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Report
from
Europe, the UK
and
Russia
No upturn yet in European forward demand
Reports from across the continent suggest very low levels
of consumption and forward purchasing activity. While
there have been moves by importers in some countries to
fill gaps in stocks, orders tend to focus on specialty
products and dimensions and volumes are generally low.
Existing landed stocks of mainstream items such as sapele
are still described as relatively high compared to the low
volume of consumption. Meanwhile there is intense
competition between importers for orders. End-users are
working on very low inventories and tend only to place
orders if they can be assured that products are already in
stock.
However, there is general awareness in the European
import sector that supplies in the major tropical producing
regions are now restricted due to very low levels of
logging activity this year and following widespread mill
closures. With respect to African sawn lumber, importers
report that delivery times to Europe now extend up to 5
months. Forward prices for key species of tropical
hardwood on offer to European buyers have remained
relatively stable over recent months, but the expectation
amongst European agents is that due to the extremely low
levels of production, prices would rise very quickly in the
event of any significant upsurge in demand.
French hardwood import levels show significant downturn
Of all European countries, only France has so far
published import trade data for the first quarter of 2009. A
preliminary analysis of this data indicates a very
significant downturn in the level of hardwood sawn
lumber imports this year. The analysis suggests that
overall French hardwood lumber imports reached only
121,000 m³ in the first 3 months of 2009, a figure which
compares to 159,000 m³ in the first 3 months of 2008 and
over 300,000 m³ in the same period of 2007. At the same
time, there have been large shifts in the source of tropical
sawn lumber imported into France this year. While direct
imports from Cameroon increased from around 17,000 m³
in the first quarter of 2008 to 21,000 m³ in the first quarter
of this year, direct imports from Brazil declined from
49,000 m³ to only 18,000 m³ during the same period.
Direct imports from Malaysia, Ghana and Côte d¡¯Ivoire
were also well down on last year¡¯s figures.
On the other hand, there appears to have been a very
strong increase in the level of indirect imports of tropical
sawn wood into France from the Netherlands and
Germany. French imports of tropical sawn lumber from
the Netherlands reached 25,000 m³ and from Germany
reached 3,000 m³ in the first quarter of 2009, up from
negligible levels in the same period last year. Such a shift
might be explained by the strong focus on just-in-time
ordering, which has encouraged a partial switch away
from the forward market in favor of heavier reliance on
large stockists in neighboring European countries.
Belgian, Dutch and UK importers see mixed fortunes
The very large European importers in the Benelux
countries and the UK have been very heavily exposed to
the downturn due to a business strategy that depends on
large stock holdings to iron out problems for
manufacturers and merchants associated with long lead
times in the hardwood import sector. The fact that these
companies have been selling off existing stocks of
standard items such as sapele at below replacement cost
has been a major factor deterring any significant increase
in forward demand during recent months.
But while these importers with large stock holdings are
heavily exposed to financial risk during the recession, the
recent very strong focus on just-in-time ordering among
manufacturers and builders merchants has also given them
an edge in the market place. Several of these companies
interviewed in a recent feature on the Belgian and Dutch
trade in the TTJ commented that their strategy of
providing customers with a very wide range of species and
specifications for immediate delivery has brought in many
new customers.
These companies are now building on this success through
continued strategic moves into a wider range of valueadded,
further processed and non-standard items with the
objective of tailing material more tightly to customers
needs. For example, one large Dutch importer interviewed
by the TTJ noted that they are developing as much
business as possible in boules, and square-edged and nonstandard-
sizes, especially thicker material for flooring and
other interior applications. These companies also comment
that the higher-quality end of the market has been holding
up reasonably well during the recession, boosted by
reasonable activity in the renovation portion of the market
even as the new-build sector has ground to a halt.
The TTJ interviewees also note that the certified wood
section of the market has been holding up well in the
Netherlands and the UK as public sector projects have
become relatively more important during the recession and
with growing concern for sustainable construction. One
large Belgian importer noted that ¡®out of every 20
inquiries we get today, half are for FSC-certified [wood].
As a result, nearly all our tropical range is now FSC and
we¡¯re getting good volumes in certified species, such as
sipo and sapele, in both dimension and random sizes¡¯.
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