Wood Products Prices in The UK & Holland
16-30th Sep. 2004

News from the UK 

Hardwood importers are reporting increasing difficulties in sourcing American hardwoods and this could benefit tropical suppliers.  

Oil prices have firmed again and freight rates are everyone's mind as rate increases are anticipated

Log Prices in the UK 

UK Sawnwood Prices  

Plywood and MDF in the UK  

Report from Holland  

Boost to housing  

The Ministry responsible for housing has announced that an action plan is in the making to boost the building sector.  Reports suggest that the plan is to build some 400,000 units and that old residential housing in some cities will be replaced with houses. However the current cost of a house in Holland is now much more expensive and often out of reach of first time buyers.  The question is can new buyers be found for the new houses.  

As observers say "the money can only be spent once" and with the prospect of less money in the wallet next year, it remains questionable whether people are willing to commit to new housing. Many believe that the renovation of existing homes is a better option and the outcome depends a lot on the outcome of the debate in parliament that is now in full swing.  

Sales below replacement costs 

Mirroring the current economic situation, the timber markets and especially the Meranti trade shows no movement. The optimistic view that, after the summer holidays, the market would pick up has fully disappeared. Nobody to be in the buying mood. This has brought about an enormous tension in sales prices for the most important size in Meranti i.e. 3x5".  

Although C&F Rotterdam levels, at least for Bukit PHND in 3x5", remained fairly stable during September, local suppliers are offering free delivery to end-users at price levels way below current replacement prices just to get stocks reduced and push some sales.  

This strategy, say analysts leads to the opposite effect in that the end-users get into the habit of only buying what is strictly needed immediately thereby letting the supplier bear all the stock holding costs.  At the same time the end-users push for even more price cuts and sit back and wait for further price discounts.  

There is the chance that the overseas suppliers will respond to the weak sentiment in the market and ease FOB prices, but this is difficult to predict as they are facing problems of supply of logs especially for Meranti Bukit, which is not in abundant supply in Peninsular Malaysia. On top of this with the ever-increasing oil prices, ocean freight costs may be expected to increase in weeks to come.  

Seraya market prospect 

Traders report that Seraya prices had come down but that now the C&F Rotterdam level has steadied and the trade is supporting this. However it has to be admitted that the supply situation for Seraya is much than for Meranti Bukit. If demand for Seraya from Dutch buyers remains as now it could be that some exporters would be willing to entertain price negotiations so as to keep the mills busy.  

Record breaking Merbau prices 

As the trade says, if advances need to be given to sawmillers for future supplies of such as Merbau or Nemesu, which are clearly in short supply at ever increasing prices, then the importer must generated some cash by quick sales. This scenario is not yet being played out but there is a chance that this may happen. 

Merbau remains very difficult to secure and log prices are rise to record breaking levels. On the supply side only small volumes are being offered.  

The few parcels, recently offered by exporters in Peninsular Malaysia during the past fortnight, were overall snapped up quickly. The demand for Merbau in certain dimensions such as 2.1/2x6", 7/4x10", 7/4x12" is expected to remain firm over the next weeks.  

 All based on container shipment at US$1900 per G.P. 40 ft. box. Freight variation for buyers account.

Abbreviations

LM       Loyale Merchant, a grade of log parcel	Cu.m         Cubic Metre
QS        Qualite Superieure	Koku         0.278 Cu.m or 120BF
CI          Choix Industriel	FFR           French Franc
CE         Choix Economique	SQ              Sawmill Quality
CS         Choix Supplimentaire	SSQ            Select Sawmill Quality
FOB      Free-on-Board	FAS            Sawnwood Grade First and
KD        Kiln Dry	Second
AD        Air Dry	WBP           Water and Boil Proof
Boule    A Log Sawn Through and Through	MR              Moisture Resistant
the boards from one log are bundled	pc         per piece
together	ea                each
BB/CC  Grade B faced and Grade C backed	MBF           1000 Board Feet
Plywood	MDF           Medium Density Fibreboard
BF        Board Foot	F.CFA         CFA Franc
Sq.Ft     Square Foot	Price has moved up or down

Source:ITTO