International Log & Sawnwood Prices

1. CENTRAL/ WEST AFRICA

Producers resigned to weaker demand in EU markets
Producers are expressing confidence that the current price
stability and steady order volumes for African species will
continue for at least the first quarter. There were no
changes in prices over the holiday period even though
business was quiet.


As previously reported, exporters believe that demand in
Europe for West African timbers will continue at the same
pace seen in 2017 as there appears no incentive for change
in consumers’ preference for pale coloured timber.


The market for tropical timbers continues to suffers from
constant negative publicity and the increasingly stringent
application of the EUTR in European importer countries.


The current opinion of producers is to wait and see but
with a strong expectation that stability will prevail while
Asian and Middle East markets begin to develop more
strongly.


Impact of Chinese New Year holidays on trade will be
minimal

The Chinese Spring Festival in mid-February will of
course dampen purchases but this will have more impact
on production and trade on SE. Asian producers. West and
Central African exporters are unlikely to feel any
significant change in the pace of business.


Hopes rise for resolution of Kevazingo issue
The industry in Gabon is hoping the recently appointed
Minister for Forests will make early decisions on the
future trade in kevazingo, a species in high demand but
which has been dogged by accusations of illegal activity
over the past year and for which exports are now banned.


The timber industry in Gabon employs almost 30% of the
working population and disruptions to production has an
immediate impact on employment.


Reports are emerging of over felling by some concession
holders in Cameroon, Republic of Congo and Gabon and
the authorities in those countries have introduced tough
new measures and tightened monitoring.


Expanded investment by Chinese anticipated
The Chinese government’s new initiative, Belt and Road
appears to be aimed at encouraging Chinese businesses to
invest higher up the supply chain in overseas countries
supplying raw materials.


This is not new to the tropical timber trade which in
African countries has seen a large percentage of new
investments in recent years made by businesses based in
China.


2. GHANA

 Financial stimulus package for distressed companies
During the Association of Ghana Industries (AGI) Annual
General Meeting, Mr. Seth Twum Akwaboah, the AGI
CEO, said that he believes the government will soon
release funds under a stimulus package for distressed
companies.


According to the AGI, a recently completed survey of
companies was useful in identifying those companies in
need of financial assistance to revive their operations.


Mr. Akwaboah explained that some companies need
significant financing and that for some there is a need for a
quick release of funding.

The AGI AGM was the occasion for election of a new
president and Dr. Yaw Adu Gyamfi was chosen to take
over from the outgoing president Mr. James Asare Adjei,
who previously served since 2013. Dr. Gyamfi served the
AGI as the first Vice President in charge of Large Scale
Industries.


Adjei said he intends to continue with the valuable
projects started under the departing president and that he
wants to empower chairpersons for all the various sectors
represented by the AGI so as to rebuild the capacities of
SMEs in the country.


The new AGI president also announced the association
will be working with government to implement
industrialsation policies particularly ‘one district one
factory’ initiative.


For more see: http://agighana.org/


Government determined to reduce power tariffs in
2018

Mr. Ken Ofori-Attah, Ghana’s Minister of Finance has
said the government is determined to bring down the price
manufacturers pay for energy.


It has been reported that the government has prepared
proposals for a reduction in energy charges and has
submitted this to the Public Utilities and Regulatory
Commission for consideration. The new administration in
Ghana is doing everything it can to ensure the continuous
supply of low cost power in order to lift productivity and
competitiveness of the manufacturing sector.


3. MALAYSIA

 Mixed start to 2018
2018 started mixed in Malaysia. On the one hand there
was an encouraging growth projections from the World
Bank but on the other there remains a risk of a trade
conflict with the EU over oil palm.


Economic growth in Malaysia accelerated through 2017
with year-on-year growth projected to be 5.8%, the
highest annual growth rate since 2014. Growth is forecast
to remain strong at 5.2% for 2018 according to the
latest Malaysia Economic Monitor, from the World Bank.


This report says “Accelerated growth has been fueled by
strengthening domestic demand, improved labour market
conditions, and wage growth, as well as improved external
demand for Malaysia’s manufactured products and
commodity exports. Capital expenditure has also increased
due to higher private and public investment.”


According to the press release from the Bank strong
growth prospects pave the way for additional reforms such
as policies to boost productivity and address constraints
such as a lack of competition in key markets and critical
skills deficits.


For more see: http://www.worldbank.org/en/news/pressrelease/
2017/12/14/malaysia-economic-growth


The year also started with an ominous warning of a
potential trade war. Plantation Industries and
Commodities Minister Mah Siew Keong Malaysia said if
the European Union moves to ban palm oil use in biofuel
mix Malaysia will have no choice but to retaliate.

Added value products from oil palm stems
In other oil palm news the Plantation Industries and
Commodities Minister said some 5.7 million hectares of
oil palm estates undergo replanting after 25 years and that
annually there are between 80,000 ha and 100,000 ha of
oil palm plantations felled yielding around 18 million
palm stems.


This is a valuable but largely underutilised raw material
said the minister when opening the Fibre and
Biocomposite Centre (Fidec 3) and Furniture Durability
Testing Laboratory at the Olak Lempit furniture complex
in Banting.


Fidec 3 is an initiative of the Malaysian Timber Industry
Board (MTIB) to provide testing services to the industry
and higher learning institutions as well as aiding in the
commercialisation of biocomposite products.


Last year biocomposite products manufactured into
plywood, chipboard and wood-plastic composites
contributed 29% of the total export value of the national
timber industry.


Export growth weighed down by strong ringgit
Malaysia’s export growth slowed to 14% year on year
weighed down by the strengthening ringgit. The
Malaysian ringgit averaged RM4.16 to the US dollar in
November 2017, up from RM4.22 towards year end and is
expected to strengthen further.


Sabah export volumes down
Sabah Statistics Department has released the January to
October 2017 export data. Total timber product exports for
the first ten months of 2017 amounted to 674,129 cu.m,
down around 6% compared to the same period in 2016.

Plywood price update
Plywood traders based in Sarawak reported the following
export prices:


4. INDONESIA

2018 plan for teak and hardwood sales
In a recent series of promotion activities and in a media
release, Denaldy M. Mauna, President and Director of
Perum Perhutani, the Indonesian state owned Forestry
Company, has invited consumers to use Perhutani wood.


Perhutani's marketing team presented its timber production
plan for 2018 indicating that it will have available some
340,000 cubic metres of plantation teak and 416,000 cubic
metres of non-teak wood such as pine and mahagony.


The 2018 plan outlines the price structures to be applied
and provides details of the costs of certification and the
price range depending on size and log quality. Perhutani's
timber sales are also retailed through online sales and up
to November last year online sales reached Rp1.1 trillion.


For more see : https://wijayaeka.info/perhutani.html


Bank Indonesia optimistic on growth prospects
Bank Indonesia (BI) has forecast that the economy is set to
expand by over 5% in 2018 as investments and exports are
expected to increase further.


BI Governor, Agus Martowardojo, said he is confident
that the private sector will continue to expand investment
and raise wages which will encourage greater consumer
consumption in 2018.


2018 exports set to rise
According to Rufi'ie, Director of Forest Product
Processing and Marketing in the Ministry of Environment
and Forestry, wood product exports rose just over 1% in
2017 However, he pointed out that in terms of tonnage
2017 exports dropped.


Despite this sobering news timber sector entrepreneurs are
optimistic that they will increase exports in 2018 said the
Chairman of the Association of Indonesian Sawn Timber
and Processed Timber (ISWA).


According to ISWA, processed wood sales up to October
in 2017 amounted to US$1.72 billion which, says
Soewarni, could grow to US$2 billion. Soewarni considers
the export of FLEGT licensed timber will improve the
competitiveness of Indonesian wood products because the
product is recognised as coming from legal timber.


In related news, the Indonesian Minister of Industry,
Airlangga Hartarto, has said Indonesia's exports face some
obstacles in international markets such as high import
duties. According to Airlangga, efforts must be made to
increase the number of trade agreements to bring tariffs
down.


Indonesian International Furniture Expo (IFEX) 2018
The Indonesian Furniture and Handicraft Industry
Association will host a major furniture and handicraft
exhibition and business to business event in 2018, the
Indonesia International Furniture Expo (IFEX) 2018.

As in previous years local companies will be encouraged
to promote their products directly to international buyers.


See: https://ifexindonesia.com/


5. MYANMAR

 Foreign investment target success
Between April and December 2017 the value of incoming
foreign investment topped US$5 billion or around 95% of
the target.


The Myanmar Investment Commission (MIC) has issued
174 investment licenses covering US$4.8 billion and the
balance was in the Thilawa Industrial Zone where
Japanese investment was the greatest. The MIC has
devolved some authority to State and Regional agencies
and at the regional level 21 licenses were issued to
investors from China, Singapore, Taiwan P.o.C, Hong
Kong, Japan and Malaysia for around US$29 million.


The MIC has issued a list of manufactured products for
which licenses will be issued and these are most for import
substitution. The MIC will provide assistance to investors
to secure land and power supplies.


Greater transparency the key to revive markets for teak
Analysts write that once again the Environmental
Investigation Agency (EIA) has reminded the authorities
in Myanmar that, for as long as they do not provide
transparency in the domestic log flows from forest to mill,
it will be impossible for teak importers to be entirely
satisfied on the legality of the timbers offered for export.


Myanmar has been striving to ensure forest conservation
and the production of verifiably legal timber but still
cannot create a supply chain reporting system that satisfies
critics and meets international standards.


The EIA has made another call for stricter control and
greater transparency in the timber sector so that Myanmar
teak can once again take its place as the’ king’ of timber in
international markets.


Local analysts are dismayed with the latest scathing report
from the EIA saying this does not reflect the reality nor
give due credit for the efforts made to implement the
recommendations of the report: Myanmar Timber Legality
Assurance System (MTLAS) Gap Analysis of April 2017.


The latest EIA report says the pristine forests of Myanmar
are under real and urgent threat. The report also says
European companies are still failing in their
responsibilities to satisfy the due diligence requirements of
the EUT R in respect of teak imports from Myanmar.


The EIA says that the actions of some government
departments in Myanmar have made it all but impossible
to access information that can prove teak has been legally
harvested. This means that importers of Myanmar teak
find it very difficult to comply with regulations aimed at
eliminating illegal timber from the supply chain.


Sale of seized logs
Recently the Forestry Department suspended the sale of
confiscated low quality hand hewn timber in a move to
ensure illegal timber does not enter the supply chain.
However, confiscated timber of high quality is being sold
by the Myanma Timber Enterprise (MTE).


Co-opt local residents to help combat illegal logging
The Director of Forestry in Magwe Region told the media
that the participation of the local people is essential to
combat the illegal logging and to conserve the forest
particularly as the Forestry Department is facing a skilled
staff shortage.


He further said civil society organisations are playing an
important role in calling for enhanced forest governance
and their involvement in negotiations for a VPA is vital.


Support for SMEs
The Government is preparing to expand its support for the
development of SMEs in the country according to Vice
President, Myint Swe, who recently chaired a meeting
with members of the Union of Myanmar Federation of
Chamber of Commerce and Industries. He said the
government intends to provide around 300 billion Kyats
for the SME development.


In related news, the new minimum wages has been
adopted at 4,800 Kyats per day. The previous rate of 3,600
was approved three years ago.


Employers in Myanmar argued for 4,000 Kyats and
employees asked for 5,600 Kyats. One manufacturer from
the wood based industry sector said the change will not
have a big impact on most workers in the timber sector as
they receive more than the new minimum anyway. The
impact will be greatest in the labor-intensive industries
such as garment manufacturing.


6. INDIA

GST to bear fruit over next 5 years
A Fitch Ratings report on the ‘Medium-Term Growth
Potential in Emerging Economies’ says India is likely to
achieve a GDP growth rate of 6.7% annually for the next
five years.


Driving the steady growth says the Flitch report will be
improvements in productivity stemming from recent
reforms such as the introduction of the goods and services
tax (GST).


The report says “Potential GDP should continue to be
bolstered by a fast-rising working age population and good
labour productivity gains. We expect a sharp pick up in
trend growth as the reforms carried out by the government
should start to bear fruit, spurring more efficiency in the
productive process”.


For more see: https://www.fitchratings.com/site/pr/1034704


Rise in sawnwood and particleboard price indices
India’s official wholesale price index for all commodities
(Base: 2011-12=100) for November 2017 released by the
Office of the Economic Adviser to the government (OEA)
rose to 116.3 from 115.5 for the previous month.


The annual rate of inflation, based on monthly WPI, stood
at 3.93% (provisional) for November 2017 compared to
3.59 for the previous month.


Inflation for this financial year so far was 2.74% compared
to 3.9% in the corresponding period of the previous year.


The overall index for wood products and cork group
declined by 0.5% in November to 131.6 from 132.3 for the
previous month due to lower price of plywood,
blockboard, laminated wood and veneer sheets. However,
the price of sawnwood and particleboard rose.


The press release from the Ministry of Commerce and Industry
can be found at: http://eaindustry.nic.in/cmonthly.pdf





2016/17 export round-up
India’s exports of wood and wood products totalled
US$800.49 million in fiscal 2016-17, very little changed
from the previous year. Analysts point out that there is
considerable scope for Indian companies to expand wood
product exports.

The main export markets were the US, China, UAE, UK,
Germany, Netherlands, Hong Kong, Nepal, Canada,
France, Sri Lanka, Saudi Arabia, Australia, Turkey and
Spain.


India is experiencing growing demand for wood products
driven by the growing young and more affluent population
between 18 – 40 years old so domestic consumption of
wood products will increase.


Cushman & Wakefield report – housing starts declined
in 2017

The combined impact of the India Real Estate
Development Act and the introduction of the national
goods and services tax (GST) resulted in a sharp dip in
investment in residential housing in 2017 according to a
recent report from property consultancy Cushman &
Wakefield. The report says only the affordable housing
sector recorded a year-on-year growth (+6%).


See: http://www.business-standard.com/article/companies/newresidential-
launches-declined-35-in-2017-report-
118010200025_1.html


Teak auctions begin as rains recede
As the monsoon rains have receded the Forestry
Department programme for teak and hardwood auctions
has now begun at various depots of the Dangs and Valsad
divisions. Auctions will continue until 22nd of January.


Analysts report that good fresh logs are available for sale
and that around 5,000 cubic metres of teak is being offered
so sales should be brisk.


Industry challenges Customs Department minimum
price for imported teak

Demand for imported teak logs remains steady but not
firm enough for wholesalers to achieve a price increase.


Difficulties with the minimum prices set by Customs
continue and efforts are on-going with the Ministry of
Finance to have this resolved.


Analysts write that since the GST was introduced Customs
have been charging the GST based on their own minimum
price for logs bu, says the trade,t this is not always
appropriate.


For example, when an importer purchases low grade
material such as thinnings or logs with a thick bark or
wide sapwood the price will be lower than average but
Customs is rejecting the price quoted on the import
documents.


Cases have arisen where the purchase price for low grade
logs was around US$290 per cubic metre but Customs
applied a price of US$490 per cubic metre, their minimum
price, and used this to determine the GST to be paid.


Efforts are on to resolve this problem but Customs officers
are not expert on quality specifications and are reluctant to
take the initiative to change. The trade has therefore to
seek redress from Ministry of Finance.

Locally sawn hardwood prices
Prices for imported hardwoods remain as reported at the
end of 2017. Traders report that demand is strengthening
as imported hardwoods are now competing effectively
with imported teak where log sizes are becoming smaller
and the overall quality is deteriorating.

Imported sawn Myanmar teak
Traders say the availability of sawn teak from Myanmar is
satisfactory but that sales are limited to a special category
of conservative buyers as more endusers are opting for
other hardwoods which are available at much lower prices.

Prices for imported sawnwood
Prices for imported sawnwood (KD 12%) remain
unchanged.

Plywood prices
Manufacturers are still rejoicing the reduction in the goods
and service tax on plywood. Plywood prices remain as
reported in December.

7. BRAZIL

Greater transparency for Amazon timber trade
A new online platform will be launched aimed at bringing
greater transparency to the Brazilian timber trade.


The new platform called ‘Timberflow’ is an initiative of
the Institute of Agricultural and Forest Management and
Certification (Imaflora). The tool will provide maps and
graphics on timber production flows and trade of timber
from the Amazon region. The initiative aims to strengthen
legality in the timber sector and to stimulate debate on the
importance of transparency and access to data.


Timberflow will start with data from Pará state, one of
major timber producer states in the Amazon region.
According to IBAMA the platform will be launched in
March this year.


IBAMA's ‘Operation Maravalha’ – a logistic and
physical challenge

To investigate suspected illegal logging it is necessary to
find the exact spot where suspect logs were cut and
compare samples from the cut stump to the suspect logs.


In order to conduct such investigations IBAMA inspection
teams in Minas Gerais and Goiás states have been
mobilised to support action to combat illegal logging in
the region of Colniza.

This is part of the IBAMA ‘Operation Maravalha’ the
name given to this specific operation to combat illegal
logging.


This operation presents a considerable logistical and
physical challenge because of distances involved and
because accessing the forest, especially in the rain season,
is difficult.


Industry needs to be alert to competitive environment
The 65th International Softwood Conference (ISC 2017)
held in Germany provided an opportunity for an analysis
of prospects in the main international markets. The
conclusion was that consumption of softwoods in 2017 has
risen and there are prospects for moderate growth in 2018.


While European markets remain the traditional destination
for EU softwood production a promising development has
been the increasingly important role of exports to Asia, in
particular China. Japan also remains an important export
destination for European sawnwood.


The picture at world level is quite promising but a possible
source of risk is the UK market as Brexit could impact
economy resulting in weaker demand. Another important
challenge relates to the availability of softwood raw
material. In the medium term there is a significant
shortage that could negatively impact the industry.
Analysts said that obtaining raw material will increasingly
play a critical role in the expansion of the softwood sector.


While export market demand is likely to grow the
Brazilian sawnwood industry needs to be alert to the
competitive environment.


Exports of the forest plantations sector until November
2017

Export earnings by the planted forest sector between
January and November 2017 totalled US$7.7 billion, an
11.4% increase compared to the same period of 2016.


The impact of the sector on the trade balance was positive
at US$ 6.8 billion, an increase of 13% year on year. In the
first eleven months of 2017, pulp exports reached US$5.7
billion (+14.1%), paper exports US$1.7 billion (+ 2.3%)
and woodbased panels US$266 million (+18.8%).


Between January to November 2017 sales of woodbased
panels to external markets increased 26%, reaching 1.17
million cubic metres.


In the period from January to November 2017, Latin
American countries were the main markets for paper and
wood panel exports. Revenues from paper exports to
regional markets amounted to US$1.14 billion, an 11%
increase year on year. Regional markets took US$139
million in woodbased panels, up almost 15% year on year.


The wood panel market also saw significant sales growth
in Asia and Oceania. The plantation wood panel segment
registered domestic sales of 5.9 million cubic metres, up
almost 4% year on year.

8. PERU

Forecast rebound in domestic demand
A recent GAIN report has taken a look at the timber
industry in Peru. The December 2017 report says the
domestic market for wood products is strong and the entire
trade was worth around US$800 million in 2017 which
could increase to US$1 billion in 2018 boosted by the
recovery of the construction sector and reconstruction
efforts after El Nino rains that caused flooding and
landslides.


Peru’s domestic demand has grown steadily over the last
15 years driven mainly by the construction and mining
sectors. The US Foreign Agricultural Service office in
Lima says “it sees opportunities for increased softwood
and engineered wood product use in Peru’s construction
sector”


According to SERFOR, of the approx. 700,000 cubic
metres of timber produced over 80% is converted to
sawnwood, 10% to plywood with the balance being for
flooring, laminated wood and poles.


See: https://www.fas.usda.gov/data/peru-wood-and-woodproduct-
trade-peru-remains-strong


Law establishing Yaguas National Park enacted
The President of Peru and the Minister of the Environment
have signed an executive order placing almost 900,000
hectares of forest in Peru’s Loreto Region in the newly
created Yaguas National Park.


Until the creation of this new park the area was only
designated as a protected reserved area.


For more see: http://www.ethicalcorp.com/together-rainforestalliance-
and-utz-will-be-more-powerful-force-positive-change




 

 


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