| The quiet spell that has a grip on the timber market in Holland, and which
is certainly noticeable in the tropical hardwood-sector, continued during the second half
of November. There were no significant changes at all compared with the first half of this
month and analysts report that it is very unlikely that any changes will take place during
the remaining weeks of the year. The market is too quiet and being so close to the
Christmas holidays a revival is unlikely. Pessimistic sounds heard in the Dutch market
suggest that the market will stay quiet for at least another 5 to 6 months. This negative
sentiment is fed by the fact that during winter building activity is always lower. Many of
the bigger joinery firms do not have much work and do not foresee a sudden change.
The building sector has really stagnated unfortunately (social unease the long strike
earlier this year; too much red tape and piles of paperwork and a skilled labour shortage)
as a result, timber consumption has declined all round. Not only are hardwoods or tropical
hardwoods in particular affected, sales of softwoods have also suffered.
Traders are finding it very difficult to place orders and it is a difficult market for
Meranti and Merbau and the recession is having a psychological impact on the purchasing
patterns of retailers and end-users. If the market buoyant there is 'a relaxed buying'
attitude. Under these conditions it is easier to sell something extra during a negotiation
and the trading partners overseas dare to put some forward positions in the pipeline
feeling confident that business will come. However when the market is bad and there are
not so many orders around it is as if a switch is pulled.
At the moment there are hardly any orders being placed with shippers
because stocks have to come down first. What buying there is mostly on a selective
hand-to-mouth basis.
A symptom of a weak market and few sales of Meranti and Merbau is the so-called 'price
boxing' or the exports of sawnwood parcels at very low prices, generally considered below
cost even and commonly below the replacement value. This practice often leads ultimately
to further reduced buying and even greater market weakness.
The Dutch buyers logic under these conditions becomes one of postponing their
timber-purchases because, perhaps next week, prices will go down again so only that what
is really needed to satisfy a customer or keep the factory running is imported. The
consequence is that prices spiral down as this leads again to further low priced exports.
When one shipper starts with the price cuts others will follow.
When taking the current CNF Rotterdam-price for 3x5" KD Bukit PHND and converting
this into a price in euro with a normal margin, a level of around euro 700 per cubic metre
is arrived at. Currently analysts observe considerably lower sales prices in Holland and
not even for a full Bill of Lading of say 15-16 cubic metres but for perhaps half a
bundle.
This presents a very difficult situation for exporters and there are not many offers
circulating and some items remain even scarce. Kiln dried Dark Red Meranti (Seraya/Nemesu)
in non-PHND is reportedly difficult to get and if available it is at extremely firm price
levels.
Prices for non PHND Seraya 3" scantlings are far above USD 900 per ton CNF
Rotterdam. Prices for Nemesu in 2.1/2" scantlings hovers between USD 940-960 per ton,
almost as high as ever seen even during the peak-years. Unfortunately analysts report a
sudden improvement in the CNF price is not expected soon.
Over the next few weeks Dutch traders are anticipating a slow down in activity in
Malaysia because it is the monsoon season and logs are in short supply, also, it is
Ramadan. In early February the Chinese New year holidays begin so the situation in
Malaysia seems not seem ripe for more of the price cutting seen during November, yet the
traders in Holland are very "trigger happy" and are prepared to do much just to
get an order sealed. It is a buyers' market at the moment and the exporters seem stuck
with this for a while.
| CNF Rotterdam |
per ton of 50 cu ft |
| Malaysian DRM Bukit |
| KD Sel.Bet PHND in 3x5" |
USD 910 |
| Indonesian DRM Bukit |
| KD Sel.Bet PHND in 3x5" |
USD 890 |
| Malaysian DRM Seraya |
| KD Sel.Bet PHND in 3x5" |
USD 930-940 |
| Indonesian DRM Seraya |
| KD Sel.Bet PHND in 3x5" |
USD 905/910 |
| Merbau KD |
| Sel.Bet Sapfree in 3x5" |
USD 910-920 |
All based on container shipment at US$1700 per G.P. box,40ft.
The Keurhout Foundation according to trade news sources has modifiedits procedures to
make it better able to be an independent verifier of certificates for sustainably produced
timber for the Dutch market.
The new version of the Keurhout procedures, which will be submitted to international
experts for comment, can be downloaded from www.keurhout@stichtingkeurhout.nl.
The foundation, set up by the Dutch government to see as much certified timber from
sustainable sources as possible on the market as fast as possible and Keurhout is reported
as saying that the Pan European Forest Certification, Forest Stewardship Council and
Canadian CSA certification schemes are the most important for the Dutch market.
Source:ITTO |
