Central/West Africa: European buyers stay on the side lines

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ITTO
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Producers in West Africa report that the rather quiet but sustained demand continues with new orders flowing at a steady but unchanged pace.

European buyers have not yet returned in any strength to negotiate contracts for the fourth quarter. This is a slower resumption of the autumn and winter round of purchases. Analysts suggest this may be because prices are fairly stable and there is no immediate pressure from a lack of availability.

Potential in Middle East improves

Producers report that mills are busy preparing shipments for the Middle East and China but order levels have not improved beyond the steady flow seen over the past three months.

The real estate market in just one country, Saudi Arabia, was valued at more than US$ 0.37 trillion last year and is expected to top US$0.4 trillion in five years. Currently, the Saudi housing and construction market is growing at an annual rate of between 5 and 7 percent due to high demand for housing development and commercial projects. Estimates suggest that the Kingdom will need more than 5 million new housing units across all cities by 2020.

FOB prices largely unchanged

The market for W. African timbers in Vietnam has grown and this market is now well established but mainly for a handful of „favoured‟ species. Sawnwood prices in the region are largely unchanged and producers appear satisfied with the current levels and there have been no serious attempts by producers to raise prices.

FOB prices for a few log contracts have moved up but these changes reflect only the normal adjustments not a shift in overall trend. The overall market outlook appears stable through into the fourth quarter with shippers in Cameroon reported as being the most active at present.

Generous incentives for investors in Republic of the Congo

There are positive developments in Congo Brazzaville where the government is very supportive of new investment in the forestry sector providing generous log export allowances for companies investing in processing capacity. On completion of the processing plants companies will be subject to log export quotas. Because of the number of new investors the availability of logs for export will improve. In the medium term the volumes of sawnwood and other processed products from Congo Brazzaville are expected to increase significantly.

Market outlook

Producers are confident of prospects in the final quarter of the year but there have been signals that competition is increasing in the Middle Eastern markets which have always been very price conscious.

Despite the suggestions from many analysts that demand for tropical timber in China may be slowing producers see no evidence of this at present and, as was anticipated, Indian importers have begun to look to African sources to fill the void left by the log export ban by Myanmar.

West and Central African exporters have not yet fully explored the opportunities in the Indian market where SE Asian producers have had success.

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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