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Report
from the UK
BoE raises interest rates to rein in inflation
The Bank of England (BoE) increased UK interest rates to a five-year high of 5%. The rise was widely expected as a
move to cool down inflation, now running at 2.4% higher than the government target figure of 2%. Analysts felt that
the BoE might be muttering a further increase in early 2007.
UK house price increases decelerate
House prices climbed 0.7% in October, which was lower than the 1.3% in the previous month. The average house
price rose to ¡ê169,623 according to the Nationwide Building Society, which indicated that the affordability of
housing for first time buyers was worsening. Halifax, the country¡¯s largest mortgage lender, reported that the annual
rate of house price inflation reached 8.6%. Nevertheless,
mortgage approvals were running at their highest level for two years, reaching 126,000 in September, above analysts¡¯
expectations. However, Halifax predicted that the market might slow down due to higher interest rates and utility
bills. House building starts were running at 29% ahead of a year ago according to TTJ statistics. The output of
builder¡¯s joinery fell 3.5% compared with last year while prices rose 2.2%.
Manufacturing and retail sales show signs of weakening
UK manufacturing growth weakened in September, sparking fears that official forecasts could be cut. Factory
output growth slowed for the first time in five months according to the Office of National Statistics. Meanwhile,
retail sales suffered their worst performance in five months according to the Confederation of British Industry
(CBI). The body said that only 38% of members reported a rise in sales compared with 42% who reported a drop. On
an optimistic note, a rise was expected in November,
which is hardly surprising due to the approaching Christmas.
Report
from Netherlands
Good prospects for Dutch market in 2006-2008
The building sector continued to perform well together with the recovering Dutch economy. Analysts estimated
that a total of 83,000 houses would be completed in 2006 while the Minister of Housing, Spatial Planning and the
Environment, Mr. Winsemius, forecast that 90.000 houses would be built in 2007 with growth in housing/building
continuing in 2008. This explained the timber traders¡¯ general good feeling about the future. The current lull in
the timber market was seen by traders more as a correction
to the overstocking of meranti sawnwood that took place during the months before September. The quiet spell in the
Dutch timber market was offset by reduced supply from Malaysia as monsoon rains
hindered log production.
Dutch retailers lure buyers with discounted DRM prices
CNF Rotterdam prices for few dark red meranti (DRM) items in Dutch sizes eased slightly in early November as
some Dutch importers stayed out of the market. The price declines were due to reductions by some Dutch retailers to
generate some business and improve cash flow while FOB
mill prices remained basically firm or were still on the rise. Prices for non-PHND Nemesu GMS and scantlings,
for instance, had never been so high. Price levels of African timber such as sapele also remained firm,
enjoying a fair demand as a substitute for the more expensive dark red
meranti.
Sapupira prices on the rise in the Netherlands
Meanwhile the situation for obtaining Brazilian sapupira remained very tight. Prices for sapupira sawnwood
continued to surge and the tendency for CNF Rotterdam prices for this and various other Brazilian species was to
increase further over the course of November. Supply bottlenecks continued to stay, caused by the rainy season
and the overhauling of timber permits, transport and tracking/tracing systems. Insiders feared that the
replacement of the existing systems with a digital system would easily take 3-4 months.
Expected hike in okoume plywood prices fizzles out
Demand for plywood was reported to be below that of earlier expectations, in parallel to the dull demand for
tropical sawnwood. An expected 9-10% increase in okoume plywood prices did not materialize probably due
to the sluggish Dutch timber market and was expected to take place on January 2007. However, stocks of okoume
veneer and peeling logs in France were reported to be low (equivalent to 5 working weeks) while factories were
fully committed to plywood production till the end of the year.
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