Wood Products Prices in The UK & Holland

1-15th November 2005

Report from the UK

Building activity continues to slow down

Travis Perkins, who bought Wickes - a leading company in the builders’ merchant and home improvement markets - earlier in the year, have reported a fall of 9% in profits due to price cutting by competitors and a fall in building activity. Mr. Perkins does not expect any real upturn until mid 2006.

There have been some reports that the coming winter could be the coldest for many years in Europe and this will have a detrimental impact on the building trade. FOB prices remain firm in most markets but importers’ stocks remain larger than wished due to the failure of the market to pick up after the summer. Thus forward buying is at a very low level and business maintains its very competitive nature. At a recent conference of the Institute of Wood Science, it was apparent that the lack of technical information was holding back the use of timber by builders.

Sales on a downward trend

High street sales continue to fall according a monthly poll by the Confederation of British Industry (CBI), which recently reported the sharpest monthly decline in retail sales in 22 years. 

Log Prices in the UK

Sawnwood Prices in the UK

*When last available

Plywood and MDF in the UK

*When last available

Report from the Netherlands

House sales are reactivating

Despite the sluggish economic situation in the Netherlands, Rabobank has indicated that house prices and housing-sales are going slightly up. The bank also observed that the average period that a house stands for sale is shortening. They expect that prices for houses will increase 3% in 2005 and 2.5% in 2006. Rabobank also expects that economic growth will go along these increases. However, the bank forecast that housing starts in 2006 will not be enough to cover the current shortage of houses that can be purchased or rented. The building sector is still behind planned targets although the output this year is probably slightly better than last year’s. Although the mortgage-rate was marginally increased by few banks at the end of October, further rate rises in the short term are not expected as per policies of the European Central Bank (ECB).

Downward pressure of sawnwood sale prices

The market for sawnwood such as meranti remained flat again during the first half of November as indicated by some analysts at mid-year. Except in September, the market has not been exciting and with Christmas-leave approaching it is not expected that the market for tropical hardwoods will show signs of recovery till year-end. Nonetheless, the C&F Rotterdam price levels of bukit and seraya PHND for the most important Dutch size 3x5” remain extremely firm and, with the strengthening of the US dollar, traders and end-users are adopting an awaiting attitude for further purchases of dark red meranti (DRM) while eyeing Sapelli. This development, in combination with a stagnant market, has led to eroding prices. There is a tough competition as overall stocks (particularly for 3x5” DRM) are more than sufficient to supply current slow demand and this has led to a further downward pressure of sale prices.

Building sector subject to stricter measures

The downward pressure on prices is expected to continue into 2006 as the building sector will continue to be subject to stricter environment measures. For instance, new building projects cannot begin in areas where fine dust particles endanger a clean environment. The Liberal party finds the proposed measures too bureaucratic whereas the opposition asks for stricter rules. In the meantime, some projects are at complete standstill which certainly influences timber-consumption.

Gerutu substituting Brazilian sawnwood

The crackdowns on illegal logging in Brazil continue to interrupt the supply of sawn timber. The issuing of export licences is also halted for November while the rainy spell in Brazil is heavily interfering operations. As a consequence, demand for Malaysian substitutes, such as gerutu (Parashorea sp.), remains high to the extent that most Malaysian exporters are short in supply. The log stock of gerutu is mostly depleted, compounded by the northeast monsoon which is affecting important logging areas in Peninsular Malaysia to be followed by the celebration of the Chinese New Year at the end of January. Dutch traders will probably have to wait till spring 2006 for better chances to obtain gerutu and DRM sawnwood.

Shortage of bangkirai and selangan batu

A similar situation is observed for bangkirai and selangan batu. The purchase season for anti-slip material in the Netherlands is now on and the supply of bangkirai/selangan batu from Sabah is minimal. Several mills in Sabah report that they cannot secure logs simply because loggers prefer to sell logs to buyers in India, Vietnam and China. Furthermore, authorities have imposed a stringent border control in Sarawak and Sabah to avoid illegal logs entering from Indonesia. Many mills face acute shortages of raw material as a result. This situation has prompted some Dutch and Belgian traders to seek African substitutes for anti-slip species such as bilinga.

Sawnwood prices in the Netherlands

                                    1 ton of 50 Cu.ft. = 1.416 m³; PHND= Pin hole no defect grade.  

Okoumé combi-ply prices in the Netherlands

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