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Report
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Europe
Tropical hardwood traders cautious as EU vacations end
As usual during Europe¡¯s lengthy summer vacation period,
there has been a slowdown in tropical hardwood trading.
Importers in many parts of Europe suggest that overall
trade during the first half of 2011, while unspectacular,
was an improvement on the same period the previous year.
However, the volumes involved were well down on levels
prevailing before the recession and there is little
expectation of any significant upturn when buyers return
at the end of August.
On-going concerns about the debt crises in the euro-zone
and government austerity measures has contributed to a
general feeling of uncertainty about the future direction of
demand and raised the spectre of volatile exchange rates.
Nor has the long-term problem of limited access to credit
amongst importers been resolved.
As a result importers remain very cautious about building
stocks. Their margins are also extremely tight and
competition for sales is intense. FOB prices for both
tropical and temperate hardwoods are relatively high
across the board as producers have cut production and face
high raw materials costs. Meanwhile customers remain
very unwilling to hold stock and there is little willingness
to buy forward.
CIF prices for African hardwood products (quoted in
euros) are generally stable. However agents supplying the
European market are hoping to push prices higher in
September and October when forward buying is expected
to pick up after the holiday lull.
Of all tropical hardwood species, sapele has become
increasingly dominant in the European joinery sector, as
supplies of alternatives have become more restricted.
There is now some prospect of improving supplies of
framire/idigbo, ayous and iroko with the improved
political situation in the Ivory Coast which has allowed a
resumption of harvesting operations and exports.
On the other hand, European manufacturers continue to
struggle to obtain supplies of more specialist products ¨C
such as afzelia/doussie, izombe, kevazingo/bubinga, and
movingui - formerly cut in Europe from Gabonese logs.
Rather poor availability and high prices are also acting as
a drag on European demand for South East Asian
hardwoods. European importers are currently buying only
smaller lots from Asian producers. South East Asian
suppliers do at least benefit from shorter lead times
compared to African species (which currently have lead
times of at least three months).
Marketing campaigns benefiting sales of treated
softwoods and temperate hardwoods
The various forms of thermally and chemically treated
softwoods and temperate hardwoods are continuing to
make inroads into markets for tropical hardwoods.
Despite relatively high prices, these products are
achieving results through investment in high profile
marketing campaigns backed by comprehensive technical
and environmental performance data.
European hardwoods competing well in the European
interiors market
On the temperate hardwood side, European hardwoods are
performing comparatively well in the European interiors
market at present, boosted by ready availability,
widespread certification, and growing interest amongst
architects in ¡°locally-produced¡± materials due to their
perceived low-carbon benefits.
Oak maintains its long-term domination of the market but
there are some signs of renewed interest in beech.
Stronger demand from UK joinery sector
According to Timber Trades Journal (TTJ), demand in the
UK joinery sector has been stable in recent months with
some reports of some improvement during the second
quarter of 2011, with window and door demand boosted
by renovation work.
Some of the large retailers have also finally got around to
redesigning store interiors after a long hiatus during the
recession, generating more demand from the shopfitting
sector.
However activity in the new build sector remains very
slow. Construction work for the 2012 Olympics has
generated much less demand than anticipated as the
original hardwood interiors specified have been downgraded
to softwood and panel products to cut construction
costs.
2011 turning out to be an excellent year for timber
decking in UK says Association
There is however some better news from the decking
sector. The TTJ quote data from the Timber Decking
Association (TDA) which indicates that in 2010 the UK
decking market recovered losses incurred during the
recession hitting an annual value of around £135 million ¨C
equivalent to its market peak in 2007.
The TDA also claim that ¡°2011 is turning out to be an
excellent year for the timber deck demonstrating that
demand for outdoor wood has held up well in the recent
uncertain economic times¡±. TDA says this is the result of
continuing low interest rates in the UK, good spring
weather, a larger number of public holidays this year, and
the ¡°improve, not move¡± trend which prevails during a
period of slow house sales.
Particularly encouraging is that, according to a leading UK
decking supplier quoted by TTJ, consumers expect
gardens to be ¡®natural¡¯ and therefore continue to give
preference to wood over alternative materials and that ¡°the
inclusion of steel or aluminium isn¡¯t widely liked¡±.
Traditional wooden designs are said to be ¡°the bestsellers
by far¡±. Clearly there continue to be good opportunities for
tropical hardwoods in this sector although, according to
TDA statistics, modified timber is making more inroads
into tropical wood¡¯s market share. In 2010, 80% of the
market comprised softwood, while 17% was hardwood
and only 3% wood plastic composite.
Falling freight rates to Europe offset plywood prices rises
While strong domestic and Japanese demand has led to
rising FOB prices for Chinese hardwood plywood grades,
the impact on prices is being offset for European buyers
by declining freight rates.
CIF Europe prices for Chinese plywood were lower at end
August than they were in May/June. On the other hand
availability is more limited and there are reports of
delayed shipments and attempts by Chinese manufacturers
to renegotiate prices agreed in existing contracts.
European importers continue to report limited availability
and firm prices of South East Asian plywood, although
there has been some easing from the intense shortages
earlier this year following the Japanese earthquake and
tsunami.
Lower freight rates are also feeding through into
marginally lower CIF Europe prices. However lead times
remain extended and there is a widespread expectation that
a surge in Japanese reconstruction activity from September
onwards will once again reduce availability for the
European market.
Competitive pressure from substitutes to tropical
hardwood plywood to continue
European trade in okoume plywood remains subdued.
Over the long term, okoume plywood has been losing
market share in Europe¡¯s large commodity markets for
raw plywood to much cheaper plywood products from
China, and to alternative wood and non-wood panel
products.
Meanwhile demand for more specialist marine grades has
shown little growth since the downturn in 2009. Although
margins are extremely tight in the sector, particularly with
the decline in availability following Gabon¡¯s log export
ban last year, producers have so far had little success in
forcing through price rises.
The competitive pressure from substitutes to tropical
hardwood plywood is expected to continue to mount in the
European market. For example, the latest issue of the UK
trade journal TTJ reports that Medite Tricoya MDF ¨C
based on acetylated wood fibre ¨C will be on sale within
months, two years earlier than expected.
The product has been developed jointly by Accys
Technologies with the Ireland-based Medite producer
Coillte Panel Products. BRE tests of the product indicate
an expected service life of 60 years in external use. Accys
is also responsible for development of Accoya acetylated
softwood.
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