International Furniture Prices

15-31th October 2005

Furniture and Parts
Source:ITTO'  Tropical Timber Market Report

MALAYSIA 

Manufacturers losing their competitive edge

The exports of wooden furniture from Malaysia have experienced some shift recently. Solid-wood dining suites which used to be the strength of the furniture sector are lately facing very stiff competition from manufacturers in Vietnam and China. Local furniture manufacturers, despite utilising mainly rubberwood which is available in abundant quantities, appear to be losing their competitive edge. The high labour content in the manufacturing of these furniture categories probably accounts for the situation as Malaysia depends largely on foreign labour. 

Competing countries have labour-cost advantage over Malaysia. In addition, lower prices of sawn rubberwood exported from Thailand to Vietnam and China seems to be contributing to the situation. On the other hand, case goods furniture exports continue to grow very rapidly in Malaysia, probably boosted by an oversupply of chipboards and other panel composite products. 

BRAZIL 

Brazilian currency affecting furniture business

US Ashley, one of world’s largest furniture producers operating in the Santa Catarina State since 2000, ceased business in Brazil. Ashley’s assets and operations in the country were recently transferred to another industrial group. According to Ashley, the continuing strengthening of the Brazilian currency was one of the factors that led to the close down. In recent months, other timber companies, mostly in the solid wood products and furniture clusters focused on the export market, have laid off staff. 

Brazil may expand exports to the Middle-East

The Brazilian Furniture Industry Association (ABIMOVEL) believes that the recent participation of Brazilian officials in the trade fair for Iraq’s reconstruction will help generate more than US$1 billion of business, of which US$10 million may be accounted for by furniture. Brazilian furniture exports to Arab countries reached US$5.6 million in 2004, up seven-fold from 2003. 

In addition, the Brazilian High-End Furniture Manufacturers Association (ABIMAD) and a group of Brazilian companies are organizing an export consortium to promote exports of furniture and associated high-quality wood décor artifacts to the expanding Arab market. The target segments are mainly retailers that deal with fine décor for homes, hotels and restaurants. The consortium expects some major Arab traders interested in developing business with Brazilian companies to participate in the International Furniture Fair organized by ABIMAD early next year in Brazil.

A strategy to face Chinese competition

To face the expanding Chinese commercial competitiveness, some Brazilian industrial segments have realized the need for reorganization and the adoption of more suitable market strategies. According to CEBC (Brazil-China Entrepreneurial Committee), China will become a world industrial cluster for furniture manufactures in a near future, boosted by Scandinavian, American, Japanese and Taiwanese investments. 

CEBC believes that although China imports solid wood products from Brazil, China may soon be exporting furniture to the country. A possible strategy to reverse this scenario is for Brazilian companies to invest in China to improve competitiveness and open new markets. Negotiations between the two governments are considered essential toward reaching an agreement to limit exports from China to Brazil and seeking a win‑win situation for both countries. 

EGYPT 

Egypt’s booming furniture sector

Egypt’s furniture industry is booming despite the country having very limited forest resources.  Egypt imports virtually all its raw materials, particularly sawnwood.  According to Hardwoodmarkets, total hardwood and sawnwood imports reached 2.3 million m³ in 2004, down 10% from 2003. Sawnwood imports fell by 11% but hardwood sawnwood imports rose by 4.5%.  The rise in hardwood sawnwood imports was mainly due to expanding furniture production and exports to European and neighbouring Arab countries.  

Market analysts expect import expansion in both sawnwood and hardwood sawnwood due to a buoyant construction sector and flourishing furniture export markets. In addition, the strengthening of the Egyptian pound against the US dollar (5.8 to the US$ compared to 7 in 2004) is lowering sawnwood and veneer import prices. Temperate hardwood sawnwood comes mainly from Romania (162,000 m³, notably beech).  Small amounts of tropical sawnwood come from West and Central Africa (4,000 m³), which include khaya, sapele, teak and samba. 

Most of the Egyptian furniture is Louis XIV style due to the influence of British and French colonial rules. As the Egyptian furniture industry increases its reliance on export markets, it is expected to face a growing need for higher grade raw materials in order to meet higher export standards.

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