Africa: EU demand unlikely to expand in final quarter

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ITTO
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Producers are satisfied with the current order book positions and consider these as about normal levels for this time of year. They are now more confident about log supplies and have indicated they could meet any increase in demand from EU buyers should they begin to restock. However, producers are not expecting any significant change in the flow of orders from Europe. The Ukraine conflict and sanctions on Russia are beginning to weaken the economies of some EU member states, particularly Germany and France, compounding the impact of the depressed construction sector in many EU member states.

The UK economy is in better shape than that of most EU member states and the housing sector is very active. With a general election due in May 2015 it is likely that the UK government will continue with current fiscal policies.

Although recently there was an improvement in EU tropical timber imports from the very low levels in the first half of the year, buyers in the EU are uncertain of how demand will develop in the final quarter of the year. The pressure to tighten up on implementation of the EUTR is just one factor that could depress growth in imports. Meeting the tough specifications in quality and dimensions is a major challenge for producers and this, coupled with the very narrow range of species required for the EU market, producers are keen to develop those new markets which are open to a larger range of sizes and qualities as profit margins tend to be better.

Finely balance supply and demand

Over the past two weeks no price changes have been reported for either logs or sawnwood. Analysts say it is unlikely there will be any substantial change in the flow of orders over the coming weeks. However, reports are circulating that, due to the Ebola outbreak, Liberia may suspend timber exports which will result in a diversion of orders to countries that are less affected.

At the moment supply and demand appear to be very finely balanced against a background of generally weak economic and market conditions in the EU but steady demand from the Middle East and China.

Boost to housing growth in China will benefit exporters

Demand from buyers for the Chinese market is strong and log and sawnwood prices have settled at around 15% higher than the average in 2013. The recent easing of credit flows in China and the actions of regional administrations to boost housing growth could benefit West African producers.

Producers report demand from companies in Vietnam is good and the expansion of the woodworking and furniture industries is encouraging. The current market outlook is positive with the expectation that the fine balance in supply and demand will maintain the current price stability into the final quarter of 2014.

Log Export Prices

West Africa logs, FOB € per m³
Asian market
LM
B
BC/C
Acajou/ Khaya/N'Gollon
220
220
155
Ayous/Obéché/Wawa
230
230
150
Azobe & Ekki
235
230
150
Belli
290
290
-
Bibolo/Dibétou
150
145
 
Iroko 330
290
260
Okoume (60% CI, 40% CE, 20% CS) (China only) 340 340 260
Moabi 320 300 -
Movingui 220
220
180
Niove
160
155
-
Okan
280
280
-
Padouk
300
275
210
Sapele 340 340 240
Sipo/Utile
360
360
220
Tali 315 315
-

                                                                                                                                              Sawnwood Export Prices

West Africa sawnwood, FOB
€ per m³
Ayous FAS GMS 350
Bilinga FAS GMS 520
Okoumé FAS GMS
480
Merchantable 275
Std/Btr GMS 350
Sipo FAS GMS
660
FAS fixed sizes 660
FAS scantlings 670
Padouk FAS GMS 820
FAS scantlings 870
Strips 500
Sapele FAS Spanish sizes 660
FAS scantlings 670
Iroko FAS GMS 620
Scantlings 695
Strips
440
Khaya FAS GMS
450
FAS fixed
470
Maobi FAS GMS
580
Scantlings
560
Movingui FAS GMS
420
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