Market  News from around Europe
‐2002.04.22／

For some time Russian and other East European producers of birch plywood have held onto a high market share in square sizes such as 5x5ft and in the 4x8ft market. In the past months pressure from imports has been growing in the 5x10ft board sizes as Russian producers increased exports.

Currently, sales in Central Europe by Russian producers, who have recently invested heavily in new capacity, is falling short of expectations. When they began the investment projects demand for birch plywood had been growing and prices were good. However, with so many start-ups at the same time and with weak demand problems have arisen. The situation today is that sales in Europe have become more difficult.

Window Grades Under Pressure

Suppliers to German producers of wooden window frames report another decline in sales. According to producers of window scantlings and to merchants, orders books have weakened compared to last year. After a minor recovery in January, orders from the domestic market had dropped to a record low in mid-March.

German DIY-Chains Realign Stores

This year, the German DIY-chains are expecting only a slight increase in sales and insiders point to trough in the DIY market demand.

In 2001, the DIY sales totalled euro 36.56bil., up only 0.5% year on year but the distribution of sales has altered. The market value of building, DIY and gardening product sales totalled euro 21.47bil. the same level as the previous year. The timber part of the retail trade achieved a 1.9% increase in sales of DIY products to euro 3.17bil.

Increase in furniture sales

In January 2002, furniture sales in Norway increased by 15.1% compared with the same month in 2001. Jens Petter Ekornes, consultant to the major producer Ekornes, believes that reasons behind the huge increase may be changes of fashion as well as reduced fear of increased interest rates.

Indoor Group's result

Both furniture chains of Finnish Indoor Group (Asko and Sotka), managed to improve their turnovers in 2001, to EUR 164.9mil. with Sotka's turnover increasing by 10.6% and Asko's by 3.5%. Sotka was the market leader with 14.1% of the market. Asko concentrated on making its operations more efficient and improving its profitability. The group will open new Asko and Sotka outlets in Riga, Latvia, in April 2002. A new Sotka outlet will be opened in Tartu, Estonia, in the autumn 2002. Both chains will open new outlets in Lithuania in 2003. The group expects its turnover and profitability to improve in 2002.

Burgbad turnover down

Burgbad AG of Schmallenberg, a German producer of bathroom furniture, recorded a turnover of EUR 80.8mn, down 9%, in 2001. But as a result of restructuring Burgbad improved its result on ordinary activities by EUR 8mil. to minus EUR 1.9mil. and its after-tax loss from EUR 8.2mil. to EUR 3.2mil.

Environmentally friendly furniture

Environmental organisation Nepenthes has launched a website (www.tropetrae.dk) to guide consumers when purchasing garden furniture. The on-going debate concerning furniture manufacturers using tropical timber, has prompted the organisation to research some 100 Danish manufacturers and their sourcing policies.

Austrian Furniture traders

According to Kreditschutzverband, an association that provides comprehensive information on businesses in Austria, furniture traders which operate in Austria have an excellent record in respect to solvency. Number one is the Swedish Ikea, followed by the Tyrolean traders Josef Troppmair and Foeger-Wohnen. The sample of the survey took into account all furniture traders with turnovers higher than EUR 10mn per year.

News from the Netherlands

It has now been decided that SGS certified timber from Malaysia under the Keurhout scheme cannot be imported into The Netherlands.

The Keurhout Foundation had only allowed temporary extended the deadline on the scheme from October last year until March 31, 2002. The initial Malaysian-Netherlands pilot project for certified timber had officially ended per February 2001. The extension was to allow for further evaluation of Malaysia's full compliance with the Dutch minimum requirements for certified timber.

Meanwhile Malaysia has launched its national timber certification scheme, implemented by the Malaysian Timber Certification Council. Those exporters who had certificates allowing export to Holland of SGS-certified timber apparently returned their certificates to SGS Malaysia for cancellation. Further news about how things will now proceed is awaited from authorities in Malaysia as well as from the Keurhout Foundation whose Chairman, Mr. Bosdijk, was in Malaysia recently.

For many months now the Dutch market for Meranti and Merbau has not been active. Statistical data from the Malaysian Timber Industry Board shows that for 2001 Peninsular Malaysia exported a grand total of 679,394 cubic metres graded sawnwood. This represents a decline of 19,5% compared to the previous year.

The share of Holland at 147,975 cubic metres accounted for almost 22% and Holland was ranked just second after Taiwan as the largest importer. Belgian imports at 39,520 cubic metres represented the second highest sEuropean country for graded sawn Malaysian timber and this illustrates the importance of Holland for Malaysian graded timber exports. Compared to 2000, the export of graded sawn timber from Peninsular Malaysia into the Dutch market dropped by 26,2% which is a significant drop indeed.

The first half of April 2002 showed proved, once again, to be a quiet time in the Netherlands for most timber importers, softwoods included. To a certain extent the market was influenced by Easter holidays but, as mentioned before, the unfavourable economic outlook has driven down consumer confidence.

Inflation remains on the high side (recent computations suggest an annual rate of 3,6%). There is little eagerness to buy/invest and timber importers in Holland continue to adopt a wait and see attitude. Overall the stock-position for Meranti in the common sizes such as 3x5 and 4x5" is considered to be on the high side still but in specials such as 2.1/2x6" stocks are said to be too low.

The situation in the building sector is still unchanged and the strike action affecting the sector looks as if it could expand.. With elections around the corner there is no immediate pressure or incentives on the politics to come up with a solution. In-fact the political debate is centred on the Srebrenica-drama and there are stories in the press that some ministers may step down or that even the entire cabinet could resign.

The exchange rate between US$ and Euro remained rather stable during the first half of April and hovered around 0,8720 to 0,8810 and was not too much of a disruption to importers calculations. Despite this there were indications of importers dumping, at prices below cost , in efforts to get some Meranti-parcels sold. The joinery plants still maintain their hand to mouth buying and are not allured to more aggressive purchasing now that the prices in Malaysia show an upward trend.

The entire Meranti-range - whether it is for Tembaga or for Bukit PHND - went up. This is caused by the reduced stock position of the exporters, which is particularly felt for Tembaga and by the increased ocean freights for containers. Due to the freight increases the prices for hardwoods from Peninsular, shipped to Rotterdam were increased during the early part of April by around US$ 15 per ton.

All based on container shipment.