News from the UK 

There is little news from the trade at the moment as the bad weather has just about put a stop to building activity. Snow and freezing rain in Scotland and the north of England, rain in the Midland counties has slowed building work.  

Reports indicate that in the UK the manufacturing sector had a poor start to the year as guaged by the purchasing managers index which dropped to 51.8 last month down from 53.3 in December and 55 in November. The current index level is the weakest since July 2004 and was hit by a drop in new orders. Industry as a whole is experiencing rising input costs, while managing only to push through modest price increases. 

The UK trade deficit is in the news again with it narrowing slightly in Decemebr.  The deficit for 2004 came in at Sterling 57.6 billion, ten billion more than in 2003.  Uncertainty about the strength of the housing market looms as a big threat to the timber trade and the economy as a whole. The Bank of England will be considering interest rates in a few days and there is a possibility of an increase, which analysts think will be the last for a while as a general election has been called for May. 

Log Prices in the UK

  

UK Sawnwood Prices  

  

Plywood and MDF in the UK  

 

 

Report from Holland  

Everyone, wait and see 

As anticipated in the last report the past fortnight has been very quiet in the market, particularly the market for Dark Red Meranti.  

The market has been very quiet for some time but during the past two weeks it is reported by contacts in the trade that buying interest dropped even further. Traders complain that the phones and just do not ring. 

Illustrative of the slow market is that prospective buyers and end users find it difficult to take decisions, they solicit quotations, ask again, consider, reconsider and finally reach the conclusion that perhaps it is better, in these uncertain times, to postpone the purchase. This situation drives the traders to become increasingly very 'trigger happy' in their efforts to secure some business and they seem quite willing to discount prices even if not pushed to such action by the potential buyer.  

As reported earlier, landed stocks of Meranti, particularly in the most important size

3 x 5", remain high and this is prompting all out efforts to sell. The severe price erosion seen in earlier weeks has eased slightly, thanks to the improved exchange rate of the US currency. Yet pressure remains.  

The wait and see attitude in the Dutch tropical timber scene is reflective of the economic situation and consumer sentiment.  Some economic analysts say that there are signs of economic improvement but many are not convinced especially as the cost of living is getting more expensive.  

Big player in difficulty 

News that many companies are having trading difficulties and setbacks and that profits are a mere dream is heard more and more. On top of this the unemployment rate seems to be on the rise, not only in Holland but also in other European countries.  The public opinion is that a recovery is not in sight yet.   

Traders say that the timber trade seems to have stagnated as demand drifts along with negative sentiments. This situation, the constant downward pressure on prices, a building sector that performs below expectation leading to poor demand for timber and the constant erosion of margins is exacting a heavy toll on most companies.  

News suggests that one of the bigger players in the Dutch market, Pont Meyer is facing a growing trading loss.  The indications in the media are that in the fist half 2004 the company booked a trading loss of Euro 5.1 compared to 1.9 mil. in 2003. The chief executive of the company took responsibility for the loss and announced his resignation.  

The desperately slow recovery of the European economies, Holland included, has a tight grip on the timber trade and dampens sales possibilities. The economies of both France and Germany, both important markets for Holland's timber sector, are certainly less robust than hoped for.  

These two countries are crucial engines of the Euro-zone economies. This situation has meant that the European Central Bank has been reluctant to increase the interest which would have added a dose of inflation to the economies.  

Merbau offers grabbed 

In the Malaysian timber sector, which is the main supplier to Holland, all is very quiet. Since the beginning of the month producers and exporters had started to prepare for the celebration of Chinese New Year and the important Muslim holiday.  

Exporters are off until around February 17th and the sawmills will generally remain closed most of the month. As a result of this there were hardly any quotations circulating of interest to the Dutch market. Traders report that only handful of last minute offers reached them mid month but then offers faded completely.  

Fortunately, some of these offers were for Merbau in the highly demanded sizes 2.1/2 x 6 and 7/4 x 6 plus some 7/4 x 12". With the current shortages of Merbau and with the firm demand from Dutch buyers, these offers were grabbed up quickly.