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Report
from
Europe
European demand improves but still concentrated on
sapele
European demand for tropical sawn hardwood has been
firmer in 2014 than during the previous year, particularly
for sapele which is now very strongly favoured.
Demand has developed particularly well in the UK,
although there are also signs of improvement in the
Netherlands and Belgium while demand in Germany and
France is stable.
The strong demand for sapele combined with limited
supply and long lead times is also filtering through into
rising demand for alternatives, notably sipo which is also
now experiencing price rises.
Demand for framire and iroko have also improved this
year, particularly in the UK.
While the European market has improved, European
trading companies involved in direct sales to other parts of
the world, report generally stronger demand in the US and
Asia.
As a result availability of favoured species to European
buyers remains restricted. Availability of African sawn
hardwood also continues to be constrained by political
problems in Central African Republic, shipping delays at
Douala port in Cameroon, and reduced overall production
capacity following the economic crises.
Lead times for forward shipments of sapele into Europe
may be up to six months. Asian and South American sawn
hardwoods are generally more readily available with
significantly shorter lead times.
Lack of supply is not only a challenge for tropical
hardwood. European buyers are also struggling to obtain
adequate volumes of American hardwoods, particularly of
favoured species like white oak and walnut. This is due to
the combined effects of strong domestic and Asian
demand and log supply problems during the recent long
harsh winter.
This has compounded longer-term supply problems
associated with reduced production and trucking capacity
and lack of access to qualified loggers in the US.
Lack of availability of US hardwoods is providing new
opportunities for tropical woods to boost share in certain
applications, for example ayous and wawa to replace
American tulipwood in moulding applications.
German tropical timber importers concerned about
availability
The German trade journal EUWID reports rising concern
in Germany about lack of availability of tropical
hardwoods. EUWID draws on comments by Stephan
Buhrich, Chairman of Overseas Trade section of GD Holz,
at the German association‟s Trade Day held in Bremen on
21 March.
The report suggests that there has been ¡°satisfactory to
good¡± demand for wood products in Germany since the
start of 2014. However in the case of imported products
the main concern this year has been ¡°problems and
restrictions on the procurement side¡±.
Buhrich reported that ¡°supplies available to European
buyers are severely restricted, especially in Africa¡± and
that this is ¡°primarily attributable to the further increase in
buying competition from Chinese companies¡±.
Buhrich also suggested that the FLEGT programme and
EU Timber Regulation are now restricting procurement
possibilities for European companies in Africa. Buhrich
said the VPA process has contributed to further harvesting
restrictions in supplier countries while EUTR has created
uncertainty over the reliability of legality documentation
issued by some African governments.
This problem has been particularly pronounced in
Germany following the German authorities‟ seizure in
August last year of a consignment of wenge logs from the
Democratic Republic of Congo due to alleged
discrepancies in the legal documentation.
According to EUWID, this consignment has yet to be
released as the importing company is still waiting for a
document from the DRC promised in November last year
that will apparently confirm the legality of the delivery.
Buhrich said that these issues have resulted in noticeably
longer delivery times and price hikes for African
hardwood. However, Buhrich also noted that procurement
from South America is less problematic and FSC-certified
goods are available there in greater volumes.
Timber availability in Indonesia and Malaysia is also
sufficient, particularly as the Indonesian SVLK and
Malaysian MTCS/PEFC certification systems facilitate
EUTR conformance by importers.
Positive response to EUTR in the UK
While the German trade still has concerns about EUTR
implementation and the enforcement activities of the
German authorities, signs are that the UK trade is more
favourably disposed towards the legislation.
Drawing on interviews with a range of UK importers,
regulators and other interested parties, the TTJ recently
published a review of the impact of EUTR in the UK. The
TTJ Editorial concludes:
"A year on, and the UK trade seems to have measured up
well in implementing the EU Timber Regulation (EUTR).
After initial concerns over the legislation imposing new
administrative burdens, our vox pop of traders and EUTR
auditors indicates that the vast part of the industry has
managed its introduction well. Most 'operators' (firms
which first place timber on the EU market) say that they
were, in fact, already undertaking the supplier risk
assessment the Regulation requires, and it has been more
a question of aligning existing procedures.
TTJ also praises the ¡°sensitive and business savvy¡±
approach of the National Measurement Office (NMO), the
UK EUTR enforcement agency, noting that: ¡° It has not
gone in all guns blazing, with the primary goal of getting
prosecutions under its belt. It has found some companies
undertaking insufficient due diligence, but dealt with this
without dragging them to court. But its principal focus to
date has been to work closely with businesses to establish
a benchmark for illegality risk assessment due diligence,
and to build up its understanding and intelligence of the
industry".
While the editorial praises the steps taken in the UK,
traders interviewed by TTJ highlight the considerable
positive steps taken by producers to demonstrate legality.
Chris Cox of Timbmet notes that: "Indonesian and
Malaysian exporters are now mostly complying with the
Malaysian Timber Legality Assurance System and VLegal
documentation, while OLB and remaining Timber Legality
& Traceability Verification exports from Africa give some
degree of legality assurance.¡±
Even where third party verification isn‟t available, Cox
comments that existing legal documentation systems in
producer countries may be perfectly adequate: ¡°Our most
contentious imports as First Placers were from Cote
d'Ivoire. After a due diligence visit to key suppliers last
June, we concluded that the systems underpinning legality
in place were surprisingly robust.
While exports from Cote d'Ivoire are almost certainly not
sustainable at current levels, they are legal according to
current legislation. Forest legislation in Cote d'Ivoire
(over 40 years old and out of sync with reality) is under
review and the country is also now engaged with the
FLEGT process".
However another TTJ interviewee, Paul-Emmanuel Huet
of Rougier, a company which has invested heavily in FSC
certification, was disappointed that EUTR may not go far
enough. Heut comments:
"Nearly a year after the EUTR came into force our
European customers are increasingly interested in thirdparty
certified products. But despite this there are some
regrettable post-EUTR issues. Many European importers
of African timber don't yet instinctively supply third-party
certified timber, when it is available at little or no extra
cost. Due diligence without third-party certification is
often based on documents from suppliers, offering some
guarantees but covering only part of the relevant
legislation in the producing country¡±.
Huet is concerned that third party certificates like FSC
may be losing out to alternative methods of legality
verification. To offset this, he suggests FSC and similar
certificates should be recognised as guarantees of legality
in EUTR in the same way as FLEGT licences will be.
He notes ¡°instead of supplying products certified from
well-managed forests (FSC), some importers also now
lean towards legality-labelled products (OLB from Bureau
Veritas, TLTV from SGS, VLC from the Rainforest
Alliance). Such products usually meet EUTR
requirements. However, certification from well-managed
forests goes well beyond certification of legality, providing
far more guarantees on social and environmental issues
through the entire chain of custody".
The overwhelming impression from the TTJ review is that
EUTR implementation in the UK has been reasonably
straight-forward and painless due primarily to the long
history of due diligence by both UK importers and their
suppliers. However, Michael Kearney of the NMO
introduces a sting into the tail of his interview with TTJ.
He notes that "as we haven't seen any dramatic action so
far, there may be a degree of complacency building, but
we're now refocusing on high-risk areas. With the
knowledge we've gathered and the NMO's existing
enforcement expertise, we're now equipped to take on a
case and ensure an outcome which will send a strong
message that the EUTR is going to be robustly enforced."
Significant improvement in Rougier sales and
profitability
The French-owned tropical timber specialist Rougier
report a positive turnaround in business in their 2013
financial report issued in early April. Overall Rougier's
operating margin came to +3.6% of revenues in the second
half of 2013 compared to a deficit of 6.8% for the first half
of 2013.
According to Rougier, these encouraging developments
are linked to: turnaround measures implemented at
Rougier‟s operation in Gabon; gradual improvements in
logistics and industrial competitiveness at Rougier‟s
Cameroon and Congo operations; a gradual upturn in sales
volumes; the steady increase in prices; and ongoing efforts
to ensure the best geographical breakdown of sales.
Rougier suggest that the significant turnaround during
the final months of 2013 points to a better level of
business in 2014, buoyed by current improvements in the
economic environment.
Positive signs for European joinery sector at
Fensterbau
A very high turnout at Fensterbau, Europe‟s most
important show for the windows, doors and facades sector
held in Nuremburg Germany at the end of March, suggests
that the European joinery industry may be regaining some
of its former strength.
The show, which is held every two years alongside the
Holz-Handwerk wood machinery exhibition, hosted 1320
exhibitors in 17 halls and attracted over 108,000 trade
visitors, 10% more than at the previous event in 2012. The
exhibition promotes innovation in the European window
and door industry and is an important showcase for
modern high quality joinery products.
Europe‟s windows and doors sector has been transformed
in recent years through innovation to improve life-in-use
and energy efficiency. A wide range of manufacturing
types were on display including wood, aluminium, u-PVC
and combination metal-wood systems.
The vast majority of wood windows comprised engineered
and laminate materials with very little solid timber now
being used. Central European wood window
manufacturers are now willing to pay the higher prices
required for engineered wood due to the need for greater
strength and stability.
This has become increasingly important as manufacturers
now offer long-life guarantees. The strong focus on energy
efficiency also means that a large proportion of new
windows are now triple glazed.
Most of the wood on display at the show was softwood but
hardwood had an important presence for higher-end
products.
Some meranti and sapele was being used for window
frames, although manufacturers at the show suggested
there was a general trend away from tropical hardwoods
due to continuing concerns about supply and legality and
other environmental issues.
Of hardwood species, American white oak was
particularly favoured for its consistent colour and grain
and availability in longer lengths than most alternatives.
European and American hardwood suppliers are now
looking at opportunities to increase share of the windows
market by encouraging use of thermally modified species.
However use of heat-treated temperate hardwoods still
seems to be at the R&D stage in this sector and only a
small number of products were on display at the show,
mainly in European beech and poplar.
Revival of tropical hardwood market promotion in
Europe
The EU Sustainable Tropical Timber Coalition (STTC)
was launched in November last year. Since then it has
acquired new members to expand the network of private,
public and civil society players committed to promoting
European demand for certified and FLEGT licensed
timber products. It has also constituted several working
groups which are developing and coordinating a
communications and technical program.
STTC has a target to contribute to the achievement of
sustainable management of up to 10 million hectares of
tropical forest by 2015 by making the business case for
certification more attractive for concession holders.
According to STTC, the aim is "to accelerate demand for
certified or licensed timber from sustainably managed
tropical forests to the tipping point of 30% and to put a
halt to declining use of tropical timber in front-running
countries in the EU, through creating momentum in
legality and sustainability efforts."
The organisations constituting STTC are categorised into 3
groups:
"Partners" provide financial support and are
committed to engagement with participants and
contributing to working groups. Partners include:
the Netherlands Ministry of Economic Affairs;
IDH, an agency jointly funded by the Dutch,
Swiss and Danish Governments which brings
together public and private partners in pursuit of
sustainable trade; ICLEI, an association of local
government organisations promoting
sustainability; the European Timber Trade
Federation; and FSC Europe.
"Participants" are trading and procuring
organisations committed to preparing and
implementing an action plan to increase the
market share of FLEGT-licensed and sustainably
produced tropical timber. It is early days so the
list of participants is still short and narrowly
focused ¨C particularly in the Netherlands and
Spain - but it contains some big names in the
retailing and importing sectors and numbers are
rising.
"Supporters" are other organisations supporting
the objectives of STTC and that contribute
through information exchange such as ITTO,
ATIBT, and PEFC.
The European STTC now has four working groups:
"Promotion and communication" which is
tackling the decrease of tropical timber on the
European market.
"Legality and sustainability" which is considering
issues surrounding tropical forest certification
and communication about the difference between
legality and sustainability.
"Business encounters" which is organizing trade
and other business-to-business events where
buyers and suppliers can meet.
"Technical" which is considering issues such as
the introduction of Lesser Known Timber Species
(LKTS) on to the European market, life cycle
analysis, and due diligence.
Discussion at initial meetings has highlighted the need to
focus on communication of technical qualities of tropical
hardwood as well as the legality and sustainability issues.
The need to build on existing communication tools has
also been emphasised, for example the new technical
procurement guide for African species now being
developed by ATIBT and the database of lesser known
wood species (LKWS) properties and applications now
being developed by FSC in the Netherlands and Denmark.
A key principle in support of LKWS will be to encourage
procurement agencies in Europe to specify on the basis of
timber technical properties rather than known species
names.
STTC now plans to set up meetings between relevant
national government authorities in the EU to co-ordinate
efforts in support of STTC goals. Efforts are also being
made to facilitate business encounters in the most
important EU countries for tropical timber in Europe
(identified as the UK, Netherlands, Denmark, Germany,
Belgium, France, Italy, and Spain) and to adjust
communication programs depending on issues specific to
each.
Business encounters will focus first of all on a few big
events notably BAU and Interzum in Germany, Carrefour
du Bois in France and the Timber Expo in the UK. A large
general European STTC meeting is also proposed, likely
to be held in January 2015.
Focus on domestic hardwood promotion in France and
Belgium
The theme of this year's "Rencontres Fili¨¨re Bois" in the
Belgian city of Namur was the development of new sales
outlets for European hardwood products.
The conference was the ninth in a series of wood industry
networking events held in conjunction with the Bois &
Habitat trade show in March. The show itself attracted
around 20,000 visitors and 360 exhibitors including
architects, engineers, timber framed home builders and
material suppliers.
The focus on hardwood at the conference is due to the
emerging forest problem in Europe where large areas of
under-utilised hardwood forests are combined with areas
where softwood is over-utilised.
At the conference, the French Technical association FCBA
outlined a programme part-funded by the French
government to research the structural properties of French
hardwoods including oak, beech, ash, chestnut and poplar.
These species are also being tested for their performance
after thermal modification.
FCBA also reported on their participation in a wider
European programme to develop structural projects for
European hardwoods including cross-laminated timber and
hardwood glulam. Research will include tests to optimise
gluing techniques for engineered hardwood, and
examining the potential for hybrid CLT panels combining
softwood and hardwood.
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