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Report from
Europe
European tropical timber markets volatile in first half
of 2015
European importers are reporting satisfactory overall
demand for tropical timber in the first six months of this
year: the majority of sources said business was stable or
slightly better than last year.
However, they also noted that the market had shown sharp
fluctuations in the last few months, with periods of strong
demand frequently being followed by several rather
subdued weeks.
This is mostly believed to be due to uncertainty caused by
the economic crisis in Greece and the related weakness in
the euro. Smaller importing companies and downstream
converters have apparently scaled back their purchases
against this background, as they wanted to avoid the risk
of building uncompetitive stock.
As a result, large, well-stocked importers in several
instances noted an increasing number of last-minute
inquiries and orders ¨C and growth in their business and
market share.
In addition to exchange rates trends, freight rate
fluctuations as well as the UK elections in May were also
quoted as reasons for the patchy demand for tropical
hardwood in the first half of this year.
Key European market stable or growing
Sales of tropical hardwood in the UK market have
maintained a good level overall. However UK demand is
not quite as strong as last year when many companies
reported double-digit percentage increases in sales.
Signs of recovery in the French market have firmed during
the summer months and several companies are now
reporting significant improvements compared to last year.
The Netherlands market also continues to show signs of a
turnaround after the lengthy crisis, although market
insiders are still uncertain as to whether this is a lasting
trend. The Scandinavia and German markets are generally
described as stable at a satisfactory level.
African tropical timber a success in the EU market
Among the different producer regions, African timber has
shown the strongest demand trend in Europe over the last
few months, according to importers.
European demand for sawn sapele, iroko and sipo, for
example, has remained at a good overall level and
improved in some markets. The market for wawa was
stable until recently.
However importers are now voicing concerns that price
hikes instituted by Ghanaian suppliers in the last few
weeks could dampen demand. Prices in Ghana were raised
against the background of the strong US dollar, to which
the Ghanaian cedi is tied. This has made the old, eurobased
sales prices increasingly unattractive for Ghanaian
sawmills.
Prices for most of the other key African species for
European markets have been stable in recent weeks, after
several rounds of price hikes were pushed through last
year.
At the same time, European importers note that sawn
timber prices for species sold primarily to the USA, such
as khaya or makor¨¦, have climbed again in the last two
months, on the back of continuing strong US demand and
the strong US dollar, making them almost unaffordable for
European buyers.
According to European importers, the supply situation in
Africa is described as largely in balance with demand, in
contrast to last year when there were shortfalls in supply
for certain species and grades.
The recent slow-down in Chinese demand has meant some
improved availability of tropical timber for European
buyers. However to some extent this benefit is offset as
many European importers have now narrowed their base
of suppliers in response to EUTR. And even in a slowdown,
China still consumes a large quantity of tropical
timber.
German importers report that demand for bangkirai
decking, sawn meranti and laminated meranti scantlings
from Malaysia and Indonesia is slightly more subdued in
2015 than last year.
This is blamed mainly on the weak euro/US dollar
exchange rate. In response buyers are reported to have
switched to European domestic species, notably softwoods
such as larch and douglas fir or (in the case of window
scantlings) pine and fir.
In addition Wood Plastic Composites (WPC) continue to
gain market share in the decking sector, while plastic is
making ground in the window sector.
However, German importers note that sales of bangkirai
decking were particularly strong in the first half of 2014.
Although sales are down a bit this year, they are still
significantly higher than in 2013. The market also slowed
significantly in the second half of 2014 and no such trend
is expected this year.
The situation for sawn meranti remains more difficult than
for bangkirai, according to importers. Both wood species
lost significant market share in 2012 and 2013, due to
sharp price increases in early 2012 and long delays in
delivery of meranti scantlings and sawn meranti.
However, in contrast to bangkirai which regained some
market share last year when prices were lower, demand for
meranti has yet to recover any ground in the European
market.
European demand for sawn tropical timber from South and
Central America has been more buoyant in 2015 than last
year. Total EU imports from the region were 47,000 m3 in
the first quarter of 2015, 35% greater than the same period
in 2015.
Although Brazil still accounts for around 70% of sawn
hardwood imported into the EU from South and Central
America, there was a sharp increase in imports from
Surinam and Guyana in the first quarter of 2015.
Changes to EUTR Guidance Document
According to EU importers, one factor which continues to
create uncertainty in the European market for tropical
wood is lack of clarity on the steps required to mitigate
risk of illegality in line with the EU Timber Regulation
(EUTR).
Some market players seem unsure whether any
documentation from countries with a low score on the
Transparency International Corruption Perceptions Index
can be accepted as evidence of negligible risk under the
EUTR.
This is particularly the case in Germany where, in 2013,
the German EUTR Competent Authority seized a
shipment of wenge roundwood after concerns were raised
over the authenticity of legal documents issued by the
government of the Democratic Republic of the Congo.
In an effort to clarify the situation, the European
Commission recently updated the EUTR Guidance
Document ¨C although it has yet to publicise this on their
website.
The new guidance emphasises that operators placing
timber on the EU market must do more than merely collect
legal documents. They also have an obligation to explain
why and how each document serves to mitigate risk of
illegality.
The key change is to Chapter 4 of the Guidance Document
(Clarification of the requirement for documents indicating
compliance of timber with applicable legislation) which
states: ¡°It is important to remember that information
included in the collected documents must be verifiable. If
the information cannot be verified, the value of the
document becomes questionable and the use of the
document for risk evaluation and risk mitigation is most
likely insufficient¡±.
The new Guidance goes on: ¡°In addition it is also
necessary to take into account the risk of corruption,
where possible, specifically in relation to the forestry
sector. In cases where the risk of corruption is not
negligible even official documents issued from authorities
cannot be valued as reliable in themselves.
The higher the risk of corruption in a specific case is, the
more it is necessary to get additional evidence to mitigate
the risk of illegal timber entering the EU market.
Examples of such additional evidence may include third
party verified schemes, independent/self-conducted audits
or timber tracking technologies (e.g. with genetic markers
or stable isotopes)¡±.
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