|
Report
from the UK
Danger of house prices collapse abates
The Association of Estate Agents reported that house prices overall in the UK remained firm in May, with
London and the South East leading the way. According to OECD research, the Bank of England has dramatically
reduced the dangers of a potential house market crash. This is in contrast to last year¡¯s prediction when analysts
saw the chance of house prices collapsing up to 30%. According to the Council of Mortgage Lenders (CML),
lending was 18% higher in May than in April and nearly 30% higher than in May 2005. Lending was boosted by a
strong London market and consumer confidence. The
Building Society Association and the British Bankers Association also support this trend.
The positive housing environment has prompted some
movements in the sector. Building supplies group
Wolseley has announced 7 further acquisitions at a total cost of ¡ê87 million, which is expected to boost sales by
nearly ¡ê200 million. House builder Persimmon, one of UK¡¯s largest, reported sales up 7% in the first semester
of 2006 and annual revenues of ¡ê2.4 billion. However, they expected a modest rise in prices and building costs
in the next semester.
TTF makes code of conduct a membership condition
Members of UK¡¯s Timber Trade Federation (TTF) voted to make the Responsible Purchasing Policy (RPP) a
condition of membership, reported TTJ. However, the rule will not apply until 51% of the members have signed
up voluntarily. The RPP is a code of conduct intended to help members steadily reduce the risk that illegal
products inadvertently enter the supply chain via suppliers. TTF says the resolution underscores its
commitment to fighting illegal logging and gives members the flexibility to introduce the system into their
businesses when it suits them.
TTF files trade action plan for South America
The Timber Trade Federation (TTF) revealed that it had filed a second Timber Trade Action Plan application with
the EU, informed TTJ. The Timber Trade Action Plan (TTAP) launched in October last year (see TTM 10:9) is
an industry response to the EU¡¯s Forest Law Enforcement Governance and Trade (FLEGT) Action
Plan. The second plan would cover South America, while the first plan covered Indonesia, Malaysia and parts of
Africa. TTF expected that the UK trade would soon have most of the world¡¯s tropical timber sources covered by
some form of scheme to provide support for suppliers to
reduce the risk of illegal logs entering the supply chain.
UK funds project to screen out illegal wood in China
The UK government has awarded ¡ê151,700 to a project by the Tropical Forest Trust (TFT), Timber Trade
Federation (TTF) and Global Environment Institute, an Chinese environmental NGO, to help China¡¯s timber
industry combat use of illegal wood, TTJ informed. The two-year project will help Chinese companies develop
their wood control systems in a bid to screen out potentially illegal wood used in products.
Report
from Netherlands
Supply improves moderately in Brazil
The supply situation in Brazil was improving even though it was hindered by strikes in IBAMA and
customs authorities (see Report from Brazil). Some Dutch traders reported that shipments (sapupira from
Mato Grosso) of typical Dutch sizes of non-certified timber were coming on steam again to the Netherlands.
The shipments were modest volumes of air dried materials, which means that after
discharge in Rotterdam, the timber should be put on stickers for preseasoning
after the summer holidays and then subject to kiln drying (KD) by the end of the third quarter of 2006.
Dutch KD operators reported that the inflow of fresh AD parcels of Sapele was coming down. Timber that was
ready from the kiln was readily taken up and delivered quickly to customers but lesser volume reached Dutch
seaports in AD, meaning that supply got tougher.
Market sentiment sustains optimism
Optimism in the Dutch economy continues to improve. The producer confidence rate is now at 6.4, the highest
since 2000 according to the Central Bureau of Statistics. The rating is based on three factors: estimated industrial
production over the coming three months, judgement on stocks by entrepreneurs and the estimated order
portfolios in the next quarter.
Local timber traders and retailers report that not a single
species is excluded: there is demand for practically every size and all regular commercial species irrespective
whether softwoods or hardwoods. Their clients (joineries, window-frame factories etc) have plenty of
work in hand with more in the pipeline to come. Moreover, the government¡¯s policy of stepping up
building activity points to a lively year for the timber trade. The dilemma remains with where to get supply
from. Timber from Malaysia, Netherlands¡¯ largest supplier, seems to dry out while adverse weather
conditions throughout the country prevents fresh supplies. Logging restrictions and limitations on forest
concessions in Malaysia seem to compound the problem.
Stabilization of prices imminent
FOB sawmill prices keep on rising by the day while items such as the popular Dutch size 3x5¡± are
increasingly difficult to obtain. Exporters are sold out. Due to the acute shortage, they are unable to replenish
enough to keep pace with the current demand from the Netherlands. The result is that the CNF Rotterdam level
for Malaysian hardwood has shot up tremendously. Even timber like merbau in comparatively lesser demand hikes
along with the trend. While $1,100-1,130 per ton for DRM PHND 3x5¡± CNF Rotterdam was an average price
level early this year, few are surprised by levels of $1,900 per ton CNF in late June. Nonetheless, end-users
are still willing to absorb the higher prices and the
remaining question is still that of adequate supply.
Analysts think that the market is overheated and that
sooner rather than later prices will have to stabilize, otherwise meranti could price itself out of the market.
The approaching holiday season is expected to contribute to price stabilization. Dutch businesses will close or slow
down activities between July and August. Local analysts hope that during this summer period, the supply at source
countries may recover and price levels stabilize. All eyes are on price developments till September, when business
return to full activity.
¡¡
| 
