Month: May 2008

The optimist’s view of economic conditions in the EU can be summed up in a few sentences. Banks in the EU have avoided America’s subprime follies and are in better shape than their US counter-parts. Average euro-area unemployment stands at 7.1%, the lowest level in almost 20 years. The euro is resurgent and there is no sign of a recession. Manufacturers in some European countries – especially Germany – have responded to the high euro by increasing efficiency and, as a result, have managed to maintain healthy levels of exports. The European Commission plans to trim its economic forecasts later this month, but euro-area growth is likely to stay close to 2% this year.

There are some reports that interest in Chinese hardwood plywood, which now leads the UK market for this commodity, revived a little after EC formally announced it would not impose ant-dumping duties on Chinese tropical redwood-faced plywood. However, during the period of uncertainty over the future status of Chinese plywood in the EU market, a significant number of UK buyers are believed to have switched to alternative suppliers, particularly in Malaysia. It’s not certain how willing these buyers will be to return to Chinese product particularly as the price advantage that Chinese plywood has long held over Malaysian and Brazilian alternatives has narrowed slightly. This reflects strengthening of the yuan against the dollar and rising production costs in China which have been only partly offset by a recent decrease in freight rates between China and the EU. And following high-profile environmental campaigns targeting Chinese plywood (particularly faced with bintangor from PNG), UK buyers also tend to be more comfortable with the environmental credentials of Malaysian plywood over uncertified Chinese plywood. Overall, the expectation is that UK imports of Chinese plywood may already have peaked.