Report from the UK 

In the UK, construction output fell by 3% in the first three months of the year according to the Dept of Trade and Industry. 

According to the latest nationwide consumer sentiment report, people feel increasingly uncertain about the outlook for the economy and the job market. Consumer price inflation came in at 1.9% (the same as in the previous quarter) but this was higher than forecast and this is boosting expectations that another interest rate increase could be on the cards.  

According to housing loan companies, the national average price is up slightly but house price inflation has dropped to 5.7% from a peak of 22% last July.  

The Euro continues to weaken against Sterling and everyone is watching for the EU heads of government meeting to be held shortly as there are particularly heavy strains in the euro-zone at present. The uncertainty, say analysts, is bad for business.  

Log Prices in the UK 

  

UK Sawnwood Prices  

  

  

Report from Holland  

The economic data out of the Netherlands is still depressing and the Central Bureau of Statistics revealed a significant jump in the number of bankruptcies - both in the manufacturing and commercial sectors. 

During the first quarter of 2005 Holland saw a total of 2453 bankruptcies (for the same period in 2004 the number was 2371) and it is said that in April this year there has been a further sharp rise with more individuals and companies applying for protection from creditors.  

Making matters worse, the number of unemployed remains high, despite a recnt drop. For 2004 there were 479,000 people registered as jobless (2003, 396,000). But, currently, some 516,000 people are unemployed and this is 6,9% of the workforce, an alarmingly high figure.  

With ever increasing expenses and operating costs, higher taxation, lower turnover, lower nett income and eroded trade margins, it is increasingly tougher for companies to make ends meet. GDP in Holland took a nosedive beginning from the fourth quarter 2004 (from +1,6% to -0,3% in the first quarter of 2005.  

The President of the Dutch Central Bank, Mr Nout Wellink, is on record as saying that, for 2005, growth will possibly come in at +0,4% because the data for the first half year have been very disappointing.  

Mr. Wellink is not apparently of the opinion that the current depression is a result of the Euro (although many goods became much more expensive after it was introduced) but it cannot be denied that, during the last few weeks, analysts in the Netherlands sense strong anti European sentiments.  

Many are now saying the changes have been imposed too quickly and that there were too many changes in too short a time, especially as regards the Dutch financial contribution to the EU.  

A glance back at the guilder 

It has been estimated that the per capita contribution is EUR 180 to yield a total of EUR 3 billion into what is now termed 'the bottomless sink of bureaucracy' in the European Union. By way of comparison, apparently Germans pay only EUR 90 per head so the Dutch consider themselves nett payers to the EU and it seems that the Prime Minister and Minister of Finance are demanding a considerable reduction, reportedly of around EUR 1 to 1,5 billion.  

Making matters worse for Holland, say analysts, has been the past slow-down in global trade, the price increases since the introduction of the Euro rising oil costs and the impact of the war in Iraq.

Added to this has been the surge in exports from China which has been felt by Dutch manufacturers and exporters.  

Many in Holland are calling for the re-introduction of the Dutch guilder matching sentiment in Italy. There are also rumours that in German finance circles moves back to the mark have been discussed. Analysts are quick to point to the differences in economic performance of countries in and outside the euro-zone, where countries such as Denmark and the UK are in better economic shape.  

The building sector 

Output by the building sector in Holland declined. In the last quarter of 2004 output was reported at +4,1% but in the first quarter (with an abnormally mild winter) came in with a decline of -4,3%. That the building sector is not performing is reflected in demand for sawn timber, regardless of whether of temperate or tropical origin, whether softwood or hardwood.  

The stock level of 3"x5" Dark red Meranti has not come down much during the past fortnight say traders, reflecting the weak demand in Holland.  

With the 'crisis-situation' in Europe after two countries overwhelmingly rejected the ratification of the European constitution the US-dollar has gained strength and exchange rates are hovering around 1,20/1,21 dollars per euro. As a result of the strong dollar prices for Meranti will rise since it is purchased in dollars per ton CNF Rotterdam.  

However, the market in Holland is so weak that the discounted price 'war' continues, leaving prices, at best, unchanged.  

Traders seem generally quite willing to entertain reasonably firm bids as long as they are able to get something sold. But the sustained weak market and the impact it is having on trade patterns has weakened many long term trading relationships.  

The good times when business relationships were courted and protected and when clients asked their suppliers for items without first asking the price are over, say local traders.  

End-user joinery mills are now shopping around and squeezing suppliers. Even for items that are not so readily available the buyers are chipping away at sellers margins and traders are not capable of forming a united front to put an end to this downward spiral as the need for sales is too high.  

Traders say that their information on the supply situation in Peninsular Malaysia, Holland's main source of supply of tropical sawn, has not improved and that many items are still in short supply.  

CNF prices for Holland's main size in Dark Red Meranti(3"x5") remain as firm as ever despite practically zero market demand. For those specifications that are in demand in Holland, such as 7/4x12, or 4x5, or shorts/strips, the supply remained is limited.  

Exporters continue to build up unsold position but resist spontaneous offers, knowing very well that Dutch buyers are gradually preparing for their holidays which run from the end of June through to the beginning of September.