Tag: ITTO

Over the last 12 months the European Commission has been investigating the potential to introduce EU-wide legislation designed to prevent imports of illegal wood.

The latest hardwood market report from TTJ, the UK’s timber industry magazine (www.ttjonline.com) suggests that while 2007 was a year when timber supply issues came to the fore, demand-side factors might well dominate 2008. Economic uncertainty in Europe has generally led to a more cautious approach to purchasing. One UK-based agent specialising in African wood suggested that “this has been the worst start to the year for West African hardwood suppliers for a number of years…the US, European and Chinese markets have all gone cold”. It was noted that some trading companies in Africa are now heavily discounting prices of sawn lumber because of high stocks, particularly in sapele. Due to the current strength of the euro, is also encouraging reductions in euro prices. The sapele inventory both in continental Europe and the UK is regarded as ample to service existing levels of demand. Framire supplies have become easier to source as significant volumes are now being shipped against old contracts. Iroko demand remains weak in major markets of Ireland, Spain and Italy, but a reduction in production levels has helped keep prices stable. Availability of good quality wawa remains restricted. Demand for this species is quiet in the UK but there are signs of greater interest in Italy. UK demand for Malaysian meranti tembaga remains weak, foiling efforts by Malaysian mills to boost CIF prices in response to rising freight rates.

Reports from around north-western Europe suggest subdued demand for tropical hardwoods. Europe’s tropical log imports continue to decline while demand for sawn lumber in countries throughout the region – including UK, Ireland, Benelux and Germany – is described, at best, as stable. Some suggest that sales of tropical sawn lumber in the region are down on the same period last year.  Economic uncertainty is sapping confidence in future sales and encouraging importers to be cautious over restocking. Nevertheless the spring season is approaching which, with its promise of increased construction activity, may provide at least some short-term improvement in demand.

Signs are mounting that this may be a difficult year for the hardwood trade in Europe. Economic forecasts are becoming more gloomy. According to this week’s Economist journal “the facts suggest that Europe is not weathering the global financial storms well. Figures released on February 14th reveal that the euro-area economy slowed abruptly at the end of 2007. GDP rose by only 1.6% at an annual rate in the fourth quarter-stronger than in America, admittedly, but still a lot slower than before.” The Economist goes on to note that GDP growth in the two largest euro-zone economies, Germany and France, was weaker than the euro-area average. Figures for Italy are not yet out, but existing indications are that the economy may have shrunk in the last quarter of 2007.

EU imports of Chinese plywood have risen dramatically over the last 2 years, driven by highly competitive pricing. However European importers report that supply problems have been mounting and prices rising from China in recent months.

Forward demand for meranti lumber and scantlings in the Netherlands and Germany is subdued at present due to relatively high stocks, with most business now focused on higher density more durable products. Due to low levels of demand, importers report no problems in securing adequate stock despite a major reduction in production levels in the Far East.  Forward prices for South East Asian wood products offered to EU importers have stabilised in recent weeks, the current relatively low level of demand balanced by the tight supply situation.