech still holds its own, especially for chairs and tables. Birch is more strongly in evidence and oak, mainly Polish, is widely used by local manufacturers. Cherry products made locally and imported were clearly the biggest fashion item. Page 13/15

Tropical countries call for pragmatic certification
At their recent meeting in Indonesia, ITTO members highlighted the need for step-wise systems of tropical forest certification that, as a starting point, provide independent assurances that wood derives from legal sources. ITTO is plans to launch a tropical wood marketing campaign, spending US$4.5 million over 3 years. ITTO report page 14,
Editorial, page 2




African market finely balanced
Log availability throughout the major African hardwood supplying countries is still confined. Heavy rains in regions north of the equator have added to long term factors of tightening regulations, resource constraints, and infra-structure problems to limit supplies. Low supply is balanced by weak demand. Log and sawn lumber prices were stable during June. Page 2/3

Malaysia bans Indonesian logs
To help enforce Indonesia’s log export ban, the Malaysian government announced on 25 June with immediate effect a total ban on the importation of logs from Indonesia. The aim is to give assurance to buyers that all timber and timber products exported from Malaysia derive from legal sources. Malaysia has also been enforcing strict controls to keep domestic log harvests to below 16 million m3 per annum. Page 4

Meranti prices rising again
Limited log supply has meant that Malaysian sawn lumber availability is very restricted. The number of offers for sawn lumber from Malaysian exporters to European buyers has fallen over recent weeks and certain sizes are already sold out until September/October shipment. Prices for Malaysian sawn lumbers (CNF European port) have continued to rise. European buyers have been shy of the forward market. Price competition for stocks on the ground in Europe has intensified in response to weakening in the dollar exchange rate. Page 4/5

Rapid rise in Asian plywood prices
Dollar prices for Indonesian and Malaysian plywood have been rising rapidly. Indonesian lauan plywood prices now stand at INDO96 -25% to -22%. The increase reflects limited log availability, rising log costs and significant strengthening in the value of the Indonesian rupiah against the dollar. Page 5

U.S. economy wobbles
A series of scandals on Wall Street has dented confidence in the U.S. economy despite data indicating a strong recovery in the first quarter of the year. However U.S. house starts remain strong, the flooring sector is booming, cabinet sales are good and even the furniture sector seems to have reached a point of stability. Overall domestic hardwood demand is rising gradually while production cut-backs have also contributed to a slow turnaround in prices. Page 8

American export optimism rises
Export demand for American hardwoods is subdued, but there is growing optimism that the worst is over. European importers are still not buying in any volume and demand has slowed temporarily due to the summer vacation season. But weakening of the U.S. dollar may allow American hardwoods to claw market share back from competitors. As was evident at AHEC’s Greater China and South East Asia Convention in Shanghai during early June, interest in American hardwoods in China continues to rise - not only to manufacture products for export, but also for domestic consumption. Page 8/9

Embarrassment for IBAMA
Shipments of Brazilian mahogany lumber from last year’s harvest are still stalled. The IBAMA president has written a letter to the CITES authorities suggesting that a proportion of recent mahogany exports derived from unknown or illegal sources. This admission is an embarrassment for the Brazilian authorities. IBAMA had originally issued all the shipments involved with a CITES certificate of legality. A major international workshop on the Brazilian mahogany trade has concluded that IBAMA is underfunded and undermanned. Page 10

France switches from logs to sawn
France is a major importer of tropical logs. However last year the progressive switch away from tropical logs towards sawn lumber continued as exporting countries have tightened controls on log exports and are promoting their own downstream industries. Overall demand for hardwoods has been weak during the first half of 2002, in line with the subdued nature of the French economy. Page 13/14

Carrefour du Bois
The Carrefour International du Bois in Nantes is widely regarded as France’s best timber trade show and probably one of the most wood focused events in Europe. This year the show saw strong participation from producers and users of European, American and tropical hardwoods. The French industry launched a campaign to promote French oak. The show coincides with a real crossroads in the European hardwood market. Stocks are low and future demand trends uncertain. The recent strengthening of the euro was a major focus for discussion at the show. Page 11/12

Spanish market stronger than most
The Spanish market for imported hardwood remained stronger than most other EU countries during 2001. Tropical hardwood imports were particularly strong, with Spain registering increases in the value of tropical log, lumber and veneer imports. Page 11

Portuguese downturn
Demand for imported hardwoods was rising in Portugal until the year 2000 as the quality of interior fitting and the domestic demand for high-end furniture increased. However a slowdown in the Portuguese economy led to a turnaround in imports last year. The value of tropical log and lumber imports declined by 15% and 17% during 2001. Imports from Brazil were on the rise at the expense of African suppliers. Page 12

Gabon looks for Asian investment
Gabon forest industry representatives visited Asia recently to discuss sales and inward investment opportunities. 70% of Gabon’s wood exports are now directed to Asian markets and only 25% to European markets. Within Asia, the Chinese market has grown rapidly and now accounts for 80-85% of the total. Only 20% of harvested logs in Gabon are processed domestically, but there are plans to increase this proportion to 50% in three years. Page 3




EU hardwood imports decline
EU imports of most hardwood products declined during 2001 from the high levels recorded the previous year, according to hardwoodmarkets.com’ analysis of EU-wide data. This reflects the slowdown in underlying economic conditions in Europe during 2001. After a temporary recovery in 2000, the long term decline in EU imports of primary products from the tropics resumed last year. Pages 1 and 13

Cameroon log exports down 75%
The ban on exports of commercially valuable redwood species from Cameroon led to a 75% reduction in log exports between 1999 and 2001. This trend has had a profound influence on international hardwood log markets, reducing the availability of supply to all the major buying countries. The ban has played a significant role in ensuring stable to firm international tropical log prices even during a period of relatively low world demand for hardwoods. Pages 2 and 3

Congo (Brazzaville) recovers
Wood production and exports from Congo (Brazzaville) are returning to normal after the disruption caused by the civil war between 1997 and 1999 which devastated forest operations in the south of the country. Production recovered to reach around 700,000 m3 in 2001 while exports rose to 396,000 m3, 35% up on the previous year. Page 3

Gabon dominant log exporter
2001 export data indicates that Gabon is now by far the leading supplier of African tropical hardwood logs to the international market. Overall log export volumes during 2001 were well in excess of 2 million m3, which compares to around 600,000 m3 from Liberia, 400,000 m3 from Congo (Brazzaville), and 250,000 m3 from Cameroon. Page 6

Difficult year for Malaysia
The year 2001 proved to be a very difficult one for Malaysia’s wood exporters judging from end-of-year data published by the Malaysian Timber Industry Board. Exports of logs, sawn lumber and plywood fell dramatically while plywood exports remained static at historically low levels. Page 5

Tropical trade declines
hardwoodmarkets.com review of the international tropical hardwood trade during 2001 suggests that there was a significant decline in the overall level of production and international trade in tropical hardwoods last year. It also confirms anecdotal reports that the switch from log exports to exports of value-added products is proceeding rapidly. Pages 6, 7 and 8

Plywood prices rise sharply
The international hardwood plywood sector is in a period of transition. It appears to be moving out of the high volume-low price rut it entered in the wake of the Asian crises. Prices for Indonesian plywood have increased sharply in recent weeks, now standing at INDO96 less 13-15%, up from levels of under INDO96 less 30-35% prevailing only a few months ago. Pages 8,9

North American recovery
The North American domestic market for hardwood lumber is still competitive, but there is growing confidence that recovery is well underway. Buyers are beginning to place purchases more frequently and for greater quantities. Kiln dried inventories are falling. The shake out from plant closures and consolidation of manufacturing facilities in the U.S. furniture industry seems to have subsided for the time being. Page 10

U.S. export prospects improving
Export demand for American hardwoods is still highly competitive and buying has slowed over recent weeks, particularly in Europe, due to the summer vacation period. However U.S. exports began to rally during the second quarter of the year after a very poor first quarter. Prospects for the second half of 2001 seem to be improving, particularly due to the weakening dollar on foreign exchange markets and declining availability of American hardwood lumber. Page 10,11

European hardwood sales weak
European hardwood lumber sales have been well down this year, with some German mills reporting a decline of up to 30% compared to 2001. Central European demand has been even weaker this year than in 2001. Export sales to some markets have stabilised but at lower prices and volumes than in previous years. Many Western European mills are now in severe financial difficulty. French and German sawmillers are talking about voluntary bans on the export of beech logs to China as a way of increasing sales of sawn lumber to this market. Page 12

Yugoslavian difficulties
The problems in the market for European hardwood are evident in the Yugoslavian sawmilling sector. Log harvesting by the state forest company is down around 20% this year, due partly to restructuring and slow market demand. Yugoslavian hardwood log and lumber sales were down last year and this trend has continued into 2002. Page 12

Brazilian downturn
A severe economic slowdown is likely to create uncertainty in the Brazilian domestic wood market, which absorbs around 90% of total Brazilian hardwood production. During the second half of this year, more Brazilian hardwood products (non mahogany) may be diverted for export, particularly as further devaluation of the real should ensure competitive pricing. Page 14

Convoluted certification
The forest certification debate becomes more convoluted every day. To help clarify the situation, we provide a brief summary of current trends. The 3 major forest certification schemes - PEFC, FSC, and SFI - have certified respectively 43 million hectares, 28 million hectares and 24 million hectares. PEFC is now extending outside it’s European homeland. FSC is taking various steps to make the scheme more accessible to forest owners. There is also growing interest in alternative, potentially lower cost certification schemes that verify legal compliance rather than full sustainability. Page 9




African log prices hold firm
Despite slow buying in Europe, African log prices have held firm over the summer months. Log supplies in Africa are tight and international prices have been boosted by Indonesia’s introduction of a permanent log export ban. China is also playing an important role in maintaining African log prices. According to ITTO, exports of African hardwood logs to China have risen 10% in volume terms over the past two months and are expected to continue to rise. Page 3

African sawn availability tight
European demand for African hardwood sawn lumber during the summer months has been slow, even for the time of year, due to continuing economic uncertainty. However there has been increased interest in African sawn lumber in Far Eastern markets. Forward availability is restricted with long lead times on contracts. Prices have been generally stable with some firming in price for several species including iroko, sipo, and framire. Page 3

Meranti prices rising again
Restricted supplies and rising log costs have encouraged Malaysian shippers to continue to raise forward prices over the summer months, although underlying demand from European importers has remained subdued. Meranti is currently being shipped out of Malaysia on contracts agreed at lower prices several months ago and some European trading companies are now offering meranti on the ground in Europe at levels reflecting these lower prices rather than at replacement prices. Page 4

Teak board prices on the up
Despite slow international demand for teak, export prices for teak boards from Myanmar have tended to rise over recent months. Various factors have contributed including efforts to crack-down on illegal logging and market distortions caused by the Myanmar export quota system. Page 4

S.E. Asian logging activity increases
There are reports of increased logging activity in parts of Malaysia and Indonesia over recent weeks, but overall harvest levels are well down on previous years. Supply shortages coupled with the export ban on Indonesian logs have contributed to continuing increases in Asian hardwood log prices. Page 4

Strong rise in China’s imports
China’s imports of logs and lumber have been rising strongly during 2002. Underlying wood consumption in China is forecast to continue to increase, but there are signs of overheating in the import trade. Page 5

German logging levels fall
The volume of high quality logs offered for sale in Germany during the 2001/2002 winter season reached 117,000 m3, down 10% on the previous year. The lower volumes reflected weak demand from the European sawmilling and veneering sector and reduced interest from Chinese importers. Volumes offered for sale in the next winter season are likely to remain at the same subdued levels. Page 5

U.S. recovery looks shakey
In recent weeks the economic recovery in the United States has begun to look shakey. The uncertain economic outlook has contributed to an air of caution in the U.S. hardwood trade. Many companies are keeping inventory levels tight and focusing on maintaining cash flow. Nevertheless, there is still optimism about market prospects in the fall mainly because of the continuing strength of the housing sector. Page 6

U.S. hardwood inventories fall
Due to weather related restrictions on production, and voluntary cut-backs in the face of slow demand, American hardwood lumber inventories have been tightening and are lower than normal for this time of year. Page 6

U.S. export volumes increase
Overall U.S. export volumes of logs, lumber and veneer increased marginally during the first half of 2002 compared to the same period the previous year. Strong growth in the Chinese and South East Asian markets compensated for declining demand in the EU, Japan and Mexico. However overall export value declined slightly. Page 6/7

Mahogany supply problems
The ban on the mahogany trade implemented by the Brazilian government last year has created severe supply problems. In August , U.S. mahogany importers were disappointed by a U.S. court decision to deny their request for the immediate release of around 1800 m3 of mahogany impounded at U.S. ports. The shortage of South American mahogany has kept prices firm in the U.S. Brazilian President Cardoso is likely to sign a decree authorizing the auction of timber seized by IBAMA in recent operations in Amazonia. Page 8

Temperate hardwood reversal
The annual UN-ECE Review of the temperate hardwood trade highlights that after a vintage year in 2000 the market suffered a reversal beginning in the second quarter of 2001 and intensifying throughout last year. The review notes that 2002 is a year of mixed signals for hardwood consumption both on the North American continent and across Europe, in which the dynamics of supply and demand are changing and the prospects for the future unclear. Page 8/9

Veneer in focus
The European veneer industry comes into focus in September as the German veneer industry’s association (VDF) meets in Berlin for its “European veneer convention” , which will be held against a background of widespread veneer mill closures in Western Europe. At the same time veneer production capacity is tending to rise in Eastern Europe. Page 1/11. Editorial page 2




African balance maintained
The fine balance that has characterised the African hardwood trade for many months, between restricted supplies and slow demand, continues. Despite rapid price rises for comparable Asian hardwood species during the summer months, African log and lumber prices have remained stable. Page 3

Asia-Europe container rate rise boosts meranti CIF prices
After the significant price gains during the summer months due to log supply shortages, underlying FOB prices for Malaysian sawn lumber stabilised during September. However CIF prices to Europe have continued to increase due to rises in container rates. Forward demand for Malaysian sawn lumber remains very slow in Europe. Page 5

Chinese furniture exports up 33%
Chinese Customs reports that in the first half of 2002, the total value of furniture exports from mainland China totaled US$ 2.65 billion, a year-on-year increase of about 33%. Page 6

SE Asian log production recovers
Log production in Sarawak is gradually recovering as weather conditions have improved. However availability of South East Asian logs is still restricted and there are continuing reports of FOB price increases for certain species. Pages 5-6

Indonesian exports to fall again
In addition to the log export ban introduced in October last year, the Indonesian government is now planning measures to restrict production and exports of other wood products. During 2003 total exports of all wood products is likely to be restricted to only 6.48 million m3. Page 6

Brazilian currency at all time low
Brazil’s currency fell to an all time low in the last week of September due to worries over the outcome of the Presidential election in October. Brazilian domestic demand for wood products has weakened. However lower international prices for these products has helped boost exports. Page 5

Bolivian exports down….
A focus on supply of certified products has failed to stem a decline in Bolivian forest product exports. During 2001, exports reached 68,800 m3 valued at US$ 85.9 million, down 8% and 28% respectively compared to the previous year. Page 6

….Peruvian exports up
In the first quarter of 2002, Peruvian timber exports totalled US$55 million compared to US$38 million in the same period of 2001, an increase of 58%. The rise reflects the restrictions on mahogany supplies from Brazil and Bolivia, which have led U.S. importers to focus more attention on Peru. Efforts by Peruvian exporters to expand sales of hardwood products in the Far East are also beginning to pay off. Page 7

U.S. domestic sales growth
Dynamic consumer spending coupled with strong residential construction have combined to fuel growth in domestic hardwood sales. In fact, the performance by several key hardwood market sectors has far exceeded that of the economy, with some expanding at a nearly double-digit rate. But some economists are fearful that American consumers are overstretched and that the U.S. may be entering a long period of slow growth. Page 7

Americans disappointed in Europe
As usual there has been a seasonal increase in European demand for American hardwoods following the summer vacation period. Some U.S. exporters report that they have reasonable order files for shipments during October. However the overall level of European trade remains disappointing. Demand for American hardwoods in the Far East, notably China, has been good. But there is growing competition for sales, not just from other North American suppliers, but also from producers in other parts of the world. Page 8

Hardwood plywood price rises
Prices for Indonesian plywood now stand at between 10 to 15% below the INDO96 list price, up from levels of 30-35% below the list price that prevailed just a few months ago. Brazilian plywood prices have also followed the upward trend. Price increases have been driven by log shortages in the Far East and by the weakening of the dollar against the Indonesian rupiah which undermined the earning capacity of Indonesian mills in their local currency. Page 9

German veneer industry subdued
The German veneer industry met in Berlin in September in an atmosphere that was best described as subdued. Not only is the German influence in sliced hardwood veneer production reducing, but prospects for a return to German dominance may well not return easily. Page 8

EU imports well down
EU import data is very consistent in reporting a very slow start to the year in all eight of the EU’s largest hardwood importing countries. Only two hardwood products made any ground; European sawn oak lumber and tropical veneer. Pages 9-13

Insolvencies in Western European hardwood sector
The critically weak state of the market for European hardwoods has led to a wave of insolvencies in Germany and France over recent months. Companies which focused heavily on the supply of beech logs and lumber to China have been particularly hard hit. Page 14

Eastward shift in demand
The UN/ECE Timber Committee concluded during September that sawn lumber markets peaked in 2000 in temperate regions. Since then, hardwood consumption has been falling in Western Europe and North America. Hardwood markets in central and eastern Europe generally offer more optimistic forecasts for 2002 and 2003, albeit on smaller volumes. Page 1-2




African balance maintained
European demand for African sawn lumber is subdued overall. However this is balanced by the low level of supply and prices are generally stable. Political problems in the Ivory Coast are creating uncertainty over future supplies of several African lumber species important to European markets including iroko and framire. Pages 3-4

Okoume log price rises
Chinese demand for okoume logs from Gabon is good. Financial problems at SNBG, the Gabon state log marketing association, have placed limits on log production in Gabon. These two factors have contributed to price rises for okoume logs. Page 3

Meranti prices reach a plateau
After progressive price rises between April and August this year, FOB prices for Malaysian sawn lumber have stabilized at the higher level. However few European importers seem interested in signing forward contracts due to continuing economic uncertainty and a general shift to just-intime ordering. Page 4

Plywood prices hold steady
Indonesian plywood prices are currently holding at around INDO96 less 12 to 15%. Brazilian hardwood plywood prices have also remained stable over recent weeks at these higher levels. Indonesian, Brazilian and European plywood producers are concerned at the level of market penetration by Chinese tropical plywood. Page 4

Mahogany trade stalled
The Brazilian mahogany trade has been stalled during the current Brazilian dry season with only one company exporting small volumes of veneer. Peru is now the only significant supplier of Brazilian mahogany lumber to international markets. Exports of mahogany from Peru have risen this year with most destined for the United States. The leading species exported from Brazil in lumber form are now jatoba and tauri. Demand for jatoba is good in the U.S. Demand for tauri from the French joinery sector is subdued but supplies are in balance with demand. Page 5

Mahogany considered by CITES
“Big-leafed” mahogany is again up for discussion for listing under Appendix II of the Convention on International Trade in Endangered Species (CITES). The proposed listing will be considered by CITES signatory states at their meeting in Santiago, Chile in November. Page 5

Beech still in the doldrums
Global demand for beech remains confined. Despite falling European production, stocks are being decreased only slowly, particularly of medium quality steamed beech. Page 10

Oak market mixed
The European market for oak sawn lumber has become increasingly competitive over recent months. Failures in the beech market have led many Western European mills formerly focused on beech to switch to oak. Due to inexperience, a significant proportion of this new oak production has been relatively low quality. Prices for medium and lower grade of European oak have therefore been under pressure. In contrast, demand for good quality European oak lumber remains good and prices are steady. Page 10

American oak vs. European oak
There is likely to be a protracted period of intensifying competition between Eastern European and North American suppliers of oak to the EU market over the next few years. This was the main conclusion of a meeting of the London Hardwood Club following a discussion introduced by the Editor of hardwoodmarkets.com. The relative merits of Eastern European and American white oak were compared. Eastern European suppliers can provide an exceptionally high quality product. However ordering times are still lengthy and availability of the best quality stock is very limited. Page 10-11

AHEC celebrates 10 years
One hundred and seventy delegates in Lisbon attended AHEC’s tenth European Convention during October. Highlights include:

  • a session devoted to reports by the Western European manufacturing sector. These demonstrated the intense competitive pressure this sector is now under, particularly from Eastern Europe. This pressure has been bad news for hardwood suppliers. Efforts by manufacturers to cut costs are leading to increased use of cheap substitute materials, both wood and non-wood. Page 1,8
  • Eric Lacey, AHEC Chairman, provided a sobering account of problems in the U.S. hardwood lumber industry, noting that production fell as much as 30% between 1999 and 2001 from around 14.5 billion board feet to 10.5 billion board feet. Lacey suggested that current trends towards tightening margins in the sector would intensify. Page 6
  • European country break-out discussions which suggested that overall EU stock levels of American hardwoods are low, that the market in most EU countries has switched to just in time, and that many importers have adopted a wait-and-see approach during a period of economic uncertainty. The weaker dollar this year has failed to give much of an impetus to European buying of American hardwood. Page 6
  • a presentation by the AHEC Executive Director on the organisations global marketing strategy which emphasised the need for marketing initiatives to be tailored to local conditions and adaptive to rapid changes in demand. Page 8-9
  • a presentation by AHEC consultant Michael Buckley on the theme “Global forces on European hardwood markets” highlighting that the main opportunity for hardwoods in major western European markets lies in influencing architects. Page 9




Changing direction of African trade
The value of European imports of African tropical logs and sawn lumber was down 19% and 8% respectively during the first half of 2002 compared to the same period last year. Nevertheless, slow European demand did not lead to a fall in prices which have remained generally stable this year. The weak European market was compensated by reasonable Asian demand and by a decline in the availability of African wood. Page 3

Slow European consumption of African sawn lumber
European markets for African logs and lumber picked up slightly in October in order to replenish depleted stocks, but underlying consumption is still slow hindering exporters efforts to raise prices. Chinese demand for okoume logs remained good, but there may be a seasonal slowdown as importers seek to avoid arrivals over Chinese New Year. Limited log production in Gabon has contributed to firm prices for okoume logs. Pages 3-4

Emerging consensus on tropical forestry
Even the renewed presence of environmental groups at the recent ITTO meeting in Japan failed to generate controversy, an indication of the emerging international consensus on tropical forests. Greater priority is now attached to tackling illegal logging. There is also growing recognition of the need for a phased approach to forest certification in the tropics. Page 4

Meranti market finely balanced
Forward prices of Malaysian sawn lumber prices have generally remained stable over recent weeks, balanced between limited supplies and slow demand. Availability may become tighter over coming weeks due to deteriorating weather conditions in Malaysia and the series of holidays in the Far East. There is also little prospect for a rapid upturn in demand. Page 5

No end to Chinese boom…
Chinese log and lumber imports were up 57% and 46% respectively during the first 8 months of 2002, driven mainly by rising domestic demand. Meanwhile plywood and veneer imports continue to decline as Chinese domestic processing capacity has increased. Page 5

… nor to Japan’s woes
Japanese imports of tropical logs and lumber were down 17% and 14% respectively during the first 8 months of this year. A wide range of factors have contributed including weak underlying consumption of Japanese plywood, rising competition from Chinese manufacturers, and falling availability of good quality logs and lumber from the Far East. Page 6

Report on Brazilian forestry
ITTO has just published the report of an expert mission looking at progress towards sustainable forest management in Brazil. It highlights the need for radical changes in the Amazonian tropical hardwood sector if is to become a major player on the international scene. It also suggests that levels of illegal logging have fallen sharply in Brazil over recent years. However the Amazon is now under greater threat from legalised forest clearance for agriculture. Pages 6-7

Rising concern about green lumber shortage in the U.S.
The U.S. economy continues to look shaky. However American domestic demand for hardwood, particularly lower grades, continues to be bouyed by good residential construction activity. But concerns are rising over tightening availability of American hardwood logs and green lumber, which may signal future shortfalls in kiln lumber supplies. Page 7

Competitive U.S. export markets
American hardwood export markets remain intensely competitive, with many exporters citing dull European demand and increased usage of European hardwoods as a major factor driving competition. However, overall American hardwood export volumes have been rising this year, a trend driven by rising demand in China and SE Asia. Page 8

Depression in Western European hardwood market
Market conditions for Western European hardwood lumber are very poor. The beech market continues to be affected by overstocking and poor prices. Even the Western European oak market, which has proved more resilient to the downturn, is showing signs of weakness. A sharp downturn in harvesting of good quality hardwood logs this year may contribute to greater stability at the higher value end of the market. However markets for lower grade Western European hardwood may remain vulnerable. Market conditions for Eastern European suppliers are generally more favourable, particularly for high grade oak from Croatia and Slovenia. Page 9

Flawed European approach to illegal logging
European policy makers have been busy drawing up action programs and public procurement policies to tackle illegal logging. Existing draft policies place great emphasis on trade measures, particularly on independent assessment of chain of custody. This response seems to reflect a simplistic view of the illegal logging issue and lack of appreciation of the complexities of the international wood trade. Our Editorial argues that a more appropriate response would be to attach greater prioirty to capacity building in producer countries where illegal logging is a significant problem. European trading companies should be encouraged to adopt a corporate code of practice on environmental timber procurement.
Lead article: Pages 1, 10-11
Editorial: Page 3



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