Month: October 2008

Widely reported measures by national government’s to bail-out failing banks, involving a massive injection of state money amounting to partial nationalisation of leading retail banks in several countries, has quelled the worst fears of European investors and depositors of an imminent and disastrous economic collapse. Steps have also been taken to kick-start national economies through a significant reduction in interest rates by several central banks including the euro area’s ECB and the Bank of England in a move co-ordinated with the American Fed. Nevertheless, economic confidence in Europe has taken a severe beating over recent weeks, a fact reflected in weakening currencies and forecasts that Europe may be facing its worst recession since the early 1990s.

The on-going financial crises across Europe and the housing market bust in several key markets including Spain and the UK have dented confidence amongst European hardwood buyers. While hardwoods remain a fashionable product in the EU, valued for their quality, aesthetic appeal and natural warmth, overall levels of consumption are falling as the market has shrunk, and as more buyers look for ways to cut costs. Trade contacts indicate that demand did not pick up in September as is usual after the summer vacation period. Meanwhile on-ground sales prices for headline tropical species such as sapele and meranti are below replacement cost as importers’ main concerns have been to off-load existing stocks and maintain cash flow rather than to consider the possibility of future short falls.