Wood Products Prices in The UK & Holland

16-31th January 2005

News from the UK 

At the core of campaigning for the next election will be the UK economy, say analysts since the rate of economic growth has been slower than during the tenure of the previous government.  

The pace of growth in the UK, while better than that in most other EU countries, is way behind that of the US, Canada and Australia.  This, the decline in business confidence, high oil prices and rising interest rates has hit consumer confidence. 

The housing market, the health of which dictates the strength of the markets for timber, has seen a considerable cooling as interest rate increases have slowed the pace of home loan applications.  

On the inflation front there was a surprise rise partly due to higher furniture prices but furniture manufacturers are sayint that all the gains were eaten up by increased costs. 

Many in the timber trade think that certification will be high on the list of issues for 2005 with the situation getting more and more muddled as time passes and as more conservation groups try and out do each other.  

Log Prices in the UK 

UK Sawnwood Prices  

Plywood and MDF in the UK  

Report from Holland  

Some business done 

During mid January Dutch importers were fairly active, in the sense that some fresh purchases were made in Malaysia. While these were not big volumes, say analysts, several exporters and agents reported business done. Everyone was looking for the somewhat difficult items such as Merbau and non-PHND sizes for doors but, as expected, the more common bulk items were easier to come by.  

After the promising start, at the end of the month buyers fell quiet reflecting the mood in the Dutch market for Asian hardwoods. Even the 'hottest' item of the past few weeks, namely Merbau, could not stir any interest it is reported. 

As Dutch traders point out "the Merbau that is now being offered has reached a price level that evokes resistance in the market place. The current Merbau price CNF Rotterdam/Antwerp may now have reached the point where importers simply refuse to swallow any further price increases".  

Demand for Dark Red Meranti, in the highly demanded size 3 x 5" (80x130mm), regardless whether Bukit or Seraya, whether in MTCC Certified or not fell quiet on all fronts. Nobody in Holland seemed in the mood to buy and traders say they see no signs of anything that could ignite the demand for Meranti or any other tropical hardwood, for that matter, at the moment.  

High stocks worry traders 

Many traders in Holland report that the building sector is so quiet that the demand for all the various species such as Sapelli, Meranti, Sapupira is flat.  

 The stock position in many of these timbers, therefore remains too high.  Some of the yards of the forwarders who take care of container stripping, customs and storage are apparently packed with timber, the bulk of which is 3x5".  

There are known cases of traders, who are normally happy with an solid stock of 5-600 cubic metres of 3x5 Meranti, now, all of a sudden, confronted with more than 1000 cubic metres in their sheds. With such high landed volumes available it is no real surprise that there are little or no replacement purchases. It is no surprise either that sales prices in the local market remain under strong downward pressure. Traders say they feel lucky that the exchange rate of the US dollar improved slightly, hovering around 1,30 to the Euro,  or else the downward pressure on prices would have been worse.  

It is expected that with the coming Chinese New Year holidays impacting the level of production in SE Asia. There will be little production and very little new loadings in coming weeks as mills and exporters especially in Peninsular Malaysia will stop operations for about two weeks.  

Chinese New Year to slow production 

Since mills in Malaysia will be down until the end of February it will only be in early March that Dutch importers will get new quotations for timber. This slow down may give some breathing space for Dutch importers to move some stocks.  

However, the good stock position may be only temporary as the log supply situation in Peninsular Malaysia is far from easy infact traders say they see the unsold stock position of exporters to the Dutch market as temporary and at rather modest levels.  

An indication of the true position can be guaged from the trade contacts. In past years, in the last few days before Chinese New Year, the exporters brought some discounted offers to the market in order to generate some quick turnover and raise some funds for the worker holiday bonuses(ang pows locally) but, quite remarkably and  illustrative of the tough supply situation in Peninsular Malaysia, traders say they did not see many of those 'special offers' this year.  

There have apparently been few spontaneous offers from Peninsular Malaysia to the Dutch market  this year and, as further illustration of the complex supply situation in Malaysia, overall despite the poor demand prices on the basis of CNF Rotterdam went up again slightly.  

Even for Seraya, after a minor downward dip in prices over the past weeks traders are saying that it is almost impossible to solicit quotations for non-PHND, so-called DUC, KD NEMESU in 2.1/2"-scantlings and for  fixed width 2.1/2x6" for the Dutch door-industry.  

Shorts in 2.1/2" scantlings are in demand for both Holland and Belgium but there are no offers circulating. Traders are now hoping that the quiet spell in Asian production will lead to some stock-reduction in Holland.

Abbreviations

LM       Loyale Merchant, a grade of log parcel	Cu.m         Cubic Metre
QS        Qualite Superieure	Koku         0.278 Cu.m or 120BF
CI          Choix Industriel	FFR           French Franc
CE         Choix Economique	SQ              Sawmill Quality
CS         Choix Supplimentaire	SSQ            Select Sawmill Quality
FOB      Free-on-Board	FAS            Sawnwood Grade First and
KD        Kiln Dry	Second
AD        Air Dry	WBP           Water and Boil Proof
Boule    A Log Sawn Through and Through	MR              Moisture Resistant
the boards from one log are bundled	pc         per piece
together	ea                each
BB/CC  Grade B faced and Grade C backed	MBF           1000 Board Feet
Plywood	MDF           Medium Density Fibreboard
BF        Board Foot	F.CFA         CFA Franc
Sq.Ft     Square Foot	Price has moved up or down

Source:ITTO