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Report
from the UK
Chinese products devalue UK plywood market
Plywood was in short supply in the UK, except Chinese plywood which was undergoing a temporary oversupply in
the market, according to TTJ. Reports suggested Chinese plywood (mainly poplar) was being offered at below
replacement costs, partly due to the presence of many suppliers. Chinese producers continued to increase their
share of the UK market in the first eight months of this year, according to timbertrends. UK plywood imports
from China jumped 52% to 165,200 m3 in the period,
those from Malaysia rose 12% to 111,500 m3, while those from Brazil and Indonesia fell drastically. Plywood
imports from Brazil dropped 14.5% to 85,900 m3 while those from Indonesia more than halved to 27,500 m3.
Some traders said that the over-supply of Chinese plywood was devaluing the market. Experts agreed that
the tide of Chinese hardwood plywood exports was unlikely to ebb in the near to medium term. Driven by the
general short supply, Chinese plywood benefited from a slight improvement in prices recently. Despite these price
increases, prices for the Malaysian and Brazilian materials were around 40% and 20% higher, respectively.
Interest rates left unchanged amid rising inflation
UK interest rates have been kept on hold at 5% despite the fact that November’s Consumers Price Index (CPI)
jumped to 2.7% from 2.4% in October. The Retail Price Index (RPI) rose to 3.9%, thus raising the chances of an
interest rate rise early in the New Year. Meanwhile, the pound hit a 14 year high against the US dollar in late
November.
UK house sector remains robust
House price growth accelerated again, rising 1.4% in November, according to the Nationwide Building Society.
The annual rate of price growth rose to 9.6%, the highest level since February 2005. NBS said the supply of houses
for sale was at a two year low and the market was fairly firm. The Halifax bank confirmed the above findings but
was expecting a cooling over the next few months.
House builder Barrett Developments said full year results were on course, although house price rises in London were
not representative of the rest of the country and interest raises could undermine
confidence. Sweden’s iconic furniture company IKEA is to launch its own range of
houses in the UK. The timber framed houses, known as Bokolks, come ready built. IKEA hopes Bokolks will be
the answer to the shortage of low-cost homes in Britain.
Retail business Kingfisher has revealed a fall in profits at B&Q as it continued to face a weak DIY market.
Kingfisher describes the UK market as “weak and price sensitive”, but added it remained on course with its
programme to improve stores and offer new ranges.
Report
from Netherlands
Dutch timber trade closes business with price hikes
With just a fortnight left, most traders have practically concluded business activities for the year. In retrospective,
the market underwent abrupt adjustments through the year. The tropical timber market started the year in bad
shape with hardly any sales and very low prices. March was the turning point, bringing record breaking CNF
Rotterdam and sales prices. Price was not the matter but rather adequate and prompt supply. Sapupira sawnwood
was hardly obtainable, shifting demand to focus more on dark red meranti (drm) and its substitute sapele, which
were also in shortage. Prices for drm sawnwood products doubled to just under $2,000 per ton CNF Rotterdam
during the course of the months. However, sales slowed down from September and came to a standstill towards the
end of November. There was simply enough timber in the pipeline.
Despite the sluggish demand in the last quarter of the year, prices remained rather firm sustained by tightening
roundwood availability, bad weather and strong demand from Malaysian plywood mills. However, prices for drm
eased slightly to $1,930 per ton CNF Rotterdam in late November.
Another factor has been playing a role in price setting. Since Malaysia “unpegged” the ringgit from the US dollar
in mid-2005, the currency has strengthened gradually and picked up strength in the last quarter of 2006. This
resulted in a recovery of prices of about $25 per ton in average for popular drm Dutch sizes in early December
amid faltering Dutch demand.
Supply expected to remain constrained during winter
The rainy season continues in Peninsular Malaysia and this will be followed by Chinese New Year celebrations
that will begin in mid-February. Most sawmills will close for about a month during the celebrations, which means
reduced supply through most of the winter and beginning of the spring. Malaysian exporters anticipate that, like in
spring this year, the Dutch market will resume demand as
the building sector and joineries have ample work in hand.
VVNH to screen legality in timber trade chains
Houtkrant news reported that the Dutch Association of Timber Enterprises (VVNH) has been granted .240,000
by the Dutch Ministry of Agriculture and Ministry of Spatial Planning, Housing and the Environment
(VROM) and a subsidy by the EU to investigate the legality of timber trade chains. The focus is on timber from Malaysia,
Congo, Gabon and Cameroon with the purpose to exclude illegally and not sustainably produced timber in the near
future. Reports said that Brazil, Guyana, Bolivia and China would eventually be included in the screening. The
move is part of the Dutch government’s action plan against illegal timber, aiming at closing bilateral agreements with each of these timber producing countries.
The Dutch government intends to increase the share of legal tropical timber to 100% by 2010 in all its public
procurements.
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