International Log & Sawnwood Prices

16-30th November 2005

1.  International Log Prices  

FRANCOPHONE WEST AFRICA
Iroko prices weaken again
Once again, log prices have remained largely stable through the month. Only iroko prices weakened, as foreseen, with LM, B and BC/C grades down by euro 42, 15 and 31 per m3, respectively, due to high stocks in Europe and increased supply from D.R. of Congo and Gabon. Sapele prices continued under pressure with one producer reporting accepting low price for 5,000 m3 sapele logs shipped to Spain and Portugal. Subdued consumption in these countries and steady supply of sapele logs and lumber from Northern R. of Congo and Central African Republic are keeping prices depressed.

Shippers expect weakness to develop in Azobe log prices due to high production in Gabon and current prices which are well above average levels. It is also expected that stocks in Europe will build up due to sluggish consumption in the winter season.

W.Africa log   Euro Per m3 　 LM     B     BC/C    Afromosia/Assaméla 381     351    -    Acajou/N'Gollon 206     190    -    Ayous/Obéché 206     191    145    Azobe 183     167    152    Bibolo/Dibétou 152     114    -    Movingui 190     175    152    Fromager/Ceiba 114     114    99    Iroko 247   259 228    Limba/Fraké 137     114    99    Moabi 244     221    206    Padouk 206     206    167    Sapelli 213     198    175    Sipo/Utile 274     259    229    Tali 144     130     91    Doussie 457     396    274

Concerns on the okoume market
Okoume producers in Gabon are uneasy over the state organization SNBG ceasing its selling and price setting activities as from 1 January 2006. It is felt this might well lead to major buyers playing off one shipper against another, resulting in an overall much weaker and more volatile market. Meanwhile, okoume log prices from R. of Congo are between 5 and 10% higher than those from Gabon, though this may be due to larger average diameters.

Demand from China and India remains strong while stocks of okoume logs ready for shipment at port in Gabon are only 25% of normal stock levels. This is partly due to the recent heavy rains that have caused rail and road transport disruptions in the region.

MALAYSIA   
Monsoon rains affecting log supply and prices
The current wet spell continued to be experienced in most parts of Peninsular Malaysia, particularly in the log producing states. Floodwaters have forced major road closures while some towns prepare for evacuation. The rains are putting pressure on the log supply situation result ing in a tight supply of sawnwood as well as chips to the various processing  industries. As a result, sawmills are quoting high prices on various sawnwood species for the export market. In addition, panel industries, particularly the chipboard industry, are also quoting higher prices for the current deliveries of chipboards. 

Some public-listed timber companies have taken the opportunity to announce conclusion of major contracts to supply American buyers for the post-hurricane season reconstruction efforts.

Interest rate hike expected soon
A rise in interest rates by the Malaysian central bank, Bank Negara, was set to take place at the end of November, as recent statements by the bank’s governor indicated that conditions for a rate hike were falling into place. This marks a departure from the bank’s policy and would end a long cycle of monetary easing which began seven years ago. Rising inflationary pressure, capital outflow and widening US-Malaysia interest rate differential are among the factors prompting the central bank to prepare the market for a shift in its monetary policy. Some economists are predicting a 25 basis points increase in the bank’s overnight rate, currently standing at 2.7%. Some analysts do not rule out a further rate increase in the first half of 2006.

MYANMAR   
Bullish market for some log species 
The log market remains firm for pyinkado with demand greater than what suppliers can offer. In contrast, gurjan (keruing) market continues sluggish. The demand for gurjan is so weak that some traders are having difficulties to sell even at MTE list prices. Gurjan is not as durable as teak or pyinkado and sellers would rather sell below the Myanmar Timber Enterprise (MTE) prices than risk quality deterioration due to prolonged storage.

The taukkyant market is upbeat while log production is steady. There is also firm demand for species such hnaw (Adina cordifolia ), kaunghmu (Anisoptera scaphula) and sagawa (Michelia champaca) but production of these species is limited. MTE has been increasing prices la tely and more price increases are likely due to the bullish market.

The teak log market remains firm. The teak tender sale was scheduled on 28 November but tender and sealed tender prices will be published after sales are confirmed. In contrast, the sawn teak market is subdued as compared with previous months. Local millers report that they need more orders from abroad to recoup after MTE’s log price increases. Some millers complain they need higher grade logs to cut deckings and boards required by European buyers. Some traders speculate the market is slightly slack due to the Christmas season. The sawn timber is usually more fluctuating than the log market.

Teak Logs, FOB Euro Avg per Hoppus Ton (traded volume) Veneer Quality September - October  2nd Quality 3866           3963 　 (8 tons)              (4 tons)  3nd Quality 3886           3529 　 (7 tons)              (9 tons)  4nd Quality 3256           3218 　 (49 tons)              (52 tons) Sawing Quality    Grade 1 (SG-1) 1559           1514 　 (100 tons)              (115 tons)  Grade 2 (SG-2) 1558           1545 　 (232 tons)              (285 tons)  Grade 3 (SG-3) 1030            　 (49 tons)               Grade 4 (SG-4) 1156           1135 　 (770 tons)              (700 tons)  Assorted 901             862 　 (406 tons)          (668tons)             Domestic 731           712 　 (904 tons)              (316 tons)

Hoppus ton = 1.8 m3; All grades, except SG-3, assorted and
domestic, are length 8’ x girth 5’ and up. SG-3 is girth 4’ and up
while assorted and domestic are girth 4’ and up. SG-3 grade is
higher than SG-4, but smaller in girth so prices are usually lower.

The table below shows MTE listed prices for other important hardwood species. Prices vary according to production area. The availability of pyinkado and kanyin was rated as “abundant”.

PAPUA NEW GUINEA

 Log exports reach 1.65 million m3
Log exports from PNG amounted to 160,002 m3 (US$9.85 million) in September, bringing log exports to 1.65 million m3 (US$99.8 million) in the first three quarters of 2005. Saw and veneer grades accounted for 84% of the log exports. In plantation species, kamarere remains the main export species primarily to the markets of China, Japan, Korea and Vietnam.

2. Domestic Log Prices

GHANA 

 PENINSULAR MALAYSIA 
Funds for 40,000 hectares of forest plantations
The Malaysian Treasury has approved the allocation of RM200 million fund for the investment of forest plantation programme in 2006, said Minister of Plantation Industries and Commodities, Mr. Chin. He said that the fund could accommodate the investment of about 40,000 hectares of forest plantation. He said that if the programme was successful, the Ministry would request for additional funds in 2007 and beyond for the expansion of the country’s forest plantations.

INDONESIA  

BRAZIL   

3. International Sawnwood Prices

FRANCOPHONE WEST AFRICA  
Mixed trends in sawnwood prices
There were some changes in sawnwood prices resulting from variations in supply and demand for particular species rather than any change in overall market trend. Surprisingly, prices for khaya mahogany remained unchanged, not following the steady rise in meranti prices.

Prices for sipo/utile GMS increased by ?61 per m3 between August and November while prices for doussie, a favourite in France, went up by ?140 per m3 for GMS and ?120 per m3 for scantlings. Iroko sawnwood prices weakened by euro122 per m3 for GMS, euro61 per m3 for scantlings and euro103 per m3 for flooring strips. Although sapele prices have been comparatively weaker, only GMS for Spain fell euro31 per m3 while sapele scantlings remained unchanged. Moabi and framire GMS also declined between euro20-30 per m3. Prices for okoume lumber showed mix results. GMS grades surged euro5 per m3 while standard and better grades for Italy fell euro10 per m3 due to low demand in a very dull market.

European markets are rather subdued and likely to remain dull through to the New Year. This situation is to some extent balanced by strong interest from South Africa and steady buying by China and India.

GHANA 

Timber exports keep growing in 2005
According to the Timber Industry Development Division (TIDD) of the Forestry Commission, export of wood products reached euro138 million (352,167 m3) in the first three quarters of 2005. This corresponds to 7.9% and 3% increments in value and volume, respectively, compared with the same period last year.

Ghana’s timber exports Jan-Sep 2005 (% change)
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Category         ‘000 m3       (mil) %     vol. %     val.
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Lumber (KD)    92.70          35.88         6.5         12.3
Lumber (AD)    98.56          32.79         43.8       53.1
Veneers
  Sliced               27.44         22.26          -3.8      -2.1
  Rotary              49.01         11.24          1.9        5.4
  Curls               0.21                 2          3.61      62.9

Furniture Parts 1.60          3.21         -21.2      -24.8
Mouldings       26.04        10.52         -19.4       -19.6
Others             15.24           9.02         -6.7          4.7
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Total                352.17       137.98
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Of this total, secondary processed wood products (furniture parts, mouldings, parquet, etc.) accounted for euro17.9 million, down 14% from the same period last year, while primary products (lumber, veneer,plywood, etc.) accounted for ?120 million, up 12.3% from 2004. KD and AD lumber accounted for almost half of the total export volume in Jan-Sep 2005. Compared with the same period in 2004, these products registered volume increases of 6.5% and 44%, and value increases of 12.3% and 53%, respectively.

Ghana’s main trading partners

The EU remains Ghana’s major trading partner,accounting for euro74.9 million (172,220 m3) over the January-September 2005 period. This trade is equivalent to 54% in value and 49% in volume of Ghana’s wood exports during the period. Key markets include Italy, France, Germany, the UK, Belgium, Spain, Ireland and the Netherlands.

The USA accounted for 15% of the total export value and volume in the first three quarters of 2005 as compared with 13.6% and 16.4%, respectively, in the same period in 2004. This market has maintained its dominance as the most lucrative destination for Ghana’s plywood, lumber (KD) and rotary veneer exports. The ECOWAS countries (Senegal, Nigeria Gambia, Burkina Faso, Sierra Leone and Togo) accounted for 64% of Africa’s euro14 million wood imports from Ghana during the period under review. Plywood and AD lumber continue to draw interest in the Senegalese and Nigerian markets. Asian and Far East countries (India, Malaysia, Taiwan, China, Singapore, Thailand and the Philippines) accounted for euro 21.7 million (15.9%) of the total value of wood exports in Jan-Sep 2005. India remains the leading importer of Ghana’s teak AD lumber. Middle East countries (Saudi Arabia, Lebanon, UAE and Israel) accounted for euro5.2 million (3.8%) of the total export value in the period.

MALAYSIA 

BRAZIL  

 PERU 

EU receives report on mahogany

During the 34th meeting of the European Commission Scientific Review Group, held in October in Brussels, Peru presented a report on mahogany, describing the advances of efforts by Peruvian authorities and the private sector in order to determine the population of mahogany and control the trade and repopulation of the species. 

Margarita Clemente, president of the Fauna Committee of CITES and member of the Scientific Review Group, trusted that Peru would become an exemplary country in terms of management and good practices on mahogany. The Group is following up the policies and actions of the Peruvian Government regarding the sustainable management and export of the species. Peru invited authorities of the European Commission and the Scientific Review Group to visit the country in April 2006 and verify in situ the advances on mahogany sustainable management.

4. Domestic Sawnwood Prices

GHANA 

MALAYSIA 

INDONESIA

Sawn timber, ex-mill; Domestic construction material

BRAZIL 

PERU 

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