Tag: Market Report

Supply of African tropical sawn hardwood lumber is now very tight, with lead times for new orders in Europe often extending to over 4 months. This is partly due to long term reduction in capacity as many mills were closed during the financial crises in 2008/2009. However the situation has been made worse by shorter term factors including heavy rains during 2010, on-going efforts to toughen governance and reallocate concessions in some countries, increased diversion of product to the Asian market, and the political situation in the Ivory Coast. This last factor, which has led European shipping companies to avoid calling at Ivory Coast ports, has resulted in particularly short supplies of iroko and samba sawn lumber. 

After a major downturn in 2009, the European window market stabilized at a low level in 2010. Wood’s share of the overall market continues to increase. These trends are expected to continue in 2011 due to continuing refurbishment of windows to improve energy efficiency across the EU. These are the results of a study carried out by the Fenster + Fassade trade association (VFF) with the support of Professor Dirk Hass of the Künzelsauer Institut für Marketing (KIM), which was presented at BAU 2011 in Munich.

Economic prospects are very mixed across the European continent. On the upside, business confidence has improved and economic growth in Germany and France is picking up. On the downside, economic data in most other European countries remains disappointing and inflation is rising. The latter is reducing spending power and putting pressure on central banks in the EU to raise interest rates at a time when the economic recovery still looks fragile.

Overall the year 2010 was probably a better year for the European trade in tropical hardwood than 2009, but purchasing continues at levels well below those prevailing before the recession. There is still considerable uncertainty about future prospects, with widespread concern over stubbornly high levels of unemployment, public sector spending cuts and rising taxes as European governments try to bring down national debt.

The latest EU-wide trade data indicates that imports of tropical hardwood logs into the region have continued to fall during the course of 2010 (Table 1). Overall imports during the first nine months of 2010 amounted to only 253,300 m3, that’s 22% down on the same period the previous year. The big decline in imports from Gabon following that country’s log export ban imposed from May 2010 onwards has been only partially offset by rising imports from other countries in the Congo basin.

OECD released their latest report on economic outlook across the OECD group of rich industrialised countries at a press conference in Paris on 18th November. OECD conclude that a double-dip recession is unlikely and that the economic recovery will continue. However the strength of the bounce back is now moderating and it could be several years before growth across the OECD region returns to its trend rate of about 2.5%.

Although some importers report that business in tropical hardwood sawn lumber has been reasonable during the autumn months, the signs are that demand remains subdued overall throughout Europe. Generally, buyers in the UK seem to be more upbeat about market demand than continental European buyers. Stock levels are low overall, a reflection both of the conservative buying practices of European importers and of relatively low forward availability. Delivery times for new orders for some African hardwood species now extend to five months or more.

The latest EU-wide trade data indicates that imports of hardwoods from less developed countries (LDCs), while still at historically very low levels, were showing early signs of recovery in the first half of 2010 (see Table 1). During this period, European imports of hardwood logs, sawn, plywood and veneers from LDCs totalled 1,721,000 m3, a 21% gain on the volume achieved in the first half of 2009.  Most of the gains were made in the second quarter of the year after a very slow start to 2010. Import performance also varied widely by European country. The overall result was strongly affected by big increases in imports of plywood by the UK and of eucalypt logs (destined for the paper rather than solid wood sector) by Portugal. Imports into several European countries including Spain, Greece and Denmark remained very weak.

The EU’s “Illegal Timber Law” (ITL) was formally introduced by the European Council on 11 October 2010 although with the proviso that there should be a 27 month preparatory period before the law becomes actionable (at the beginning of 2013) to firm up the regulations and to give time for development of the required procedures by the European Member States and trade.

European consumption of tropical hardwood plywood remained at low levels during the third quarter and there now seems little prospect of any significant upturn in forward buying before the end of the year.