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Report
from
Europe
EU tropical wood imports static at last year‟s level
While economic indicators are beginning to improve in the
EU and market confidence is rising, these trends are
filtering only very slowly into the European tropical
hardwood trade.
The latest EU trade data indicate imports of tropical
hardwood products in the first four months of 2014 were
1.385 million cubic metres in roundwood equivalent
terms, down 1% compared to the same period last year
(Chart 1).
Although imports of tropical hardwood sawn and veneer
have increased this year by 3% and 14% respectively,
these gains have been offset by declining imports of
tropical hardwood logs (-34%), mouldings and decking (-
3%), plywood (-8%) and glulam/window scantlings (-6%).
In addition to slow consumption, the European market for
tropical wood during the first quarter of 2014 suffered
from supply constraints, notably from Cameroon and
Congo where shipments were significantly limited due to
major issues with handling operations and administrative
procedures at Douala Port.
The situation has improved since the start of the year but
the backlog of wood destined for Europe at the port is
being shifted only slowly.
Lead times between ordering and delivery into Europe of
the main African commercial species such as sapele and
framire has now fallen to 3 to 4 months compared to 6
months at the start of this year.
Another reason for slow imports of tropical wood in 2014
is the change in GSP status of several key tropical
suppliers, notably Malaysia and Gabon.
This led to a rise in European import duties on timber
products from these countries on 1 January 2014. An
immediate effect was to encourage a short-term build-up
of stocks before the deadline and subsequent fall in
imports from these countries in the first quarter of 2013.
Declining imports into France and Belgium
In the first four months of 2014, the volume of tropical
hardwood imports (roundwood equivalent volume of logs,
sawnwood, mouldings & decking, veneers, plywood and
glulam) fell into both Belgium (-7%) and France (-5%),
the two largest volume European destinations for these
products (Chart 2).
Both markets are currently affected by consolidation of
operators in the tropical wood industry and rapidly
changing trends in demand.
In France economic conditions remain difficult and
generally uncertain. Building permits in France declined
22% in the three months to end February 2014.
There are also concerted efforts underway in France to
boost demand for locally grown hardwoods, for example
through continued expansion of thermal treatment
facilities to increase their durability and use in outdoor
applications previously dominated by tropical woods.
Fall in German tropical wood imports despite
improving economy
There was an 11% fall in imports of tropical hardwoods
into Germany during the first four months of 2014, despite
evidence of stronger economic conditions and robust
growth in demand for wood products in the construction
and garden furniture sectors.
According to EUWID, the German Timber Federation GD
Holz reported strong growth in total German timber trade
revenues in the first four months of 2014, up 13% in the
first quarter and a further 8% in April.
GD Holz reported that revenues in the garden wood sector
were up 50% in the first quarter of 2014 compared to the
same period in 2013, particularly owing to much better
weather conditions during the late winter months this year.
Unfortunately these gains have not led to improved
demand for tropical wood which has come under
considerable competitive pressure from wood-plastic
composites in the garden wood sector during 2014.
Another factor that has reduced demand for tropical wood
in Germany this year is uncertainty over the legality of
some tropical products.
This follows the German EUTR Competent Authorities‟
seizure in August last year of a consignment of wenge logs
imported from the Democratic Republic of Congo (DRC).
According to a recent report in EUWID, the wenge logs
remain confiscated despite receipt of another letter from
the DRC government to the German authorities
confirming the legality of the concession held by Bakri
Bois Corporation (BBC) where the logs are claimed to
have originated.
However, according to EUWID, the German EUTR
authorities are not satisfied that there is sufficient proof
that the logs in question derive from the specified
concession.
Rising tropical wood imports by the Netherlands and
UK
Declining imports of tropical wood into Belgium, France,
and Germany have been partly offset this year by rising
imports into the Netherlands, UK, Spain and Portugal.
Tropical wood imports into the Netherlands were up 5% in
roundwood equivalent volume terms in the first four
months of 2014.
After many years of very depressed activity, the Dutch
construction sector is now improving with architects and
builders reporting better order books and turnover.
Although new building permits issued in Netherlands have
slowed a little in recent months, the Dutch market is now
benefitting from the temporary VAT reduction on
renovation activities implemented since early 2013 and
due to remain in place until the end of 2014.
UK imports of tropical hardwood increased 8% in
roundwood equivalent volume terms during the first four
months of 2014. Consumption has been rising at a time
when UK landed stocks of most hardwood products are
quite low, encouraging stronger UK engagement in the
import trade.
The recovery in UK construction has become stronger and
broader this year, with rapid increases in private house
building, together with growth in renovation,
infrastructure and commercial construction activity.
While the 8% rise in UK imports of tropical hardwood
products is encouraging, there are signs that tropical wood
may be losing share to temperate hardwood in this market
during 2014.
The American Hardwood Export Council recently
reported a 66% increase in UK imports of American sawn
hardwood in the first quarter of 2014 compared to the
same period last year.
Demand in Spain shows signs of improvement
For the first time since the start of the Global Financial
Crises, the Spanish market has shown slight signs of
improvement this year.
In roundwood equivalent volume terms, Spain‟s imports
of tropical hardwood products were up 9% in the first four
months of 2014 compared to the same period the previous
year.
According to the latest survey of European architects by
Archivision, a market research firm, the long-term decline
in Spanish architects order books hit bottom at the start of
2013 and architects have become more positive during
every subsequent quarter of the year.
However, Archivision also note that the more positive
attitude amongst Spanish architects is not in line with
trends in building permits, especially the non-residential
sector which is still showing decline.
The volume of imports of tropical hardwood into Italy in
the first four months of 2014 was at the same low level as
in 2013. Although some large Italian tropical hardwood
importers report stronger sales into other parts of Europe
this year, the domestic market remains weak.
There seems little prospect of any improvement in the
Italian construction market, probably the main driver of
demand for tropical wood now that Italy‟s furniture sector
is so focused on temperate species, particularly oak.
Archivision forecast that Italian construction will shrink
by 9% in 2014 and by a further 4% in 2015.
EU imports of tropical hardwood logs fall sharply
EU imports of tropical hardwood logs were 42,000 cubic
metres in the first four months of 2014, 34% less than the
same period of 2013.
Imports fell particularly heavily from the Congo countries,
Cameroon, and Central African Republic (Chart 3).
This is due to the combined effects of shipping problems
at Douala Port, the civil war in Central African Republic,
and EUTR-related concerns over the reliability of legality
documentation.
While total EU imports of tropical hardwood logs were
down over the four month period, closer analysis of the
monthly trend suggests a slight improvement in April
compared to the first quarter of the year (Chart 4).
Malaysia and Côte d'Ivoire fill gap in Cameroon sawn
supply
Improving demand in the UK and Netherlands boosted EU
imports of sawn hardwood in the first four months of
2014.
Imports were 320,000 cubic metres during this period, 4%
more than the same period in 2013. Rising imports from
Malaysia, Ivory Coast and Gabon, helped to fill the gap
caused by supply disruption in Cameroon (Chart 5).
Monthly data reveals that after a sharp fall in January and
February this year, the pace of EU imports of tropical
sawn hardwood began to recover from March onwards.
This was due to improved shipments from both Cameroon
and Malaysia (Chart 6).
Indonesia and Malaysia increase share in EU decking
imports
EU imports of mouldings and decking products were
168,000 cubic metres (RWE - Roundwood Equivalent)
during the first 4 months of 2014, 4% less than the same
period in 2013 (Chart 7).
Improved supply conditions led to gains in imports from
Indonesia and Malaysia and these countries gained market
share, particularly at the expense of Brazil and other
Amazonian suppliers.
Monthly data reveals the strong seasonal pattern of EU
mouldings imports, driven by the decking sector and timed
to coincide with the European spring and summer garden
season (Chart 8).
Overall imports this year seem to be shaping up to be very
similar to last year but still well below the level of 2012.
Rougier revenues rise in Africa but fall in Europe
In a press release, Paris-based Rougier reports first quarter
revenues for their Africa International branch at euro 27
million, up 11.7% on the first quarter of 2013.
According to Rougier this growth reflects the positive
trend for international tropical timber markets.
In Gabon, business has also benefited from a dynamic
local market. However, for Cameroon and Congo,
shipments were significantly limited during the quarter as
a result of logistical problems at Douala Port. Some
deliveries have therefore been put back to the second
quarter.
First quarter 2014 revenues of Rougier's France Import-
Distribution branch were €7.5 million, down 6.3% on the
first quarter of 2013, but up 20.3% compared with the
fourth quarter of 2013. According to Rougier, this trend
highlights the French market's volatility.
Rougier report that first quarter log sales were up 29.4%,
particularly in Gabon thanks to sustained growth in sales
to local industrial operators. Sawn timber sales were up
6.0% in relation to last year.
This positive trend is being supported by the
diversification of the regional mix, as well as demand for
certain timber species and the good level of average sales
prices in general. Plywood sales, generated primarily in
European countries, were stable compared with the first
quarter of 2013.
Faced with the slowdown in European markets, Rougier
has continued moving forward with its strategy to
diversify its regional markets, achieving strong growth in
the Americas and Sub-Saharan Africa, particularly Gabon.
Markets in the Mediterranean Basin and Middle East are
gradually picking up again. In Asia, sales trends confirm
the upturn on the Chinese market, as seen during the
second half of 2013.
DLH - ¡°Challenging conditions¡± for tropical wood in
Nordic countries
The European divisions of the Denmark-based DLH
posted a turnover of DKK 399 million for the first three
months of the year, 6% less than the same period last year.
2% of the decline in turnover was exchange rate related.
This downturn came against the background of
challenging market conditions in both the Nordic countries
and France, the only areas of Europe where DLH now
operates following recent divestment of other European
divisions.
DLH note that the Swedish retail sector remains
particularly challenging, while the Danish and Norwegian
markets are showing signs of gradual improvement. In
general, the industrial sector is showing a good
development.
Overall DLH reckons that there is continuing strong
growth potential in the industrial sector in Sweden and
Norway.
In France, DLH has decided to focus and optimise the
business solely on one hub which supplies tropical
hardwood in S¨ºte in the south of the country. The
objective is to create a smaller, more cash efficient and
cash generating unit with a view to divestment under the
current strategy plan.
DLH report that turnover in France is at the same level as
last year but margins have improved significantly due to
the focus on decking business.
In Central Europe and Russia, DLH report that macroeconomic
conditions remain weak, but are showing signs
of improvement. Turnover for the first quarter shows a
decline of 5% to DKK 65 million, mainly related to the
weakening of the Russian Rouble.
In contrast to the decline in turnover of European
operations, DLH Global Sales Division delivered a 2%
increase in turnover to DKK 108 million for the first
quarter compared to the same period last year.
This Division is engaged in tropical hardwood trading
between and within Vietnam, China, Indonesia and Africa.
DLH note that the Vietnamese market is showing
particularly strong development while China is somewhat
lower due to a more selective approach to bulk shipments.
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