International Tropical s2

International Tropical Timber Organization

INTERNATIONAL ORGANIZATIONS CENTER,5TH FLOOR, PACIFICO-YOKOHAMA1-1-1, MINATO-MIRAI, NISHI-KU, YOKOHAMA, 220-0012, JAPAN [email protected]

Tropical Timber Market Report 16 – 30th June 2002

Contents International Log Prices p2 Domestic Log Prices p3 International Sawnwood Prices p4 Domestic Sawnwood Prices p5 International Ply and Veneer Prices p6 Domestic Ply and Veneer Prices p9 Other Panel Product Prices p9 Prices of Added Value Products p10 Rubberwood and Furniture Prices p11 Report From Japan p11 Report From China p13 News from Germany p16 Report from Netherlands p19 N. American Furniture Markets p20 Abbreviations and Currencies p24 Appendix: Price Trends Economic Data Sources

Headlines

Log availability problems in West Africa. Japan South Sea Lumber Conference revises Page 2 tropical hardwood log import projections. Page 11 Malaysia bans imports of logs from Indonesia. Page 3 In Japan tropical hardwood plywood prices increasing. Page 12 Environmental groups participating in Peru’s debt swap programme. Page 3 China's Forest Protection Programme to have minor impact on timber production. Page 14 APKINDO announces unit to ensure plywood companies operate sustainably. In Germany, a surplus reported for some Page 6 imported plywoods. Page 16

ABIMCI programme for Quality European Commission asked to initiate anti- Certification expanded to include tropical dumping measures against Chinese plywood. Page 7 plywood. Page 17

1 International Log Prices FOB LM B BC/C Euro Sarawak Log Prices Afromosia/Assamela 381 350 - Acajou/N'Gollon 175 152 - Ayous/Obeche 175 160 (FOB) per Cu.m 106 Meranti SQ up US$150-155  Azobe 134 122 small US$120-125  114 super small US$85-95  Bibolo/Dibtou 145 114 - Keruing SQ up US$155-160 Fromager/Ceiba 99 99 small US$125-130 - super small US$95-100 Iroko 228 198 - Kapur SQ up US$140-145 Limba/Frake 122 107 99 Selangan Batu SQ up US$145-150 Moabi 213 190 - Sapelli 221 206 - Sipo/Utile 274 244 - West African Log Prices Tali 129 129 91

There are no changes in prices during June. As I forecast last month, prices have Myanmar remained firm through the month and I still forecast there will be no change through July. Veneer Quality FOB per Hoppus Ton Log supplies in the region are said to be April May only barely adequate, but in Cameroon there 2nd Quality no sales no sales is a shortage of logs even for domestic 3rd Quality no sales no sales further processing due to the now strictly 4th Quality enforced regulations following changes to Average US$3600 US$3602 the tender system for forest concessions. Teak Logs Concessionaires are allowed to exploit only Sawing Quality per Hoppus Ton 2500ha of their forest area each year and as Grade 1 a consequence very few logs are available Average no salesno sales for export. Some mill owners are selling up Grade 2 and contemplating moves to Congo Average US$1935 US$1921 Brazzaville or the Central Africa Republic, Grade 3 however all countries in the region are Average US$1074 US$1123 tightening up forest laws and taking steps to Grade 4 control logging much more closely. Average US$1443 US$1384 Assorted US$979 US$972 Even exports of Okoume logs from Gabon are showing a decline of around 30%. Hardwood Logs Padauk Peeler species and secondary species are still 4th Quality US$1305 - in low demand and European markets are Assorted no sales - very dull because of the upcoming vacation period. Hoppus ton equivalent to 1.8 Cu.m. Teak 3-4th Grade for sliced veneer. Teak grade 1-4 for

2 sawmilling. SG Grade 3 3ft - 4ft 11" girth, other said Malaysian Primary Industries Minister grades 5ft girth minimum. Datuk Seri Dr Lim Keng Yaik.

The ban was in support of the move by the Indonesian government to ban the export of Domestic Log Prices logs last October to combat the problem of illegal logging in that country. Malaysia's Brazil import ban does not extend to logs from other countries. Tropical log supplies are getting back to normal, but many mills are still not able to Malaysia produces around 15 million cubic supply the demand. Plywood producers are metres of logs annually and has imported finding difficulties in supply of veneer. This about one million cubic metres annually is the result of low prices and low demand from Indonesia. The decision to stop imports for tropical veneer over the past 3-4 years of logs from Indonesia was taken to erase during which time several veneer mills have the negative perception of the Malaysian closed. timber industry and to assure buyers that all timber and timber products exported by Malaysia were from legal and sustainable Logs at mill yard per Cu.m sources said the Minister. It was also and to Mahogany Ist Grade ensure that efforts to implement the national Ipe US$73  timber certification scheme under the Jatoba US$38  Malaysian Timber Certification Council Guaruba US$24  would not be jeopardised. Mescla(white virola) US$27 

Logs Indonesia Domestic (SQ ex-log yard) per Cu.m DR Meranti US$165-175  Balau US$170-175 Merbau US$220- Domestic log prices per Cu.m Plywood logs 225  Face Logs US$80-85  Peeler Core logs US$75-80  Core logs US$50-60 Rubberwood US$38-40  Sawlogs (Merantis') US$70-85 Keruing US$165-170 Falkata logs US$90-95 Rubberwood US$42-45  Pine US$75-85 Ghana Mahoni US$480- 490 per Cu.m Wawa US$29-34 Peninsula Malaysia Odum US$27-133 Ceiba US$20-23 The Malaysian government is imposing a Chenchen US$21-40 ban on the importation of logs from Mahogany (Veneer Qual.) US$68-98 Indonesia for an indefinite period with Sapele US$27-104 immediate effect. Any logs from Indonesia Makore (Veneer Qual.)US$40-133 entering Malaysia would be confiscated,

3 Peru As with logs, there are no prices changes As part of the agreement signed between the reported during June. Buyers in Spain and governments of Peru and the USA, three Portugal are quiet, German buyers are international environmental groups are reportedly in the market for Sipo, Khaya participating in the programme "Exchange and Ayous. Supplies of Sapele and Sipo are of the Peruvian debt for Protection of the in the main from Congo Brazzaville and Peruvian Tropical Forests". CAR and just about adequate to meet market International Conservation (CI), The Nature demands. Conservancy (TNC) and World Wildlife Fund (WWF), apparently committed to Gabon mills are offering Moabi and contribute US$ 1,1 million, for financing Douka/Makore plus increased volumes of conservation programmes in Peru and help Izombe and Okoume lumber from the newer in this way to reduce the contracted debt sawmills.. Cameroon sawn Iroko is on offer with USA. and in the region generally prices are unchanged with supply just meeting The agreement obliges Peru to invest in a demand. range of conservation works in the forestry sector. Likewise CI, TNC and WWF are committed to collaborate each providing US FOB per Cu.m $370,000. At the same time the USA Okoume Euro government will provide US $5.5 millions to FAS Standard Sizes 274 cancel part of the Peruvian debt. This Standard and Better 259 agreement will reduce the Peruvian debt FAS Fixed Sizes 297 with the USA and save Peru around US$14 Sipo million in interests over a 16 year period. FAS Standard Sizes 518 FAS Fixed Sizes 518 The funds provided by the three agencies Sapelli will be used for research, reforestation, FAS 442-488 protection and maintenance of national Dibtou Parks, national reserves and restoration of FAS Standard Sizes 381 degraded forests. FAS Fixed Sizes 412

In other news, Peru's timber certification standards, were reportedly been approved by Brazil Mr. Heiko Leideker, executive director of Forest Stewardship Council (FSC), during Demand for tropical sawn wood continues to his visit to Peru on May 30th. be weak Some prices have dropped and demand seems lower than during the same Mr. Leideker declared, as solved, the pre- period last year, particularly in USA. conditions for the recognition of the " Standards of Certification of the Forestry Management for Wooden Products in the Export Sawnwood per Cu.m Peruvian Tropical Forests", this is Mahogany KD FAS FOB interpreted locally as meaning that Peru's UK market no trade standards are officially approved and Jatoba Green (dressed)US$560  recognized by the FSC. Cambara KD US$400  Asian Market(green) International Sawnwood Guaruba US$235 Angelim pedra US$295  West African Sawnwood Prices

4 Mandioqueira US$185 Makore US$394 Pine (AD) US$125  Odum US$475  Sapele US$405  Wawa US$264 

Malaysia

Peru Sawn Timber Export(FOB) per Cu.m White Meranti A & UpUS$290-295 For US Market per Cu.m Seraya Mahogany 1C&B, KD 16% Scantlings (75x125 KD) US$500- Central American market 505  US$1,220-1,245  Sepetir Boards US$185-195  Mahogany 1C&B, KD 16% Sesendok 25,50mm US$320-325  US market US$1,180-1,190  K.Semangkok Walnut 1" Thickness, 6' - 11' length (25mm&37mmKD) US$875-885 US$645-675  Spanish cedar # 1 C&B, KD 16% US$690-700  Ghana Virola 1" to 1 1/2 Thickness, 6' - 8' length, KD US$380-390 An amount of € 19.1 million was realised Lagarto 2" Thickness, from the export of 47,539m3 of wood 6' - 8' length US$280-300 products for the month of May 2002. Ishpingo 2"Thickness 6' - 8' length Compared to the same month in 2001, this US$380-400 showed increases of 6.6% and 5.6% in value and volume respectively. Domestic Sawnwood Prices Total cumulative exports for Jan-May 2002 was 195,892m3 valued at 80.1 million. Brazil Compared to figures for the same period in 2001, this registered decreases in volume (- Domestic prices quoted in US dollars have 5.4%) and value (-3.6%). fallen by between 5 and 15% during June. This is mainly the result of the recent Export lumber, Air Dry FOB devaluation of the real. Some products, such as plywood and pine sawn wood, have been FAS 25-100mmx150mm and up 2.4m and less affected as prices in the local currency up have been supported due to the strong demand in the export market. FOB per Cu.m Afromosia US$753  Asanfina US$414 Sawnwood (Green ex-mill) Ceiba US$160  Northern Mills per Cu.m Dahoma US$239 Mahogany US$770  Edinam US$308  Ipe US$265  Khaya US$500  Jatoba US$180 

5 Southern Mills Odum US$144 Eucalyptus AD US$77  Wawa US$39 Pine (KD) First Grade US$99 Dahoma US$71 Redwood US$97 Ofram US$58 50x75mm Odum US$135 Dahoma US$77 Redwood US$64 Ofram US$64 Indonesia Emire US$64 The Forest Products Inspection Division Sawn timber, ex-mill (FPID) and the Timber Export Development Domestic construction material Board (TEDD) have been merged to form the Timber Industry Development Division (TIDD) of the Forestry Commission (FC). Kampar per cu.m AD 6x12-15x400cm US$225-235 The TIDD takes over the functions of the KD US$295-305 two defunct organisations. The newly AD 3x20x400cm US$310-320 appointed Executive Director of the TIDD is KD US$325-335 Mr. Joseph Pius Peprah, who recently was Keruing the Ag. Chief Executive of the Forest AD 6x12-15cmx400 US$215-220 Products Inspection Division. AD 2x20cmx400 US$220-230 AD 3x30cmx400 US$220-235 Peru

Malaysia per Cu.m Mahogany US$1398-1420  Sawnwood per Cu.m Virola US$195-200  Balau(25&50mm,100mm+) Spanish Cedar US$612-620  US$225-235 Catahua US$172-200  Kempas50mm by Tornillo US$330-340  (75,100&125mm) US$135-140  Red Meranti (22,25&30mmby180+mm) International Plywood and Veneer US$220-230 Prices Rubberwood 25mm & 50mm Boards US$170- Indonesia 175 50-75mm Sq. US$180-190 APKINDO, the Indonesian Wood Panel 75mm+ Sq US$195-200 Association recently announced the setting up of a special monitoring unit to ensure plywood companies in the country do not Ghana exceed the sustainable capacity of the forest in terms of raw material supply.

Sawnwood per Cu.m The unit, known as Production Control 50x100mm Body, in addition to ensuring that the

6 plywood companies do not exceed the to lift the pine plywood prices that have sustainable production limits also helps to been very depressed over the past 1-2 years. protect the forest. In other news. the ABIMCI programme for The monitoring unit has mapped out five Quality Certification, originally designed for regions for this purpose and they are : First pine plywood, has now been expanded to region - North Sumartra Riau and Jambi; include tropical plywood. Programme Secong region - South Sulawesi, Lampung activities will be started in Para and and Java; Third region - West Kalimantan, Maranhão State, and 13 companies are Southeast Kalimantan and South involved. A team is now visiting the mills Kalimantan; Fourth region - East for a first evaluation and collection of panels Kalimantan and Sulawesi while the fifth to be tested at the Federal University of region would cover Maluku and Papua. Parana Laboratories. The first mills are expected to be certified by the end of this APKINDO members have expressed their year. commitment to fully cooperate with the Production Control Body and will supply the So far there are six pine plywood mills necessary data on the raw material intake. certified under the Programme. The results The Body also would also extend to have been very positive in terms of marked members their services, which include response, but certified producers have also analysis of the export market for plywood. noted that the the overall efficiency of the mills have improved. This is basically a APKINDO has meanwhile set the result of the improvements in equipment production target for the present year 2002 settings and improvements in the control of to be 5.0 million cubic metres. the operations.

The better prices and strong demand for Plywood (export, FOB) tropical plywood have caused many mills MR, per Cu.m located in the south to reduce pine plywood Grade BB/CC production. To some extent this has helped 2.7mm US$240-250  to lift the pine plywood prices that have 3mm US$200-210 been very depressed over the past 1-2 years. 6mm US$165-175

Veneer FOB per Cu.m Brazilian Plywood and Veneer White Virola Face 2.5mm US$165-190  Market demand for plywood is strong. Most Pine Veneer (C/D) US$135-150  tropical plywood producers have orders for Mahogany Veneer per Sq.m the next 2-3 months and prices have 0.7mm no trade increased. Some producers have mentioned that they have more orders than they can deliver on time because the local supply of Plywood FOB per Cu.m veneer is limited especially for those mills White Virola (US Market) located in the south. 5.2mm OV2 (MR) US$245  15mm BB/CC (MR) US$270  The better prices and strong demand for For Caribbean countries tropical plywood have caused many mills White Virola 4mm US$310  located in the south to reduce pine plywood 12mm US$278  production. To some extent this has helped Pine EU market

7 9mm C/CC (WBP) US$170  Afromosia US$1.05 US$0.61 15mm C/CC (WBP) US$162  Asanfina US$1.00 US$0.59 Avodire US$0.81 US$0.45 Chenchen US$0.63 US$0.38 Mahogany US$0.90 US$0.54 Makore US$0.89 US$0.50 Odum US$1.35 US$0.81

Malaysian Plywood

MR Grade BB/CC FOB per Cu.m Plywood Prices FOB 2.7mm US$255-265  3mm US$215-220  9mm plus US$170-180 Redwoods per Cu.m WBP MR Domestic plywood per Cu.m 4mm US$394  US$328  3.6mm US$240-250  6mm US$245  US$222  12-18mm US$175-190  9mm US$226  US$211  12mm US$223  US$202  15mm US$222  US$204  Ghana 18mm US$217  US$201 

Rotary Veneer Core Face 1mm+ 1mm+ Light Woods Bombax, Chenchen, per Cu.m WBP MR Kyere, Ofram, 4mm US$345  US$234  Ogea,Otie,Essa US$280 6mm US$240  US$192  US$313 9mm US$210  US$178  Ceiba US$231 US$265 12mm US$198  US$162  Mahogany - US$405 15mm US$202  US$165  18mm US$180  US$150  Core Grade 2mm+ per Cu.m Ceiba US$217 Chenchen, Otie, Ogea, Peru Ofram, Koto, Canarium US$265 Peru's exports of plywood, veneers and fibreboard in the period January-April registered declines of 41%, 36% and 61% Sliced Veneer respectively, compared with the same period in 2001. Falling exports is mainly the result of weak prices in Asian markets and in the Face Backing Brazilian markets. Also, uncertainties per Sq.m generated because of the non-renewal of the

8 tariff preference ACE N°8 with Mexico, has generated concern among the importers in Mexico. Indonesia

FOB For Mexican Market per Cu.m Domestic MR plywood Copaiba plywood, (Jarkarta) per Cu.m two faces sanded, B/C, 15mmx4x8 9mm US$215-225 US$300-320 12mm US$180-195 Virola plywood, 18mm US$175-185 two faces sanded, b/c, 5.2mmx4x8 US$395-410 Lupuna plywood, antipolilla, two faces sanded, 5.2mmx4x8 US$315-330 Lupuna plywood, b/c , 15mmx4x8 US$280-285 b/c, 9mmx4x8 US$295-312 Peru b/c, 12mmx4x8 US$285- 315 c/c 4x8x4 US$316-320 Lupuna Plywood per Cu.m 122 x 244 x 4mm BB/CC US$404  122 x 244 x 6mm BB/CC US$399  Veneer Prices 122 x 244 x 8mm BB/CC US$390  122 x 244 x 10mm BB/CC US$383  122 x 244 x 12mm BB/CC US$381  FOB per Cu.m 122 x 244 x 15mm BB/CC US$383  Lupuna 2.5mm US$200-205  122 x 244 x 18mm BB/CC US$380  Lupuna 4.2mm US$210-225  Lupuna 1.5mm US$235- 240  Other Panel Product Prices

Brazil Domestic Plywood Prices The domestic over supply of MDF and Brazil particleboard has forced local producers to export more of their production. A huge increase in supply of these woodbased Rotary Cut Veneer panels is expected over the next months. (ex-mill Northern Mill) per Cu.m MDF and particleboard exports during the White Virola Face US$96  first 5 months of this year were higher than White Virola Core US$80  exports for the whole of last year.

Plywood The recent devaluation of the real has helped (ex-mill Southern Mill) increase the competitiveness of Brazilian Grade MR per Cu.m MDF and particleboard in the international 4mm White Virola US$310  market. Exports of OSB are also expected to 15mm White Virola US$215  begin next month. 4mm Mahogany 1 face US$940 

9 Export Prices Blockboard 18mm per Cu.m Domestic Price White Virola Faced 12-18mm US$165-180 5 ply B/C US$195 

Domestic Prices Peru Ex-mill Southern Region per Cu.m Blockboard Domestic Particleboard Prices 15mm White Virola Faced US$225  15mm Mahogany Faced US$860  per Cu.m 1.83m x 2.44m x 4mm US$264  Particleboard 1.83m x 2.44m x 6mm US$218  15mm US$145  1.83m x 2.44m x 8mm US$189  1.83m x 2.44m x 9mm US$202  1.83m x 2.44m x 12mm US$186  Indonesia Prices of Added Value Products

Other Panels per Cu.m Indonesia Export Particleboard FOB 9-18mm US$125-140  Mouldings per Cu.m Domestic Particleboard Laminated Squares 9mm US$140-150 for turning US$300-305 12-15mm US$135-140 Laminated Boards 18mm US$125-135 Falkata wood US$300-315  Red Meranti Mouldings MDF Export (FOB) 11x68/92mm x 7ft up 12-18mm US$140-155  Grade A US$520-525 Grade B US$430-440 MDF Domestic 12-18mm US$150-170  Malaysia Malaysia Mouldings (FOB) per Cu.m Selagan Batu Decking US$520-535 Particleboard (FOB) Laminated Scantlings Export per Cu.m 72mmx86mm US$465-470 6mm & above US$135-150  Red Meranti Mouldings 11x68/92mm x 7ft up Domestic Grade A US$630-640 6mm & above US$140-155 Grade B US$495-500

MDF (FOB) per Cu.m Ghana Export 15-19mm US$170-175 

10 Parquet Flooring Malaysia

10x60x300mm FOB per Sq.m Apa US$11.98 Semi-finished FOB each Odum US$7.53 Dining table Hyedua US$12.00 Solid rubberwood laminated top 3' x 5' Afromosia US$12.05 with extension leaf US$19.5-20.5ea 10x65/75mm As above, Oak Veneer US$32.5-34ea Apa US$12.70 Windsor Chair US$7.5-8.5ea Odum US$8.94 Colonial Chair US$10-11ea Hyedua US$12.24 Queen Anne Chair (with soft seat) Afromosia US$16.00 without arm US$13.0-14.5ea with arm US$17.0-18.5ea Rubberwood Chair Seat 22x500x500mm US$1.45-1.50ea

14x70mm Apa US$13.00 Rubberwood Tabletop per Cu.m FOB Odum US$9.20 22x760x1220mm Hyedua US$15.65 sanded and edge profiled Afromosia US$15.65 Top Grade US$490-495 10x50mm Standard US$470-475 Apa US$9.65 Odum US$7.47 Hyedua US$11.06 Brazil Afromosia US$12.00

Edge Glued Pine Panel Peru per Cu.m for Korea 1st Grade US$460 Export Flooring US Market US$425

Decking Boards per Cu.m Cambara US$590  Cumaru KD, S4S, (Swedish Market) Ipe US$880 US$650-660 Cumaru KD, S4S, (Asian Market) US$534-545 Ghana Pumaquiro KD # 1, C&B (Mexican market) US$416- 430 Mahogany/Sapele Stg per Piece Quinilla KD 12%, S4S Table nest parts 20mmx100mmx620mm (Asian market) 24.00 US$530-550 Chair parts 9.55 Odum Coffee table parts 38.00 Furniture Folding chair parts 22.20

11 Folding rectangular table 59.40 than last week. Import 3 x 6 coated concrete formboard prices are about yen 1,050,yen 50 higher than a month ago. Imported 3 x 6 Report From Japan JAS concrete formboard prices are yen 860- 880, yen 20-30 higher than a week ago. Tropical log demand Domestic 3 x 6 coated concrete formboard The Japan South Sea Lumber Conference prices are yen 1,030. Yen 60-70 higher and has revised its demand projection made in JAS concrete formboard is yen 850-860, yen December 2001 for tropical hardwood logs. 50-60 higher. The prices of 12 mm The new project is for a total imports of structural softwood Fc2 are rising due to a 1,784,000 cubic metres, 25% less than in strong push by plywood mills, going to 2001. It is estimated that 1,595,000 cubic around yen 720-730 per sheet. DD grade is metres will be for plywood use, 26.5% less in short in supply so that the prices are up than in 2001 and 189,000 cubic metres will by yen 60-70 at about yen 700. be for lumber use, 20.4% less than last year. New Campaign Recent harvest logging restriction in Sarawak to prevent illegal logging have The Japan Federation of Lumber pushed log prices considerably higher Association considering the establishment of which, it is anticipated, may trigger a a special committee to change general reduction in consumption by Japan of SE perceptions of consumers that wood Asian tropical logs. products for housing are expensive. One of the reasons has been that the prices of wood Tropical Plywood Supply Tight products are shown in unit of cubic meter or koku, which consumers find it hard to Log production in Sarawak has dropped due understand. To make it easy to understand, to enforcement of restrictions on illegal the intention is to try to show prices by piece logging and this has reduced the availability or sheet rather than by volume. Through of logs and has caused log prices to soar. this the association hopes to wipe out This has also pushed export plywood prices consumers' suspicions and to promote sales higher because of reduced offers. of domestic wood.

The supply of tropical hardwood plywood Reorganization of JLIA has become extremely tight and prices are rising. Imported sheathing and concrete The Japan Lumber Importers Association formboard for coating are in short supply has announced it intends to reorganize and and the availability of domestic downsize its budget. As a result of manufactured concrete formboard, thin and declining demand in Japan for imported medium thick B & C plywood is also getting wood products, membership fees are tight. This is a supply side issue while on dropping. The association budget for 2002 is the demand side there is a very mixed yen 57 million, about 20 million yen lower picture. Demand by precut mills is steady than last year's budget. but in regular distribution channels, such as Tokyo, wholesalers say enquiries have Four sections of Southern Sea lumber become are inactive as of last week. section, North American lumber section, Russian lumber section and New Zealand In the Tokyo market, imported long lumber section will be combined into two sheathing prices are yen 820-830 per sheet sections, the South Sea Lumber and delivered wholesalers, yen 20-30 higher Plywood Section and Softwood Lumber Section.

12 Melapi (Sarawak) The new head of South-Sea Section is Mr. Select 8,800  Satoru Yasuda of Nissho-Iwai Corp. and Mr. Agathis (Sarawak) Mamoru Sato of Nichimen Corp. is the head Select 8,600  of the Softwood Lumber Section.

Lumber FOB Price Yen per Cu.m White Seraya (Sabah) 24x150mm, 4m 1st grade 113,000 Mixed Seraya 24x48mm, 1.8 - 4m, S2S 42,000

Tropical Log and Lumber Prices

Logs For Plywood Manufacturing June Wholesale Prices

Indonesian Plywood yen per Sheet 2.4mm (thin plywood, A board) 920 X 1830 260 CIF Price Yen per Koku 3.6mm (midium thickness, OVL) 910 X 1820 350 Meranti (Hill, Sarawak) 5.2mm (midium thickness, OVL) 910 X 1820 450 Medium Mixed 8.5mm for sheathing (UTY) 910 X 1820 660 5,600  11.5mm for foundation 910 X 1820 800 Meranti (Hill, Sarawak) 12mm concrete-form ply (JAS) 900 X 1800 860 11.5mm flooring board (JAS) 945 X 1840 1030 STD Mixed 5,700  3.6mm baseboard for overlays (OVL) 1230 X 2440 650 Meranti (Hill, Sarawak) 5.2mm for packing 1230 X 2440 700 Small Lot 8.5mm for packing 1230 X 2440 1000 (SM60%, SSM40%) 4,900  Malaysian Plywood Taun, Calophyllum (PNG) 2.4mm (thin plywood, A board) 920 X 1830 260 3.6mm (midium thickness, OVL) 910 X 1820 350 and others 5,000  5.2mm (midium thickness, OVL) 910 X 1820 450 Mix Light Hardwood 8.5mm for sheathing (UTY) 910 X 1820 660 (PNG G3-G5 grade) 4,200  11.5mm for foundation 910 X 1820 800 Okoume (Gabon) 6,500 11.5mm concrete-form ply (non-JAS) 900 X 1800 860 Keruing (Sarawak) 11.5mm flooring board (non-JAS) 945 X 1840 1030 Medium MQ & up 6,900  3.6mm baseboard for overlays (OVL) 1230 X 2440 650 Softwood Plywood Kapur (Sarawak) Medium 9.5mm foundation of wall (JAS) 1220 X 2440 1270 MQ & up 6,000  12.5mm Sheathing (T&G JAS) 606 X 2273 910 15.5mm foundation (T&G JAS) 1220 X 2440 2100 18.5mm Foundation (T&G JAS 1220 X 2440 2400 9.5mmfor packing (non-JAS) 1220 X 2440 na Particleboard Logs For Sawmilling FOB Price Yen per 12mm for woodworking 910 X 1820 460 Koku 15mm for woodworking 910 X 1820 570 OS B 11.9mmfoundation of roof (JAS) 910 X 1820 740 9.5mm foundation for 2 by 4 910 X 2440 900 6.5mm for packing (non-JAS) 1220 X 2440 710 13 9.5mm for packing (non-JAS) 1220 X 2440 910 have a minor impact on timber production if viewed over a decade.

This is because the State will also implement projects to establish fast-growing and high-yielding forest plantations. According to current plans, the State will Report from China establish 13.33 million hectares of commercial forests in 18 provinces. It is Positive Economic Indicators projected that these forests will supply 130 million cubic metres annually bringing into According to the latest information from the balance demand and supply. What will State Statistics Bureau, in the first 5 months change, of course, is the type of raw material of this year, the industrial added value that is available. amounted to 1.168 trillion yuan, up by 11.6% over the same period last year. The At present, an average of some 370 million manufacturing sector was the main driving cubic metres of forest resources is consumed force behind the rapid growth of industrial. annually in China and about 40% is supplied from plantations. The State plans that the Statistics show that the contribution to amount of timber supplied by plantations production of the electronics and will go up to 70%. In recent years, some 70 telecommunications equipment million cubic metres (log equivalent) of manufacturing and transportation equipment various forest products, including logs, and electro-machinery sectors during in May sawntimber, plywood, veneer, pulp, paper was up 5.3 percent. and paperboard have been imported. At the end of the next decade China's log and Also, from the same Bureau, the total value sawnwood imports are projected to be only of China's foreign trade amounted to around 20 million cubic metres and will US$221.55 billion in the first 5 months of stabilise at this level said Mr. Lei. this year, an increase of 12.1% over the same period last year. Of this, exports were US Hardwood Export to China US$115.99 billion, an increase of 13.2%, while imports were US$105.56 billion, an It is reported that the United States will shift increase of 10.9%. the focus of hardwood exports from Europe to China where imports of American The favorable trade surplus grew to hardwood in 2001 rose to US$212 million. US$10.43 billion. Of exports, electro- To aid this development the AHEC office in machinery maintained a rapid growth and Shanghai will be expanded. accounted for 47.8% of the total export value. Of imports the value of soybean and Since its first entry into the Asian markets in finished oil products dropped considerably 1992, American hardwood export values to while import of timber and coal were up Asia have risen steadily. US hardwood sharply. exports to China alone in 2001 increased by 9.3% over the previous year. With the Future Timber Imports vigorous growth of China's economy and the market's appreciation of American Mr. Lei Jiafu, Deputy Director of the State hardwood, AHEC has expanded its Forestry Administration, remarked recently promotion to the Chinese market. that, in his opinion, China's Natural Forest Protection Project programme will only News in Brief

14 China's construction sector is offering new opportunities said Minister Wan Guangtao of the Ministry of Construction. He is Tianjin yuan per reported as saying that as China's Cu.m urbanization level was only 37.7% at present Radiate pine log urbanization will continue into the future. 6m 26cm+ dia - According to the State's development Douglas fir log - estimates large numbers of agricultural Luan Logs 1600 workers will relocate to urban areas. Kapur/Keruing Logs 1100 Beech Logs 6m 30cm+ 2500-4800 It is estimated that the urban population is White Oak Sawn 2ins - swelling by fourteen million annually at Canadian lumber 4m - present. It is expected that, in addition to US Maple Cherry the major cities, a number of medium and 2ins sawn - small cities will develop quickly. In the Beech Sawn 5300 immediate future China's economy is Teak sawn 4 m+ 9,500 forecast to grow steadily at a rate of some SE Asian Sawn 4m+ 3000 7%.

Poland is encouraging timber export to China. The Polish premier and ex- ambassador to China, pointed out recently that Poland's exports to China in the first quarter of this year amounted to US$45 million, an increase of 4% over the same period last year. He said that there are great opportunities for Polish medium and small Nanjing yuan per enterprises to export high value timbers such Cu.m as oak and beech for furniture Radiate pine log manufacturing to China. 6m 26cm+ dia 800 Douglas fir log For information on China's forestry try: 1335 www.forestry.ac.cn Luan Logs 1600 Kapur/Keruing Logs 1500 Beech Logs 6m 30cm+ - Shanghai yuan per Cu.m White Oak Sawn 2ins - Radiate pine log Canadian lumber 4m 1400 6m 26cm+ dia 700 US Maple Cherry Douglas fir log 2ins sawn 2200 1350 Beech Sawn 9000 Luan Logs 1650 Teak sawn 4 m+ - Kapur/Keruing Logs 1780 SE Asian Sawn 4m+ 2850 Beech Logs 6m 30cm+ 4600-7200 White Oak Sawn 2ins 12000 Canadian lumber 4m 1350 Hangzhou yuan per Cu.m US Maple Cherry Radiate pine log 2ins sawn 11500 6m 26cm+ dia 900 Beech Sawn 7-8500 Douglas fir log Teak sawn 4 m+ 9500 1350 SE Asian Sawn 4m+ 2150 Luan Logs 1700

15 Kapur/Keruing Logs 1700 Beech Logs 6m 30cm+ - German International Trade Performance White Oak Sawn 2ins - Canadian lumber 4m 1400 According to recent whole year data, the US Maple Cherry weak German and European economies 2ins sawn - resulted in slowing export performances, Beech Sawn 6500 primarily during the fourth quarter of 2001. Teak sawn 4 m+ 9000 German furniture exports fell by 1.2% in SE Asian Sawn 4m+ 2800 2001 and imports also fell for the first time in years by 4.1%.

Guanzhou yuan per Cu.m Export destinations remained predominantly Radiate pine log the European Union registering, however, a 6m 26cm+ dia 750 decline of 3.7% on 2000. Furniture imports Douglas fir log - from Eastern European countries increased Luan Logs 1500  in 2001 and reached a 44% market share Kapur/Keruing Logs - exceeding, for the first time, the 36% share of the European Union. A positive effect in Beech Logs 6m 30cm+ 2400  face of the rather negative trade performance White Oak Sawn 2ins 11200 was a decrease in the German Trade Balance Canadian lumber 4m - deficit by around Euro 200 million in 2001. US Maple Cherry 2ins sawn 13-14300 Surplus hampers ply markets Beech Sawn 5500  Teak sawn 4 m+ 12500 Over the past eighteen months a SE Asian Sawn 4m+ 2800 considerable surplus has reportedly developed in the supply of some types and sizes of imported plywood, in one case this has caused an accelerated decline in replacement prices. Unfortunately the Wholesale Prices, Indonesian and Malaysian prospect of turnaround in prices exists for plywood 3mm 1220x2440 only a few individual lines. Asian plywood manufacturers, in particular, are doing what they can to establish higher prices. Price yuan per sheet rises planned by the Brazilian plywood Shanghai 32 industry, on the other hand, are going to Tianjin 28 prove far more difficult in the EU markets. Harbin 32 Zhengzhou 30 Brazilian manufacturers of pine plywood are Lanzhou 31 still trying to get higher prices accepted but Shijiazhuang 24 have so far met with only partial success. Yinchuan 29 Some analysts in Europe are of the opinion Jinan 35 that the current upward trend in prices must Chengdu 30 be seen as being connected with the Nanjing 35 discontinuation of the duty-free quota for Hangzhou 30 softwood plywood in the EU. Around Changsha 29 50,000 cubic metres of the quota still Guanzhou 31  remained in the first week of June. In the last two years, each time the quota has been exhausted, prices for Brazilian pine plywood Report From Germany fell, giving reasonable grounds to believe

16 that duty-paid material, too, would be Alno AG, the Pfullendorf-based kitchen available at prices similar to those of producer, whose turnover fell by 2% to EUR plywood imported duty-free. The intention 436mn (US$ 397.96mn) in 2001, will behind manufacturers' current efforts to raise continue to make losses even if, as prices again shortly before the quota is expected, the 2002 losses will be lower than exhausted is therefore to stabilise the in 2001. In 2003 Alno expects to return to prevailing price level. These efforts have so the black. far been successful in as much as the lowest prices, in particular, have been moved up. Ikea in Seligenstadt Brazilian manufacturers of pine plywood, however, are still said to be utilising only By the middle of summer 2002, Ikea, the 40-50% of their total capacity and so the Swedish furniture chain, intends to set up availability of Brazilian pine plywood can, two huge warehouses, including a high therefore, be described as relatively good at rack warehouse with a height of 28 m, on an the moment. area of about 35 ha in the German municipality of Seligenstadt. However, the In comparison, prices for Asian plywood implementation of this project will seem to be picking up rapidly. Lauan depend on the results of an environmental plywood from Indonesia is approaching study, which is being carried out at present. Indo '96 -25% to -22%. A similar trend is developing for film-coated plywood, though Market and Company News from around the price increases planned by suppliers Europe have so far remained moderate. At the same time, pushing through higher prices for film- Claims of Dumping coated plywood will be considerably more difficult as film-coated plywood from the EUWID is reporting that, at its general Baltic States and Russia is still available at meeting held in Lahti, Finland, the Brussels- relatively low prices with no sign of the based FEIC (Fédération Europeénne de market firming. l'Industrie du Contreplaqué) decided to ask Market and Company News the European Commission to initiate anti- dumping measures against Chinese suppliers Leicht closing of gabon plywood. According to the FEIC, the marked growth in imports of low priced German kitchen producer Leicht AG plans gabon plywood lines from China has created to close its production site in Kirchheim, as considerable distortions in the European the firm plans to concentrate the production markets in the last few months. at the head office in Waldstetten. The move would affect 120 staff. In the fourth quarter of last year, traditional suppliers of gabon plywood first noticed Hin & Mit store to be closed increasing imports from China to the main European markets, especially to Holland and In contrast to other branches which could France. Over a period of months the be sold, the furniture store of insolvent situation developed to a point where a German Hin & Mit in Königsbrunn in the significant share of the market had to be Augsburg region will be closed at the end surrendered to Chinese plywood producers. of June 2002. 28 staff will be affected by this closure. Competition in the French market has aggravated an already weak market Alno, further losses condition caused by falling demand since last year. In contrast, market demand in Holland had been stable until the beginning

17 of the year but, by the first quarter, business market is held by four companies. Martela development slowed there also caused by sells under half of the furnishings, Isku one price competition. fourth, Kinnarps and EFG Toimistokalusteet both about 10% to 15%. Analysts at EUWID say the growth in The economic recession, which started in imports is primarily due to the considerably the summer of 2001, has hit sales. lower selling prices offered by Chinese According to Martela marketing chief, suppliers. European manufacturers claim sales have decreased by 20% to 30% from the price level of Chinese plywood is well the summer of 2001, but an improvement below that of European mills, sometimes is on the way. undercutting prices in the market by 15% or more. According to assessments by Isku's results European manufacturers, production cost at Chinese mills cannot be covered at the Finnish furniture group Isku reported current sales prices with the current cost of turnover of EUR 210mn in year 2001, raw materials. The general assumption is compared to EUR 221mn in 2000. The that Chinese suppliers are selling at far operating profit dropped from EUR 9mn to lower prices on the European markets than EUR 1mn. The pre-tax loss amounted to they are in their own domestic market. EUR 2mn, compared to a profit of EUR 6mn the year before. Isku's solvency ratio If this proves to be the case, or if the stood at 47.5%. Isku estimates its result to Chinese suppliers are selling below cost in be positive in year 2002. the European markets, one of the three main criteria would be fulfilled for an in-depth Furniture imports from Indonesia examination of anti-dumping measures by the EU Commission. According to the Central Bureau of Statistics (BPS), imports of furniture from Indonesia to Poland stood at US$ 1.81mn in 2000 and grew to US$ 2.65mn in 2001.

Leading Danish furniture producers boost Maersk agreement with Ikea exports Maersk Logistics of Sweden, has reached The biggest furniture producers in an agreement with Ikea to run its new Denmark continue to take market share distribution centre, located in Valls, in from the smaller ones. About 50% of the Catalonia Spain. The new centre, which 500 Danish furniture producers account will supply Ikea shops all over Spain, for 72% of total furniture exports (41% in Portugal and France, is expected to be in 1997). Danish furniture exports grew by operation by spring 2003. 3% to DKr15.7bn (US$1.8bn) in 2001. The biggest furniture group in Denmark, Tvilum- News From the UK Scanbirk A/S, continues to boost turnover. In 2001, the company reported a turnover of Log Prices in the UK DKr2.3bn, whit a 8% increased if compared with 2000. FOB Finnish Sales of office furniture plus commission per Cu.m Sapele 80cm+LM-C Euro 235- In Finland, companies use about euro 260 250mil. annually to furnish their office Iroko 80cm+LM-C Euro 240-260  facilities. In practice, 90% of the Finnish

18 N'Gollon 70cm+ LM-C Euro 210- complete enough proporties to meet 230 demand. In 2001 some 162,000 new Ayous 80cm+LM-C Euro 210-225  properties were finished, 4% less than in 2000.

UK Sawnwood Prices The decking sector continues to prosper with sales up 200% on the same period last year.

FOB plus Commission per Cu.m For more information on the trends in the Brazilian Mahogany FAS Stg905 UK market please see www.ttjonline.com Teak 1st Quality 1"x8"x8' Stg2250-2600 Tulipwood FAS 25mm Stg325 News from the Netherlands Cedro FAS 25mm Stg430 DR Meranti Sel/Btr 25mm Stg280- In the last 14 days of June the Dutch market 300 for Meranti and Merbau remained stalled. Keruing Std/Btr 25mm Stg200- This is hardly surprising because the 220 summer vacation-period has arrived in Sapele FAS 25mm Stg300-320 Europe.  On June 28 the first holiday makers move on Iroko FAS 25mm Stg325- and throughout the month of August timber 345 buyers' minds will be more focused on the Khaya FAS 25mm Stg370- holiday mood rather than to twisting the 390 brain to decide whether to buy or postpone Utile FAS 25mm Stg370- purchases. Also the general uncertainty that 390 prevails amongst the Dutch partly explains Wawa No1. C&S 25mm Stg270-290 the quiet spell in the Meranti-market and  market for other species, as it is not only Meranti or (tropical) hardwoods in general that are in the doldrums. Also the softwood Plywood and MDF in the UK market is not enjoying any better fortunes.

Negative news from global stock markets CIF per Cu.m and the Dutch market is having an impact, Brazilian WBP BB/CC 6mm US$370 inflation in Holland remains high; the " Mahogany 6mm US$1265 opinion that the euro has led to price- Indonesian WBP 6mm US$320-350 increases in many sectors is deeply rooted.  On top of that there are now more calls for buyers to limit tropical hardwood purchases Eire, MDF BS1142 per 10 Sq.m CIF and consumer trust has weakened. 12mm Stg32.00 The continued decline in the UK stock The formation of the new government in market (down 14% for the year to-date) is Holland still drags on with some interesting worrying the government although they have proposals but there are big question marks indicated that a rise in interest rates may be as to where the money will come from to on the cards. realise the ambitious plans. Generally speaking there is a lot of uncertainty in the House prices are still rising and are said to atmosphere. be overvalued particularly in London by as much as 30%. This is because while the The euro has gained against the dollar and, construction sector is bouyant it has failed to in terms of the guilder, the rate of exchange

19 of the US-currency dropped by 25 cents the market is as depressed as is the case (down 10%). If the weakness of the dollar now. continues it won't be long until the euro and US$ are at par. Given these circumstances it To meet the Dutch requirements Malaysia is not surprising that, with the slow sales in did import substantial volumes of logs every Holland over the past months, traders are month from Indonesia. According to very eager to dispose of stocks. The fall in Maskayu the MTIB publication, around the value of the US.dollar has again led to 33,000 cubic metres of logs were imported serious price competition in the Dutch monthly. If no more logs of Indonesian market for Meranti. origin are imported the question in the minds of the Dutch trade is whether The market for Merbau is almost at a Malaysia can produce enough to meet the standstill also except for some items. Now demand in Holland. that the retail price of Meranti in Holland has reached such low levels, Meranti should Certainly in the short term the impact of the be in the position to win back some market import ban will lead to higher prices for share lost to Sapelle, Mahogany and perhaps locally produced logs and to an overall Brazilian hardwoods, all of which both had increase in prices. Even though the ink on the edge on Meranti due to a lower prices. the bill banning imports was still wet log Now that Meranti is at a more competitive prices in Peninsular went up. price level the competition will be on technical characteristics where Dutch Also new offers for PHND 3x5 Bukit C&F endusers favour Meranti over the Rotterdam were higher the very next day. alternatives. When the holidays are over in Holland it will be interesting to see how the market All this depends, of course, on how prices in develops. Peninsular Malaysia develop in the near future. Although trading Meranti/Merbau between Malaysian exporters and Dutch CNF Rotterdam per ton of importers will be low profile in the 50 cu ft forthcoming weeks as a result of the Malaysian DRM Bukit holidays, price-changes, CNF Rotterdam- KD Sel.Bet PHND in 3x5" USD 850  basis, seem to be possible. Indonesian DRM Bukit KD Sel.Bet PHND in 3x5" USD 825 In early June a Malaysian delegation visited Malaysian DRM Seraya The Netherlands, primarily to brief the trade KD Sel.Bet PHND in 3x5" USD 880-890 on the MTCC timber certification scheme.  During the visit the Malaysian Minister of Indonesian DRM Seraya Primary Industries disclosed that he be KD Sel.Bet PHND in 3x5" USD 860 seeking a ban on imports of Indonesian logs  into Malaysia (both Peninsular and East Merbau KD Malaysia) so it did not come as a surprise to Sel.Bet Sapfree in 3x5" USD the Dutch trade that on June 24,the 900-910 Malaysian Government announced the ban. All based on container shipment. Trends in the US Furniture Sector In the words of the Dutch trade, "with this decision the Malaysian trade is firmly for US Consumer Spending on Household green timber". But, as the trade points out, Furniture there are some downsides to this decision. Holland is a major buyer of graded Malaysian sawn timber, even in times when

20 Throughout 2001, personal income growth remainder of this year. Analysts at AKTRIN in the USA declined from 6.6% at the predict a similar rate for 2003. beginning of the year to a mere 2.7% at year-end. Thanks to massive tax cuts, real Against the backdrop of the economic disposable income declined less, that is from fundamentals, furniture consumption 3.8% to 2.1%. This year started on a positive recovered sharply from its low point of note with real disposable income jumping US$63.57 billion (annual rates) during the 5% during the first three months. third quarter of 2001 to US$66.70 billion in Unfortunately, the economic recovery lost the first quarter of this year. It is not some steam and real disposable income anticipated that this hurried pace will growth came in at only 3.6% in the second continue. In fact we may see slightly lower quarter. It may be even lower - at an numbers in the months to come. For 2002 as estimated 2.9 percent - in the third and forth a whole, it is estimated that the market value quarters of this year. The forecast for next will be US$66.62 billion, or 4.9 percent year is 3.2 percent. above last year's value. Growth may accelerate toward the end of this year and Consumer spending, too, declined during the next year. Analysts anticipate furniture first three quarters of 2001. Surprisingly, consumption to advance by 3.3 percent spending was very strong during the final between 2002 and 2003, bringing its value quarter, in spite of falling incomes. The to US$68.80 billion next year. erratic consumer behavior was particularly evident in regards to durable consumer Selling prices of furniture are fairly stable. goods (including furniture). Spending Therefore, most of the growth in growth on durable goods at the beginning of consumption goes on account of higher 2001 stood at 10.6 percent from where it fell volume sales. to 0.9 percent in the third quarter, only to rebound to a staggering height of 39.4 percent in the final quarter. Considering the US Household Furniture Sales lackluster income growth, the high rate at 70.0 year-end could not be maintained. The first 60.0 quarter of this year saw consumption of durable household goods drop by 9.7 percent 50.0 40.0 and growth in the second quarter stood at billion US$ only 3.0 percent. For the second half of this 30.0 year, we predict a rate of 2.5 percent and a 20.0 rate of 4.3 percent in 2003. 10.0

0.0 The housing sector has a very strong - albeit 1995 1996 1997 1998 1999 2000 2001 2002 2003 forecast delayed - impact on the household furniture demand. Housing starts dropped from 1.62 million (at annual rates) in the second quarter of 2001 to 1.57 million during the A Different Story in Canada last quarter. The fist quarter of this year was very strong, with 1.72 million starts. Personal income growth in Canada fell throughout 2001 and again in the first No doubt this was the result of low quarter of this year. Lower federal and mortgage rates and the emerging catch-up provincial tax rates have somewhat demand following the lull after September mitigated the slide of disposable income 11, 2001. The fast pace of the first quarter is growth. Even though growth may pick up a not sustainable and it will probably drop to a bit in the coming months, the performance rate of approximately 1.57 million for the of this year as a whole will lag behind the

21 performance of 2001. The sky may be brighter again next year with an anticipated growth of disposable income in the vicinity Canadian Household Furniture Sales of 3.1%. 9,000

8,000 Consumer spending was quite erratic in 7,000 2001. After a strong first and second quarter, 6,000 5,000 million consumption growth turned negative in the C$ 4,000 third quarter, only to sharply rebound in the 3,000 final three months. This year started on a 2,000 very positive note, albeit somewhat slower 1,000 0 than at the end of 2001. The remainder of 1995 1996 1997 1998 1999 2000 2001 2002 2003 this year will be still slower, nevertheless the forecast growth rate for durable consumer good spending will stay at a comfortable level in the 3% range. Next year's rate is anticipated to be about 3.3%. American Spending On Office Furniture

Housing construction provided a positive Corporate profits represent one of the force to the economy as a whole and in weakest spots in the American economy. particular to the furniture segment. Pre-tax profits have been falling throughout Following a short dip after the terrorist 2001 and ended 17.4% below the prior attack on New York, housing starts have year's level. While lower corporate taxes rebounded sharply, both in the final quarter provided some relieve, this was not enough of 2001 and again in the first quarter of to bring after-tax profits into the black 2002. Last year, 163,000 new housing units territory. Fortunately, the tide has started to have been started, and this year the number turn. While profits are still meager may be as high as 175,000. Next year may substantially better times toward the end of see fewer starts but we do not think that they this year are forecast. Profits in 2003 may be will drop below 165,000. up by 15%.

Alberta is Canada's undisputed growth Office furniture demand is driven most leader, a long held position which this decisively by the employment growth in province is not likely to surrender anytime office-intensive industries. Due to soon. Ontario and Newfoundland are also corporations' poor profitability, virtually all ranking higher than the national average, new hiring has come to a complete stop. while British Columbia is positioned at the Since the second quarter of 2001, overall low end of the spectrum. employment growth in the USA has been negative. While we believe that the first Furniture consumption in Canada is on a quarter of this year may have been the last long-term advance. Apart from a minor dip quarter with dropping employment figures, in the second quarter of 2001, consumption growth will be very slow at least until the has been climbing in each and every quarter fall. In the last quarter of this year and in since the beginning of 1999. We believe this 2003, job creation may become somewhat trend will continue at least till the end of faster. It is predicted a growth rate of about 2003. The market value (at retail prices) 2 percent. stood at C$ 7,574 million in 2001. Analysts predict a growth rate of 7.6 percent this year Similar to the employment picture, and 4.6 percent next year. This will bring the corporations are in no mood to make new value to C$ 8,148 million in 2002 and C$ capital investments. Business investments in 8,524 million in 2003. machinery and equipment (which includes

22 office furniture) fell by 4.5% in 2001, and only marginally better but growth is the first quarter of this year saw again a drop expected to speed up thereafter to a of 2.3% in comparison to the previous projected rate of 3.3% for this year and 3.9% quarter. Investments in non-residential for next year. construction declined even more. The effect of the past interest rate reductions is now Profit growth for 2001 was negative at 8.9% staring to show a beneficial impact. after a stellar performance of 19.4% in the Business investments in machinery and previous year. This year's profit growth will equipment will be positive in the months to be positive again, but the anticipated rate of come and may accelerate with the passage of 3% is modest. If companies undertake the time. On the other hand, due to relatively necessary rationalizations measures, high office vacancy rates, investments in profitability may raise above the 10% mark office buildings will remain subdued for a next year. while. In 2000, business investments for machinery Office furniture consumption collapsed and equipment grew at a healthy rate of dramatically from its peak of US$43.5 9.3%. The situation has changed billion (at annual rates) in the second quarter dramatically last year. Capital spending of 2000 to US$32.9 billion in the first posted its first annual decline of 2.2% in quarter of this year. This is a decline of nearly a decade. While there will be some 24.3%. Office furniture consumption is now modest growth in the months to come, growing again but at a snail's pace. A market spending on machinery and equipment in value of US$33.2 billion is anticipated this 2002 will likely remain below last year's year, and US$34.6 billion in 2003. Both level. However, a healthy advance of 7.3% values are well below the previous peak year is anticipated for 2002. Not everybody is of 2000 when the market valuation reached affected by the investment slump. US$42.1 billion. Governments, and the office intensive financial sector are predicted to boost their investments at an above average rate. US Office Furniture Sales The continuing weakness of corporate 45.0

40.0 profits is hampering non-residential 35.0 construction. After advancing by less than 30.0 one percent last year, it is predicted to fall billion 25.0 US$ 20.0 by 4.2% in 2002. Next year's growth may be 15.0 in the 3% range. The slow addition of new 10.0 office buildings is not likely to hamper the 5.0 expansion of office space. The national 0.0 1995 1996 1997 1998 1999 2000 2001 2002 2003 office vacancy rate at downtown locations is forecast increasing and standing now at a comfortable 9.3%. Only in a few cities - such as Ottawa and Winnipeg - is office space in short supply

Spending on Office Furniture in Canada Employment is a key indicator for the office

furniture market.Canadian InOffice 1999 Furniture and Sales 2000 growth After growing at a 4.4% annual rate in 2000, stood at 2.6% and 1.1% respectively. This the economy in Canada slid rapidly and even year and3,500 next, growth is predicted to be turned negative in the 3rd quarter last year. about 2%3,000 p.a. Average growth for 2001 as a whole came in 2,500 2,000 at 1.5%. The first half of this year will be million C$ 1,500

1,000 500 23 0 1995 1996 1997 1998 1999 2000 2001 2002 2003 forecast Historically, office furniture demand has always been more volatile than its underlying forces. After a steep increase of 8.6% between mid 1990 and the first quarter of 2001, it had lost more than this entire gain by the end of last year. Consumption is now advancing again, but at a very slow rate. It will take several years before the previous top level of 2000 is surpassed.

24 World Value of the US Dollar 21st June 2002

Aust ralia Dollar 1.7414 Indonesia Rupiah 8630 Bolivia Boliviano 7.151 Japan Yen 121.25 Brazil Real 2.84 Korea, Rep. of W on 1209.4 Cambodia Riel 3835 Liberia Dollar 1 Cameroon C.F.A.Franc 675.44 Malaysia Ringgit 3.8 Canada Dollar 1.5185 Myanmar Kyat 6.5142 Central African C.F.A.FrancRepublic 675.44 Nepal Rupee 77.671 China Yuan 8.27771 New Zealand NZ Dollar 2.0129 Colombia P eso 2387.5 Norway Krone 7.6156 Congo D.R C Franc 346 P anama Balboa 1 Congo, P . Rep. C.F.A.Franc 675.44 P apua New Guinea Kina 3.7888 Cote d'Ivoire C.F.A.Franc 675.44 P eru New Sol 3.518 Denmark Krone 7.654 P hilippines P eso 50.325 Ecuador dollar 1 Russian Fed. Ruble 31.5123 Egypt P ound 4.66 Surinam Guilder 2178.5 EU Euro 1.0299 Sweden Krona 9.3295 Fiji Dollar 2.1023 Switzerland Franc 1.511 Gabon C.F.A.Franc 675.44 T hailand Baht 42.03 Ghana Cedi 8017.5 T ogo, Rep. C.F.A.Franc 675.44 Guyana Dollar 180.5 T rinidad and T obago Dollar 6.087 Honduras, Rep. Lempira 16.4 United Kingdom P ound 0.6681 India Rupee 48.9 Vanuatu Vatu 134.68 Venezuela Bolivar 1285.5

Abbreviations

LM Loyale Merchant, a grade of log parcel Cu.m Cubic Metre FOB Free-on-Board SQ Sawmill Quality SSQ Select Sawmill Quality KD Kiln Dry AD Air Dry FAS Sawnwood Grade First and Boule A Log Sawn Through and Through Second the boards from one log are bundled WBP Water and Boil Proof together MR Moisture Resistant BB/CC Grade B faced and Grade C backed pc per piece Plywood ea each MBF 1000 Board Feet BF Board Foot Sq.Ft Square Foot MDF Medium Density Fibreboard FFR French Franc F.CFA CFA Franc Koku 0.278 Cu.m or 120BF   Price has moved up or down

25 Appendix 1 Tropical Timber Product Price Trends

Tropical Log FOB Price Trends

0 120 0 1 = 7

9 100 9 1

J 80 (

x e d n

e c i r

0 Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun 2001 2002

Meranti SQ & Up Keruing SQ & Up African Mahogany L-MC Obeche L-MC Sapele L-MC Iroko L-MC

Meranti and Keruing Log FOB Price Trends

78 Meranti SQ & Up )

0 Keruing SQ & Up 0

1 73 = 7 9 9 1

J 68 (

x e d n I

i 63 r P

W.African Log FOB Price Trends

0 140 0 1 = 7

9 120 9 1

J 100 (

n 80 I

African Mahogany L-MC e c i Obeche L-MC r 60 P Iroko L-MC

26 Tropical Sawnwood FOB Price Trends

120 ) 0 0 1 =

7 100 9 9 1 n a

J 80 ( x e d n I 60 e c i r P 40 Meranti Brazilian Mahogany Sapele Iroko 20 khaya Utile Wawa

Dark Red Meranti Sel & Btr 25mm FOB Price Trends

70 ) 0 0 1 =

7 68 9 9 1

J 66 (

x e d n I 64 e c i r P

Brazilian and African Mahogany FAS 25mm FOB Price Trends

) 140 0 0

1 130 = 7

9 120 9 1

n 110 a J ( 100 x e d

n 90 I Brazilian Mahogany e c

i 80 r

P khaya 70 60 Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun 2001 2002

27 W. African Sawnwood FAS 25mm FOB Price trends

140 Wawa

) 130 0

0 Sapele 1 120 = Iroko 7 9

9 110 1

J 100 (

d 90 n I

c 80 i r P 70

Tropical Plywood FOB Price Trends

60 ) 0 0 1 =

7 50 9 9 1 n a

J 40 ( x e d n I 30 e c i r P Indonesian 2.7mm Indonesian 6mm 20 Brazilian Virola 5.2mm Brazilian Pine 9mm 10 Malaysian 2.7mm Malaysian 9mm

Indonesian Plywood FOB Price Trends

60 ) 0

0 55 1 = 7

9 50 9 1

J 45 (

d 40 n I Indonesian 2.7mm e c i r 35 Indonesian 6mm P

28 Malaysian Plywood FOB Price Trends

) 55 Malaysian 2.7mm 0 0 1 Malaysian 9mm = 7

9 50 9 1 n a

J 45 ( x e d n

I 40 e c i r

Brazilian Plywood FOB Price Trends

) Virola 5.2mm 0 0

1 70 Pine 9mm = 7 9

9 65 1 n a

J 60 ( x e d 55 n I e c 50 i r P 45

29 Some Sources of Statistical and Economic Data

ITTO Annual Review www.itto.or.jp/inside/review1999/index.html

International Trade Centre www.intracen.org

UN/FAO www.fao.org/forestry

Eurostat http//europa.eu.int/comm/eurostat

IMF www.imf.org

World Bank www.worldbank.org

The Yardeni Data Sorces are temporarily off-line

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