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Report
from the UK
House prices cool but demand still strong
The recent record levels of oil prices are causing UK inflation to edge up as they hit transport costs. The UK economy grew strongly at the start of the year buoyed by a surprise expansion in manufacturing, according to the Office of National Statistics. GDP grew by 0.6%, raising the annual rate to 2.2%. However, house price growth cooled sharply in April, according to the Nationwide Building Society, though demand was still strong.
Builders merchant Travis Perkins reported that weak spending continued to hit sales at its Wickes arm despite a recent recovery in the housing market. Sales were nearly 10% lower in the last quarter compared with a year ago. They reported that Easter holiday sales were satisfactory, suggesting that market conditions could improve. Wolseley, the largest building and plumbing suppliers, continued to expand in both the US and UK, where it has acquired K&R Building Supplies and A&R
Electrical. In the meantime, GUS became another DIY hit by lower spending as sales dropped 5% in the 5 months to March. This came after B&Q reported that the home improvement market was sluggish.
House builder Persimmon has said it is confident of meeting profit targets after very satisfactory levels of sales in the last two months. It said 9,000 house units have been sold in 2006 so far. Prices continue to hold firm and a 3-4% increase is expected by the end of the year.
Report
from Netherlands
Short supply fuels bullish market for anti-skid decks
Due to the prolonged shortage of Indonesian bangkirai anti-skid decks, prices for selangan batu decks have exceeded the $1,000 per m3 CNF-Rotterdam mark. Short availability of this item and seasonal demand also contributed to the price hike. Prices for alternative species (e.g. from Africa) have risen as well. Bilinga decks are slowly reaching .700 per m3 CNF-European main port while tali decks (profiled in the Netherlands)
Meranti shortage shores up demand for substitutes
Prices for Dutch sizes of popular African species such as sipo and sapelli are improving due to growing shortage of meranti products. Even iroko, currently not in great demand by Dutch traders, has not escaped from the trend. Dutch end-users are reported to be very active, with joineries showing a filled order portfolio till beyond the holiday season in July-August. This explains the good demand enjoyed presently by timber. Similar optimistic prospects in spring 2004 and 2005 proved to
be only temporary and collapsed before the vacation period started. This year, however, the recovery in timber-consumption seems more durable and in tandem with the country¡¯s general economic situation.
Traders' phones and faxes keep ringing with constant inquiries for popular cross sections such as 3x5" and, especially, 4x5" as well as odd sizes. Requests include prompt and later deliveries of such specifications of dark red meranti (DRM) and sapelli. The awareness of limited supply in producing countries has also led to a significant improvement of the sales price. DRM PHND 3x5¡± (80x130mm) is edging rapidly towards .800 per m3. Although there is still a fair amount of African and Asian
timber in the pipeline (sailing and landed), offers from exporters continue to be limited. Non-PHND nemesu and seraya cannot be offered at the moment. With PHND DRM in good demand and yielding excellent prices, sawmillers in Peninsular Malaysia are converting whatever quantity of logs they can get into sawnwood for the Dutch market. DRM 3x5¡± and 4x5¡± continue to reach
record CNF Rotterdam prices and are expected to rise to new highs since demand is larger than supply. The low supply has affected availability of recovery items such as 2.1/2x3¡± and the various strip sizes, creating difficulties for many moulding factories as supply dries out and the cost of raw material escalates. Local factories must opt for expensive scantlings to keep machines running and
expensive scantlings to keep machines running and fulfil existing orders, but the acceptance of fresh orders is increasingly difficult.
Gerutu (white meranti) is sold out and delays in delivery seem unavoidable. Some factories are so eager to get gerutu that they are overbidding on timber meant for pending orders in order to secure fresh materials.
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