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Report
from the UK
Dollar
Exchange Rates of 8th March 2006
EU EURO 0.839
Interest rates left unchanged amid signs of recovery
The bank interest base rates have been left unchanged again at 4.5% by the Bank of England¡¯s monetary committee. A steady inflation rate and signs of a gradual recovery in the housing market are believed to be behind the decision. It was the seventh month that the rates have remained unchanged. The UK is nearing the Annual Government Budget, with business pushing for a reduction in stealth taxes and regulations which they say are reducing their competitiveness in world markets. The
UK¡¯s global trade deficit in goods narrowed in January, but a smaller surplus in services left the overall deficit the same as December at ¡ê3.8 billion.
Furniture sector hit by declining profits
Furniture group MFI has revealed plans to cut 1,500 jobs as part of a restructuring process to revive the flagging business. The group is to reduce UK manufacturing by 40% and close at least 11 stores and its sofa workshop business. The new MFI¡¯s Chief Executive reported underlying loses of ¡ê600,000 in 2005, as opposed to profits in 2004. Builder¡¯s merchant Travis Perkins has announced flat profits despite a large rise in sales following its purchase of the DIY chain Wickes. The
group was hit by a sharp downturn in home improvements after several years of growth. UK retailers remained under pressure in February with flat sales and
rising costs according to the British Retail Consortium (BRC). Sales growth slowed to 0.9% in the December-February period. BRC said there was a continuing squeeze on consumer spending.
Mixed reports on house price movements
There seems to be some conflicting reports regarding house prices. The Nationwide Building Society says they are dropping back while the Halifax Bank of Scotland indicates a small rise and predicts further price rises this year. House builder Redrow has posted a fall in interim profits after a period of falling sales and reduced average selling prices. Redrow said consumer confidence stayed weak last autumn while the second-hand house market was slower than expected. Bovis Homes has reported a 20% fall in profits after its focus on more affordable homes. Both sale prices and margins fell. The company
expects a modest improvement in 2006, but will continue to build more small affordable houses.
*When
last available
Report
from the Netherlands
Law amended to facilitate small- building projects
The Dutch Cabinet has amended the law for clean air, clearing the way for the implementation of small building projects and industrial sites as well as the construction of driving lanes for rush hours. The law includes small building projects of up to 2,000 units and industrial sites not larger than 40 hectares. The Cabinet thinks that such small projects do not contribute significantly to air pollution originating from fine dust particles. The EU clean-air norms had halted many housing projects in the Netherlands affecting the country's inventories. The
amended law renews hope for the initiation of the second Maasvlakte (¡®Meuse-plain¡¯) near Rotterdam for the expansion of the port area, blocked in 2004 by the Council of State. Last year, the government had to suspend the construction of 149 km of extra lanes due to the fine particle dust regulation. The law will come into force once it is approved by both the Second and First Chambers. If approved, building activity is likely to step up in 2007.
Market shows signs of recovery in March
Although the building industry/joineries will not benefit yet from the amended law, some traders report that joineries have sufficient work in the pipeline from the beginning of March. The overall feeling that the economy is emerging from recession is starting to be reflected in the timber trade. Several retailers and importers are reporting busy activities and that a fair amount of business could be done in various tropical timbers. Traders are hoping for the momentum to hold during the second half of the month (and beyond) and be reflected in improved sales prices.
Strips specialists face declining supply
The ongoing critical supply situation in Brazil is putting added pressure on Asian hardwoods, particularly since the supply of dark red meranti (DRM) from East Sumatra has dwindled. Any available volume of gerutu (known also as white meranti/seraya, a substitute of Brazilian cambara) is taken up immediately regardless whether it is for random widths or fixed widths in thickness 1?and 5/4? Strips specialists, who see their Brazilian stocks declining, are now looking for Malaysian substitutes but supply from that country is also limited. Strips are not made in full log production and come as a recovery item. As the production of normal sizes is down due to lack of logs, the availability of meranti strip-sizes is restricted or
obtainable only at high prices. Furthermore, there is a growing demand for strips in Peninsular Malaysia to feed local moulding plants for the production of various glass beads, architraves, skirtings, door-sides, etc. as well as "amscants"?(laminated/finger-jointed scantlings 72x120mmx590cm) for the Dutch market.
Shopping spree sends prices to record highs
In the first half of March, more importers realized that the supply situation in Malaysia was indeed problematic. This has been particularly evident since CNF Rotterdam prices for the various meranti items continue to rise despite the no buying mood. There seems to be a growing concern that prices may go up further while the supply situation remains precarious. The fact is that log prices in Malaysia continue to rise amid growing production costs of sawmilling and kilning due to higher
diesel prices. The awareness of this situation has led to a shopping spree in the Netherlands. Several importers are
travelling to Malaysia to examine the situation more closely while a growing number of importers are making efforts to place some forward orders. Even 3x5", a size that was long out of favour, is being bought again. Popular items such as 2.1/2x6¡±, 7/4x12¡± and 4x5¡± are now sold out. Meanwhile, prices of KD DRM PHND 3x5¡± CNF Rotterdam are reaching historic highs. Some analysts forecast that these will surpass the $1,200 per ton CNF Rotterdam-mark very soon.
1
ton of 50 Cu.ft. = 1.416 m3; PHND= Pin hole no defect grade.
*Price
also for Keurhout Legal (KH-LET) certified product.
KOMO
is a quality standard for the Dutch building sector.¡¡
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