Summer Slowdown – ITTO European Market Report 13th August 2009

Recent reports suggest little change in overall market sentiment in Europe. If anything demand for both tropical logs and lumber has slowed further with the onset of the summer vacation period, following on from the substantial fall in consumption across all major European markets beginning in the early part of 2008. Lack of credit insurance for many key customers of the importing sector remains a significant problem. Although many importers will still supply to customers lacking such insurance, the situation has considerably increased the financial risks associated with transactions and further deepened the trend towards smaller orders and just-in-time trading. Customer’s unwillingness to commit to purchase of larger volumes creates day-to-day uncertainty. This further discourages moves by importers to enter the forward market despite emerging signs of shortfalls in landed stocks in certain specifications and long lead times between ordering and arrival in the EU. For example, lead times of 4 to 5 months are now common for new orders from African sawmills. In current conditions of very low consumption and supply, prices for both logs and lumber on offer to European buyers are generally holding steady at relatively low levels.

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