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Report
from Europe
and the UK
European demand for Chinese plywood fails to bounce
back despite removal of EC anti-dumping threat
There are some reports that interest in Chinese hardwood
plywood, which now leads the UK market for this
commodity, revived a little after EC formally announced it
would not impose anti-dumping duties on Chinese tropical
redwood-faced plywood. However, during the period of
uncertainty over the future status of Chinese plywood in
the EU market, a significant number of UK buyers are
believed to have switched to alternative suppliers,
particularly in Malaysia. It is not certain how willing these
buyers will be to return to Chinese product particularly as
the price advantage that Chinese plywood has long held
over Malaysian and Brazilian alternatives has narrowed
slightly. This reflects strengthening of the yuan against the
dollar and rising production costs in China which have
been only partly offset by a recent decrease in freight rates
between China and the EU. And following high-profile
environmental campaigns targeting Chinese plywood
(particularly faced with bintangor from PNG), UK buyers
also tend to be more comfortable with the environmental
credentials of Malaysian plywood over uncertified
Chinese plywood. Overall, the expectation is that UK
imports of Chinese plywood may already have peaked.
At present, UK stocks of most forms of plywood are
widely reported to be sufficient to meet current levels of
limited demand. Prices in the UK are tending to fall short
of replacement costs. Under such conditions, interest in
the forward market is inevitably limited. Expectations are
that this situation will not change at least until late
summer.
Elsewhere in Europe, the German trade journal EUWID
reports that demand for Chinese poplar plywood improved
in recent weeks. Demand for filmed poplar plywood
increased on the back of improvement in construction
activity, increasing demand for shuttering. Demand for
Chinese bintangor faced plywood in continental Europe
has remained stable at levels lower than last year. As in
the UK, continental buyers that switched away from this
product during the period of uncertainty over possible
anti-dumping measures have not returned in force now
that the uncertainty has been lifted. European demand for
Indonesian plywood, most of which is now centered on
continental Europe rather than the UK, has remained slow
in recent weeks. Although there have been efforts by
Indonesian exporters to push prices up, the market has not
been receptive and prices are generally regarded to be
stable at around Indo96 +25% for 4x8ft BB/CC grade.
EUWID also reports that in an effort to exploit the strength
of the euro against the dollar and boost returns, more and
more Chinese plywood exporters are trying to invoice in
euros, a practice that has inevitably met with strong
opposition from importers.
Dutch and Belgian importers boost market share across the EU
A recent supplement in the UK TTJ on Belgian and
Netherlands suppliers highlights how companies in the
two countries are adapting to increasing uncertainty in
global wood supply and the trend towards just-in-time
ordering through establishment of large concentration
yards for supply of companies throughout the European
continent.
TTJ notes that new voracious and still rising demand for
wood from Asia - notably China, India and Vietnam - has
fundamentally altered trading conditions in the EU. The
impact on EU hardwood products manufacturers has been
raising raw material costs and commoditization of the
market, inhibiting affordable supply against specification.
Because of their central location in Europe and ready
access to transport routes, Belgian and Dutch importers
have been major beneficiaries of these trends. They have
responded to the changing market conditions by
establishing direct contact with large mills in major supply
countries, building large warehouses, establishing hi-tech
stock control and customer management systems,
developing processing capacity to supply kiln dried and
dimension, cut-to-size timber, and providing a range of
other added-value services. One company representative
noted that with their special grading, drying and handling
services, they are able to service a wide range of
customers and end-use markets with applications ranging
from solid-doors, mouldings and flooring, to stair-cases
and tables, and also exclusive joinery products such as the
interiors of luxury yachts. Another interviewed company
indicated they could supply anywhere in Europe within 48
hours.
Due to their scale, these companies are also well-placed
both to encourage suppliers to achieve forest certification
and to benefit from economies of scale in FSC and PEFC
chain of custody. As a result, these companies can now
combine high volume with accurate supply to
specification, both in terms of timber quality and
environmental credentials. Linked with their commitment
to certification and desire to provide a wider range of
further processed products, many of these companies are
also now playing an important role to generate interest in
and demand for lesser known tropical species.
So successful have these companies been, that many are
now expanding warehousing and expanding their supply
base. For example, one Dutch company noted that it is
now developing a client base in the Far East (mainly for
European oak) where many of the European furniture
manufacturers it supplied in the past have migrated.
Europe gives market boost to certified Malaysian wood
products
The market credentials of the Malaysian Timber
Certification Scheme (MTCS - formally MTCC), which
has long struggled to achieve universal acceptance in the
demanding European market, recently received a
significant boost. The scheme scored 88% in a gap
analysis carried out by the University of Hamburg and
GTZ as part of a joint project between the City of
Hamburg (CoH) and MTCC. As a result, the CoH agreed
to recognize the MTCS until it receives PEFC
endorsement. The decision by the CoH overturns a
previous policy of accepting FSC only. Two conditions
imposed by the CoH in their decision have already been
met. These conditions were that MTCS be submitted to
PEFC for endorsement and that the MTCS ¡®MC&I 2002¡¯
certification standard (which is broadly based on the FSC
criteria but not recognized by FSC) must be ready.
MTCS now awaits two further decisions that would have a
major bearing on marketability. The decision on PEFC
endorsement is expected within the next 6 to 12 months. In
addition the UK government¡¯s Central Point of Expertise
on Timber (CPET) will be announcing their opinion on
whether MTCC provides satisfactory evidence that timber
is ¡®legal and sustainable¡¯ as part of a major review of
certification systems due to be completed this month. A
positive result in the latter would open the door to MTCS
certified wood products being used in lucrative London
Olympic contracts.
European companies adjust wood strategies as
Russian log costs increase
In a press release from Wood Resources International, it
was announced that Russian domestic sawnlog and
pulpwood prices fell 20% in the first quarter of 2008 as
taxes on softwood logs increased 20 to 25% of log value.
Since Russian taxes and thereby the cost of logs are
expected to increase further, forest companies in Europe,
the Nordic countries and the Baltic states are revising their
near and long-term strategies. Softwood log imports to
Europe reached their peak in 2005 (10 million m3), with
Finland maintaining the highest import status in Europe
and likely to be the most affected by the Russian tax
increases.
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