Wood Products Prices in The UK & Holland

01-15th MAY 2005

Report from the UK 

The UK election was, as was expected, won by the ruling Labour Party but with a reduced majority which means the government will face some problems getting legislation through especially if there is a revolt within the party. 

Analysts report that the UK economy continues to slow. Exports are down, imports are down, inflation is up but the Bank of England left interest rates unchanged at 4.75% at its meeting recently. 

Many have been surprised that house prices have started to move up again but the number of homes changing hands has fallen by half compared to this time lasrt year. 

The government has renewed its pledge to build a further 200,000 homes a year but analysts say that the current procedures to secure building approvals will get in the way of this plan. 

For the timber trade, the move to more and cheaper first time buyer homes means an increase in timber frame construction which to date has just a 15% market shre ine England and Wales.  In Scotland the figure is much higher at around 50%. 

The main talking point in business circles is the efforts of the EU to enforce a max. 48 hour working week on the UK, this, say local businesses will prove very costly to manufacturers and the government has said it will try and negotiate out of complying with this EU directive.    

Log Prices in the UK 

 UK Sawnwood Prices 

 Plywood and MDF in the UK 

Report from Holland 

As commentators in Holland say, "it would have been nice if - for a change - we could report that the Dutch market for timber and timber products had been active". Sadly however,  this is not the case and traders are saying that they have seen no sign of activity.

Many sectors of the Dutch timber trade are complaining. For those traders that specialise in Western Red Cedar (WRC) the indications are that there is little demand but sufficient landed stock, as a result of which price are depressed.  　

Weak demand affects all sectors 

For Malaysian Dark Red Meranti (DRM) there is a similar picture, plenty of landed stock in important dimensions like 3x5"  but hardly demand. In parallel to the WRC situation the pressure on the price for DRM remains as fierce as ever with hardly a profit-margin for traders who are forced to sell at cost or even at a loss to generate cash flow. 

For African hardwoods analysts report that the Houtwereld magazine of 28th April  is saying that demand for wood for house interior/building purposes has shrunk but the number of offers circulating has gone up as if there was a buoyant market.  

For major African timbers the sales prices in Holland, as well as the trader's margins, remain under strong downward pressure. The downward pressure is because of the weak demand and because of the cut throat prices being put forward by some traders in Holland, both factors are driving prices lower 

A glance at the plywood/sheet material-sector gives the same impression and analysts say the symptoms are mostly the same as for the sawnwood market. 

Illustrative of the stagnant market in the Netherlands is the fact that now sales offers for species such as Oak and Beech, timbers not normally traded in bulk (as is the case with DRM) are now also circulated widely with almost pleas for buyers to take up some volume. 

The reason why the demand is so terribly low, say analysts, has to do with the slow recovery from the depressed economic situation and the fact that most people are not convinced that a recovery is underway or sustainable and that generally consumers are just adopting a wait- and -see attitude.  

Others maintain that the structure of the Dutch timber sector is not at all healthy with too many players chasing a smaller and smaller market with little immediate hope that demand will grow again in the near future and it is this that is strangling margins. 

Buying cycle hits market 

The market in the first half of May was also heavily influenced by public and school-holidays. It was said that more than 2.0 mil people from the Dutch work force were on leave during the first half of May. With roughly 7 more weeks to go before the annual summer vacation period starts a so any chance of a recovery of consumer buying is not expected to take place until at least the end of August if it takes place at all! 

Items that are still in fair demand are said to be timber and timber products for garden/outdoor purposes for example poles/fences, anti-slip deck boards in various thicknesses. Generally, traders report that prices for anti-slip material - regardless whether sourced in Brazilian or in Asia are firming and some traders say that stocks are certainly not so high and that there may be some further upward movement in prices.  

Merbau and Iroko 

An item that has long had been in demand and the market under supplied is Merbau. However, with the constant increases in CNF Rotterdam price levels and given that, despite exporters reporting that Merbau is in short supply, a substantial volume has been consigned to Holland over the past 5-6 months.  

Analysts are saying that they now sense a buyers' backlash against high priced Merbau and possibly an over-supply in the short-term.  Also influencing this picture is that it is said that the supply situation for Iroko (an Merbau alternative) seems to have improved slghtly. 

Despite the fact that the market was extremely calm over the past fortnight traders report that they have seen virtually no changes in CNF price levels for major Malaysian timber items for the Dutch market. This could mean that the supply situation in Malaysia is still very tight and that exporters have stock levels which are not putting a strain on cash flows. 

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