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Report
from the UK
New Prime Minister stresses need for housing
Prime Minister Gordon Brown, who succeeded Tony Blair on 27 June, stated the urgent need for
housing at the lower end of the market. He suggested that housing at lower
prices was necessary to encourage first time buyers into the housing market. Experts suggest that this should aide
the construction industry and timber trade.
Rising interest rates may dampen housing market
Investors are expecting an interest rate rise shortly, possibly in July, in an effort to curb inflation. The
Bank of England¡¯s decision to keep interest rates at 5.5% was agreed by a margin of one vote, leading to speculation that
interest rates will rise in July.
Builders Persimmon said that rising interest rates have led to a stable property market with moderate price growth.
On the other hand, companies Taylor Woodrow and George Wimpey noted that the
housing market is likely to be less buoyant for the rest of the year, as rising interest
rates hit consumer confidence.
OFT to investigate UK housing industry
The Office of Fair Trading (OFT) would investigate the house building industry in the UK. Specifically, it would
examine how to improve regulation and competition and customer satisfaction. Critics of the
industry complain that too few houses are being built, since the annual build is
approximately 140,000 units/year while demand has been for over 200,000 units/year.
EUROPE
MARKET
Europe braces for hike in Chinese plywood prices
Chinese plywood prices in Europe are expected to rise due to reduced export subsidies and higher
freight prices, reported EUWID. Export subsidies will be reduced to 5%, and the offset would be
transferred to plywood prices. Additionally, rising freight rates and higher roundwood
sourcing costs would be passed on to the product. As a result of the projected increase in plywood price, new
orders from European importers are less likely to be placed in the coming weeks.
Although there have been sufficient supplies of plywood in European ports, agents have to consider
higher replacement costs when these stocks are depleted. Some speculated that prices of up to
USD30/m3 for Chinese plywood in the next few months. To adjust to the cost
increases, European buyers have been expecting some Chinese plywood producers to reduce production costs, thereby
affecting the quality of the product.
Europe stands to gain most from new production lines
EUWID reported that about 65 production lines for woodbased panels would be coming on line between 2007 and
2008, with Europe receiving the bulk of the projects. By the end of 2007, 36 production lines would be online
around the world, with 13 in Europe. Europe will receive 26 of the 66 product lines
commissioned globally by the end of 2008. More than have of the firm orders placed
with European plant builders are for MDF/HDF facilities.
EU reopens quota on softwood plywood
After the EU duty free quota on softwood plywood imports to the EU expired on 18 May (TTM 12:11),
the EU reopened the softwood plywood quota on 5 June. The quota was reopened due to the
registration of cancellations, EUWID reported. Any remaining volume from these cancellations (currently at 255 m3) would be
blocked until 5 July 2007. After that time, future drawings could be made against
the quota.
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