International Tropical s3

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 1 - 15th February 2000 West African Log Prices Contents

International Log Prices p1 FOB per Cu.m Domestic Log Prices p2 Sapele 80cm+LM-C FFR 2000 International Sawnwood Prices p2 Iroko 80cm+LM-C FFR 1900  Domestic Sawnwood Prices p3 International Ply and Veneer Prices p4 N'Gollon 70cm+ LM-C FFR 1650  Domestic Ply and Veneer Prices p6 Ayous 80cm+LM-C FFR 1200 Other Panel Product Prices p6 Prices of Added Value Products p6 Rubberwood and Furniture Prices p7 Myanmar Report From Japan p7 Report From Korea p10 Report From China p11 Average prices for Teak logs in the An Update on the UK p13 December and January 2000 Tender Forecast US Hardwood Sales. Market p14 Abbreviations and Currencies p19 Appendix: Tropical Timber Product Veneer Quality FOB per Hoppus Ton Price Trends Dec Jan 3rd Quality no sale US$3459 4th Quality International Log Prices Average US$3353 US$3409  Sarawak Export Prices Teak Logs Log production has been slow due to poor Sawing Quality per Hoppus Ton weather and because of the Chinese New Grade 1 Year holidays, log inventories continue to Average US$2418 US$2633 decline.  Grade 2 (FOB) per Cu.m Average US$1870 US$1832 Meranti SQ up US$150-160  small US$120-130 Grade 4 super small US$90-100 Average US$1142 US$1058 Keruing SQ up US$135-140  small US$105-110 Sagawa US$209 US$183  super small US$75-80 Kapur SQ up US$140-145 Selangan Batu SQ up US$140-150 Hoppus ton equivalent to 1.8 Cu.m. Teak 3-4th Grade for sliced veneer. Teak grade 1-4 for

1 sawmilling. SG Grade 3 3ft - 4ft 11" girth, other grades 5ft girth minimum.

Domestic Log Prices Ghana

Brazil Mill gate domestic log prices

The National Forest Program is under Domestic log prices remain unchanged. preparation by the Ministry of Environment. The Private sector, NGOs per Cu.m and others will be involved in the Wawa US$28-35  discussions in the next weeks in order to have an agreement by April when the Ceiba US$20-23  Government expects to announce the Chenchen US$22-28 programme. K. Ivorensis US$28-54  Sapele US$54-82  Makore US$54-123 

Logs at mill yard per Cu.m Mahogany Ist Grade US$250 Peru Ipe US$79 Jatoba US$46 Domestic Log Prices Pucallpa Guaruba US$41 Mescla(white virola) US$34 per Cu.m Caoba (Swietenia macrophylla) US$363 Indonesia Capirona (Calycophylum spruceanum) US$67 Catahua (Hura crepitans) US$48 Domestic log prices per Cu.m Cedro (Cedrela odorata) Plywood logs US$145 Face Logs US$105-115 Estoraque Core logs US$80-85 (Miroxilon balsamun) US$73 Sawlogs (Merantis') US$85-110 Huayruro (Ormosia sp) US$79 Falkata logs US$70-80 Rubberwood US$35-38 Pine US$70-80 International Sawnwood Prices Mahoni US$435-450 Brazil

Peninsula Malaysia The year 2000 started with very good economic news. The currency is now stronger (the present exchange rate is 1.77 Logs reais for one USD against 2.0 in early November last year), inflation is now Domestic (SQ ex-log yard) per Cu.m projected to be around 6% for 2000, and DR Meranti US$160-170 more jobs are available. Balau US$145-155 Merbau US$175-185 Also, the Government is reducing the Peeler Core logs US$85-90 fiscal deficit and investment in production Rubberwood US$30-32 and infrastructure is increasing. The Keruing US$150-160

2 projected growth rate of 4% for the year Scantlings (75x125 KD) US$555-565 2000 will probably be surpassed Sepetir Boards US$175-185 Perupok (25mm&37mm KD) US$835-850 K.Semangkok Export Sawnwood per Cu.m (25mm&37mmKD) US$785-795 Mahogany KD FAS FOB Ghana UK market US$1050 Export price levels remain unchanged. Jatoba Green (dressed) US$640 Asian Market Export lumber, Air Dry FOB Guaruba US$180 FAS 25-100mmx150mm and up 2.4m and Angelim pedra US$198 up Mandioqueira US$155 Pine (AD) US$145 DM per Cu.m Afzelia 840 Utile 950 Ayan 500  Sapele 716 Peru Albizzia 450 Otie 450  Cedrella 660 Black Ofram 350 The ban on logging of Caoba and Cedro in Dahoma 450 Ofram 500 the Madre de Dios which has been in effect for about a month will eventually Danta 600 Odum 900  affect availability and prices. This area is Edinam 630 Niangon 700 said to provide around 15 percent of the Emeri 700  Makore 790 total cut of the two species and an impact Ekki 550 Kusia 500 on exports can be expected. The ban is Guarea 600 said to be temporary to allow an Wawa FAS 500 assessment of the forest cut. 1 C&S 400 Mahogany For EU 750  Export Sawnwood FOBCallao/Lima per Cu.m Caoba (Mahogany) US$932 FOB Export Prices for FAQ Boules Cedro (Red Cedar) US$595 25-100mmx100mmx10metre Cumala (Virola) US$266 Congono US$394 DM per Cu.m Ayan 525  Apa 650 Dahoma 400 Otie 340 Malaysia Wawa 320 Guarea 620 The market was generally quiet due to the Ofram 310 Emeri 600 Chinese New Year fesitivities celebrated Niangon 650 from the 4 to around the 14 of February. There was not much price movement during this period. Domestic Sawnwood Prices

Brazil Sawn Timber Export(FOB) per Cu.m Dark Red Meranti (2.5ins x 6ins & up) Sawnwood (Green ex-mill) GMS select & better (KD) US$420-430 Northern Mills per Cu.m Seraya Mahogany US$395

3 Ipe US$295 Red Meranti Jatoba US$221 (22,25&30mm by180+mm) Southern Mills US$225-230 Eucalyptus AD US$112 Rubberwood Pine (KD) First Grade US$110 25mm & 50mm Boards US$145-155 50mm squares US$170-180 75mm+ US$210-215

Caoba per Cu.m Ghana (Swietenia macrophylla) US$666 Capirona (Calycophylum spruceanum) US$82 per Cu.m Catahua (Hura crepitans) US$84 25x150mm Cedro (Cedrela odorata) Odum US$121  US$273 Dahoma US$78  Huayruro (Ormosia sp) US$133 Redwood US$104  Shihuahuaco (Dipterex sp) US$133 Ofram US$69  Tornillo 50x100 (Cedrelinga catenaeformis) US$170 Odum US$156  Copaiba (Copaifera) US$99 Wawa US$39  Dahoma US$85  Report from Indonesia Redwood US$130  Ofram US$59  Sawn timber, ex-mill Domestic construction material International Plywood and Veneer Prices Kampar per cu.m AD 6x12-15x400cm US$250-260 Indonesia KD US$340-350 AD 3x20x400cm US$325-335 The timber industries with forest concessions in East Kalimantan have KD US$380-390 agreed to contribute part of their profits to Keruing the human resource development AD 6x12-15cmx400 US$215-225  programme in the Province. Under the AD 2x20cmx400 US$225-235  so-called Levy and Grant programme, the AD 3x30cmx400 US$230-240  firms will have to donate US$2 per cubic metre for each cubic metre felled. The money will be used to help improve Malaysia human resources in the region. According to official data, East Kalimantan can produce some 7 million cubic metres of Sawnwood per Cu.m logs per year and therefore the Province stands to gain around US$14 million from Balau(25&50mm,100mm+) the Levy and Grant programme. US$200-205 Kempas50mm by (75,100&125mm) US$120-130 Plywood (export, FOB)

4 MR, per Cu.m During 1999 plywood production reached Grade BB/CC a new record level. Preliminary 2.7mm US$355-375 information available on the 1999 production suggests that over 2.1 million 3mm US$285-295 cubic metres of plywood were produced in 6mm US$190-205 Brazil. Most of the increase in production was due to new developments in pine plywood for exports (CDX- construction Brazilian Plywood and Veneer grade).

Brazil's major Elliottii Pine plywood Pine plywood production in 1999 was producers met recently in Imbituva, around 1.1 million cubic metres and this Paraná, to discuss price levels. As the means that Brazil is, at moment, producing value of the Brazilian real has more pine than tropical plywood. For the strengthened against the US dollar, actual year 2000 pine plywood production is price levels are causing producers large expected to reach the 1.3 million cubic losses. The manufacturers agreed to a metre level. 15% production cut and to new reference export prices, which are listed below: Malaysian Plywood

FOB Net per Cu.m 9mm US$240 MR Grade BB/CC FOB 12mm US$230 per Cu.m 15mm US$225 2.7mm US$365-375 18mm US$220 3mm US$290-300 20,5mm US$220 9mm plus US$190-200 Domestic plywood 3.6mm US$290-305 Prices are expected to increase in the short 9-18mm US$210-220 term accompanied by further production cuts which will enable producers to reverse their negative returns. Ghana Veneer FOB per Cu.m White Virola Face Core Face 2.5mm US$190-220 1mm+ 1mm+ Pine Veneer (C/D) US$170-190 Bombax, Chenchen, DM per Cu.m Mahogany Veneer per Sq.m Kyere, Ofram, 0.7mm US$2.45 Ogea,Otie,Essa 623 685 Ceiba 478 526 Plywood FOB per Cu.m Wawa 625 680 White Virola (US Market) Mahogany 810 900 5.2mm OV2 (MR) US$270 15mm BB/CC (MR) US$280 Core Grade 2mm+ per Cu.m For Caribbean countries Ceiba US$230 White Virola 4mm US$345 Chenchen, Otie, Ogea, 12mm US$305 Ofram, Koto, Canarium US$320

Ceiba Plywood Prices FOB

5 Domestic Prices DM per Cu.m Ex-mill Southern Region per Cu.m WBP MR Blockboard 4mm 755 680 15mm White Virola Faced US$312 6mm 760 648 15mm Mahogany Faced 9mm 650 585 US$660 18mm 613 525 Particleboard 15mm US$167

Domestic Plywood Prices Indonesia Brazil

Other Panels Rotary Cut Veneer (ex-mill Northern Mill) per Cu.m Export Particleboard FOB per Cu.m White Virola Face US$120 9-18mm US$105-125 White Virola Core US$94 Domestic Particleboard Plywood 9mm US$145-155  (ex-mill Southern Mill) 12-15mm US$140-150  Grade MR per Cu.m 18mm US$135-145  4mm White Virola US$445 15mm White Virola US$348 MDF Export (FOB) 4mm Mahogany 1 face US$890 12-18mm US$145-160 MDF Domestic 12-18mm US$160-170  Indonesia

Malaysia Domestic MR plywood (Jarkarta) per Cu.m 9mm US$250-260  Particleboard (FOB) 12mm US$230-240  per Cu.m 18mm US$215-225 6mm & above US$120-130 Domestic 6mm & above US$125-140 Other Panel Product Prices

Brazil MDF (FOB) per Cu.m 15-19mm US$155-165 Domestic Price Export Prices 12-18mm US$150-165 Blockboard 18mm per Cu.m White Virola Faced 5 ply B/C US$220

6 Prices of Added Value Products per Cu.m FOB Finger jointed laminated boards US$535-550 Indonesia top grade US$580-590

Mouldings per Cu.m Semi-finished FOB each Ramin casings US$690-705 Dining table Laminated Squares Solid rubberwood laminated top 3' x 5' for turning US$325-335  with extension leaf US$27.5-29ea Laminated Boards As above, Oak Veneer US$45-46ea Falkata wood US$295-305  Red Meranti Mouldings Windsor Chair US$8.0-8.5ea 11x68/92mm x 7ft up Colonial Chair US$10.0-11.0ea Grade A US$555-565 Queen Anne Chair (with soft seat) Grade B US$450-460 without arm US$16.5-17.5ea Malaysia with arm US$21.5-22.5ea Rubberwood Chair Seat 20x450x430mm US$1.50-1.65ea Mouldings (FOB) per Cu.m Selagan Batu Decking US$550-565 Laminated Scantlings Rubberwood Tabletop per Cu.m FOB 72mmx86mm US$480-490 22x760x1220mm Red Meranti Mouldings sanded and edge profiled 11x68/92mm x 7ft up Top Grade US$585-590 Grade A US$635-645 Standard US$540-550 Grade B US$490-500

Brazil Ghana

FOB export Prices for Wawa Mouldings Edge Glued Pine Panel per Cu.m DM per cu.m for Korea 1st Grade US$640 Wawa 5-22x14-28x1.95-2.38mm US Market US$540 Light 900 Discoloured 800 Putty Filled 400 Report From Japan

The Japanese economy may finally be Furniture and Rubberwood Parts starting to rebound and this is having a measurable impact on the mood in the Malaysia trade.

The furniture industries are in the midst of In retrospect, 1999 was the turning point preparing samples for the upcoming in which Japan finally pulled itself out of a Malaysian Furniture Exhibition scheduled serious, two-year long slump. The for the first week of March 2000. momentum came from a series of stimulus measures by the government. The "emergency economic package" of

7 November 1998, the largest stimulus of its and structural DD grade is yen 630-640, type ever introduced in Japan, and public both yen 10 lower than December. The investment financed out of fiscal 1999's Seihoku group intends to try lifting prices expansionary initial budget, combined to little by little after February. In the Kansai produce a large boost in demand, market (Osaka and west), structural panels especially during the first half. Indeed, the are yen 10 lower at yen 700. first half of calendar 1999 recorded a real GDP growth rate of 0.1% year-on-year, Thin plywood prices remain unchanged. the first time GDP growth had been in 2.3 mm is yen 260-270. Medium thick 4 positive figures in three consecutive terms. mm is yen 410-420 and 5.5 mm is yen 520-530. While there are no more low With little reason for much confidence in offers in the Kansai market prices remain domestic private-sector demand, one must on the soft side. look to the public sector and export markets to see what, if any, effect can be Log Prices Hitting Bottom expected from the state props to the economy. Public demand, which has been Log prices in Japan seem to have hit flagging recently, should increase again, bottom because of firm FOB prices due to especially in the first half of this year, as log shortages in the producing countries the expansionary fiscal 2000 initial budget and the weakening of the yen. is implemented. That will be fine as far as it goes, but public investment was at high In Sarawak, log production has been slow levels in fiscal 1999, so unless there are due to poor weather and the Chinese New additional programmes, fiscal 2000 is Year holidays so log inventories continue unlikely to see any increase in to decline. construction activity, the driving force in timber consumption. FOB prices are still moving up steadily. Current FOB prices for Meranti regular There are also doubts in the trade that all (SQ up) is around US$155 per cubic metre the construction budgeted will actually be with some offers up to US$160 by undertaken, since local governments are in aggressive suppliers. Meranti small is increasingly desperate financial straits. holding at US$125-130 while super small Therefore, not too much should be Meranti is up a bit at US$115. expected of public sector demand this year. The weather in PNG is beginning to improve but log prices are on the softer Plywood Market Stagnant side because of a slow down by Chinese buyers. Taun is at US$125-130 per cube The plywood market remains dull. FOB and Calophyllum is around US$125- Domestic 12 mm concrete formboard 135. prices are yen 800-820 per sheet in Eastern Japan. Imported concrete formboard 12 In Japan, the plywood market continues to mm is still available at about yen 750-760 be sluggish such that there is no active log or even lower, which puts limits on any buying, mills buy the bare minimum rise of domestic plywood. In Western volume only. Japan, the prices have been softening with 12 mm concrete formboard being offered Russian Softwood Logs at around yen 840-900, yen 10 lower than December. The total volume of Russian softwood logs imported during 1999 was 5.66 million Softwood plywood prices are affected by cubic metres, the highest in three severe over-production since more mills continuous years. This volume exceeded have shifted using softwood logs. In the the import of North American logs by one Kanto market (Tokyo and the north), million cubic metres last year. Of the structural panels are at about yen 670-680 total, 1.57 million cubic meters were

8 directed to softwood plywood, which The Forestry Agency has established the a increased 500,000 cubic metres from last project team for the promotion of dried year. lumber, to assist in solving the problems of the undeveloped KD sector among A concentration of shipments arrived in domestic wood industries. April and May when 600,000 cubic meters The team will help to improve domestic was brought in, causing an over-supply drying facilities and develop some new and the market quickly declined. Russian drying techniques and give information export prices, as well as the domestic and assistance in finance and information market were hit hard. Russian logs could on loans and subsidies for small to have enlarged their market due to good medium scale lumber companies. Drying price competitiveness but the lumber cost reduction will also be one of the market was depressed throughout last important jobs for the team. year. The All Japan Federation of Lumber Russian log supply this year may be down Associations have also set up a dry lumber slightly but demand from sawmills will promotion office. In cooperation with the stay at about the similar level but for the Forestry Agency, they will try to increase plywood industry it will very likely the KD lumber supply in Japan. increase by 300,000 cubic meters or so this year. Meanwhile, analysts expect mainland China to require 5 to 6 million Logs For Plywood Manufacturing cubic meters of Russian logs and, as such, CIF Price Yen per Koku China may become a competitor with Meranti (Hill, Sarawak) Japan. As the ruble weakens against the Medium Mixed 5,400  US dollar Russia producers are likely to push exports. Meranti (Hill, Sarawak) STD Mixed 5,500  Formaldehyde Emission Rules Meranti (Hill, Sarawak) Small Lot The Ministry of Agriculture, Forestry and (SM60%, SSM40%) 4,400 Fisheries will revise the standard on Taun, Calophyllum (PNG) formaldehyde emission on JAS certified and others 5,200 regular plywood. The revision will be Mix Light Hardwood available in March and will come into effect in April at the earliest. The Ministry (PNG G3-G5 grade) 4,000 will also set a new standard index on Okoume (Gabon) 6,800 laminated lumber, structural panel, LVL, Keruing (Sarawak) fire-retardant plywood and fire-proof Medium MQ & up 7,000 plywood. Kapur (Sarawak) Medium MQ & up 6,000 Former F1, F2, F3 will be changed to Fc (formaldehyde concentration) 0, Fc 1, Fc 2. The emission standard will be tightened Logs For Sawmilling FOB Price Yen as much as the JIS (Japan Industrial per Koku Standard) so that the maximum allowed emission in even the most mild grade Fc 2 Melapi (Sarawak) is restricted to a half of former grade. On Select 8,500 JIS graded laminated lumber the new Agathis (Sarawak) standard is much stricter because it is Select 7,500 likely to be used for exposed posts in the Japanese style rooms. Lumber FOB Price Yen Promotion of dried lumber per Cu.m

9 White Seraya (Sabah) imported for plywood purposes from 24x150mm, 4m 1st grade 175,000 Sarawak, PNG, Solomon Islands and Mixed Seraya 24x48mm, Africa. The number one supplier was PNG, as for 1998 and the volume from 1.8 - 4m, S2S 43,000  PNG was estimated about 395,000 cubic metres.

The Radiata Pine logs from New Zealand Report from Korea dominate the softwood market in Korea and the volume of Radiata Pine logs The hardwood log market in January imported from NZ in 1999 was estimated worsened further and demand continues to about 3,190,000 cubic metres, about 59% be very dull. Many of the importers are of the total softwood log imports of suffering from domestic sales prices lower 5,426,000 cubic metres. than their import cost, but they have to keep turnover moving so as not to fail For February shipment, NZ shippers are completely. asking about US$2 higher than January shipment at US$67 for K grade Peeler The domestic sales price for softwood logs logs, US$73-75 for A grade Peeler logs was below that of the import cost and most and US$73 for K Sawlog with 11 metre of the importers have stopped entering 30%. Actually, these prices are much new contracts for February shipment due higher than the domestic sales prices and to high stocks and the dull market. many of the wholesalers withdrew as they have enough stock until the coming spring Solomon Is. logs for February shipment season. Most of buyers are expecting were offered about US$2-3 lower than prices for March shipment to be a little bit January shipment but some of species, e.g. softer because of slow demand and high Campnosperma, was offered at much domestic stocks. lower prices on shippers fears of low log durability problems. Calophylum was Log Prices, Ex Log Yard in Korea offered at US$130-133, Dillenia at U$118- 120, Campnosperma at US$103-5 with per Cu.m about US$10 drop from last month, and Mixed red at US$95-98 only. Meranti Regular W283,050 Calophylum/Taun regular W243,090  PNG shippers also offered February Solomon Dillenia regular W199,800  shipment a few dollars lower than January Calophylum/Taun 2nd grade W179,820 shipment and their February shipment Mixed Red W156,510  price was Calophylum/Taun around US$118, Dillenia US$110, G-3 US$80, G- NZ Radiata K-11m W102,000  4 US$75. Both of Solomon Islands and PNG have good production in January NZ Radiata KS-3.6m W87,000  even during the rain season and Chinese buyers have been very quiet since last October. These two points forced shippers Wood Based Panels to lower prices for the dull winter market in Korea. But some of the buyers are Total production of panels in December expected to contract new shipment from 1999 was almost at the same level as with end of February because of they anticipate the previous month but domestic sales of Chinese buyers will move again after their plywood dropped 13% pushing up stocks. traditional Lunar New Year holiday. The production of plywood in December Total of import of hardwood logs in 1999 was 64,109 cubic metres, particleboard was estimated about 1,141,000 cubic 61,972 cubic metres and MDF 83,567 metres, about 44% of total volume was cubic metres but domestic sales were only

10 39,483 cubic metres of plywood, 49,460 cubic metres of particleboard and 69,293 Report from China cubic metres of MDF. Dull sales for 3 consecutive months since October resulted 1999 Plywood Imports. in all producers having to build up their stock to very high levels. According to recently released Customs statistics plywood imports were 1.042 Total domestic production of plywood in million cubic metres in 1999 some 38 1999 was 733,680 cubic metres, 14.5% percent lower than in the previous year. higher than 1998 but imports have been According to the analysts, the main estimated at about 750,000 cubic metres, reasons for the fall were as follows: slightly higher than local production. First, prices for plywood increased as Total production of particleboard in 1999 economic recovery took hold in the main was 672,469 cubic metres and MDF plywood importer countries, Japan and reached to 831,254 cubic metres. South Korea. Demand for plywood increased rapidly and prices, which had Prices for combi plywood, tego plywood, fallen to very low levels began to rise. particle board and MDF are all at the same level as last month but some mills are The CIF price of imported plywood was selling with a discount for cash sales. US$321 per Cu.m in China in 1998, and increased to around US$400 per Cu.m in Prices ex factory per sheet 1999 an increase of almost 25%. Specifically the average CIF price of Combi-Plywood imported Indonesian plywood went from 12mm x 4'x8' T-1 W15,000 US$336 to US$ 418 per Cu.m, while 12mm x 3'x6' T-1 W 8,500 panels from Malaysia rose from US$280 to US$307 per Cu.m. 12mm x 4'x8' T-2 W13,800 12mm x 3'x6' T-2 W 7,500 Secondly, after the implementation of Natural Forest Protection Programme, the tariffs on imported logs and sawnwood Tego Plywood was adjusted to zero, but that on imported 12mm x 4'x8' Tego W22,000 plywood was maintained at 15%. Under 12mm x 3'x6' Tego W12,000 such conditions, domestic plywood producers could use cheaper imported logs to produce plywood products that were Particle Board able to compete effectively with imported 12mm x 4'x8' W7,200 plywood. 15mm x 4'x8' W8,000 5 Billion Square metres in 2000 18mm x 4'x8' W9,600 According to the recent data the total value of interior house improvement exceeded MDF 95 billion yuan in China in 1999, 3mm x 4'x8' W2,800 individual city dweller's average value in 6mm x 4'x8' W5,760 house decoration exceeded 20,000 yuan. 9mm x 4'x8' W9,780 12mm x 4'x8' W11,520 Apparently, the house decoration craze was not confined to the big cities such as 15mm x 4'x8' W13,900 Beijing, Shanghai, Guangzhou, Harbin, 18mm x 4'x8' W16,150 Nanjing, Dalian and Chengdu, but also in vast numbers of middle and smaller sized cities. It is estimated that the total housing area in cities and towns would exceed 5

11 billion square metres in 2000, and that Douglas fir log 30cm+ 1400 about 8,300 homes would be decorated at White Oak lumber 2 ins 9800 a total cost of about 30 billion yuan. Canadian lumber 3m 50cm 1500 US maple lumber 2 ins 11000 It is thought that the rapid development of the economy and the pursuit of a higher Teak sawlog 4 m+ 8000 quality living environment was the main Lauan Logs 4m 30cm+ 850 reason for the rapid development of house decoration, providing a sound base for the development of the home decoration Qindao yuan per Cu.m sector. Douglas fir log 30cm+ 900 Luan Log (mixed) 1850  Timber Managers Meet White oak lumber 2 inches thick 9500  According to the latest news from the National Timber Circulation Association, the annual meeting of Chinese timber managers is going to be held in March, Nanjing yuan per this meeting will replace the annual Cu.m national meeting of managers from Radiate pine log national timber enterprises. length:6m, dia. 26cm+ 800 Douglas fir log 1350 Foreign enterprises, and solely owned Lauan log 1600 enterprises are also welcome to attend the Kapur/Keruing Log 1500 meeting, according the orgainisers. Teak sawlog 4 m+ 9500 100 billion yuan in Chinese furniture American maple lumber 2 inches 9600 According to the director of the Chinese SE Asian Sawnwood Furniture Association, the furniture 4m Length plus 2850 industry maintained good momentum in 1999 through differentiation in product lines and increased production especially Hangzhou yuan per Cu.m in the interior rather than only the coastal Radiate pine log regions. 6m, dia. over 26cm+ 800 New furniture enterprises tended to be of Douglas Fir sawlog length: large scale and sales tended to be more than 4m 1600 diversified with good order book positions Lauan log 1600 during the year. The latest data indicates Kapur/Keruing log 1600  that the annual production value increased Canadian sawwood 4m+ 1550  by about 12% in 1999, with sales value Teak sawlog 4m+ 8500  topping more than 100 billion yuan. SE Asian Sawnwood 4m Length plus 2900 

Guanzhou yuan per Cu.m Lauan Log Mixed 1800 Keruing/Kapur log 2000 Wholesale Market Prices White oak 2 ins sawnwood 10000 Canadian sawnwood Shanghai yuan per Cu.m length: 4m+ 2300 Radiate pine log US maple Lumber 2 ins 10000 6 m, dia. over 26cm+ 800 Teak sawlog 4 m+ 8800

12 SE Asian Sawnwood Consumers' Association declared that the 4m Length plus 1950  difference is a result of Ikea having less competition in the UK.

August Wholesale Prices, Indonesian and Malaysian plywood 3mm 1220x2440 Sawnwood and Panel Prices in the UK

yuan per sheet FOB plus Commission per Cu.m Beijing 32 Teak 1st Quality 1"x8"x8' Stg2755 Brazilian Mahogany Shanghai 33  Harbin 32 FAS 25mm Stg770  Shenyan 32 Tulipwood FAS 25mm Stg265 Zhengzhou 31 Cedro FAS 25mm Stg410 Lanzhou 28  DR Meranti Sel/Btr 25mm Stg410 Shijiaozhuang 32 Keruing Std/Btr 25mm Stg265 Yingchuan 32 Xian 38  Sapele FAS 25mm Stg375  Jinan 35 Hefei 33 Iroko FAS 25mm Stg390  Qindauo 35  Khaya FAS 25mm Stg375  Chongqing 33 Utile FAS 25mm Stg460  Chengdu 35  Wawa No1. C&S 25mm Stg195 Nanjing 32 Hangzhou 32  Plywood and MDF Wuhan 27 Changsha 33 CIF per Cu.m Guanzhou 32 Brazilian WBP BB/CC 6mm US$440 " Mahogany 6mm US$1275 

Indonesian WBP 6mm US$440  From Europe, an Update on the UK

DFS Furniture, the UK furniture retailer, Eire, MDF BS1142 per 10 Sq.m has announced its results for the full year 12mm Stg32.50 will exceed analysts' expectations of between Stg. 35 million to Stg 39 million. Everyone is talking about the strength of DFS sales increased by 17.5% in the first Sterling but the real problem is the 23 weeks of the fiscal year, while its order weakness of the Euro. As most of the intake saw a substantial increase. tropical producers have shifted to trading Following a poor trading period in 1998, in the US dollar, prices are firming. the group took on a new strategy approach (cutting prices and new advertising) which A recent survey of of builders indicates resulted in improving sales. that they want more information about wood in general. This means sticking to According to a survey, the catalog prices drying schedules and quality for the Swedish chain Ikea are higher in specifications. the UK than in France, some of them are more than double. Ikea has indicated that The Stg 3 million promotional campaign its prices are higher in the UK due to more being started this summer by the Nordic strict safety regulations and higher Timber Council, the UK Forestry transport and land taxes. But the Commission and the TTF should be

13 watched carefully for its softwood bias. In 1999 the Swiss Manor Group reported When will we have a concerted and an increase in turnover to SFr 2.82 billion. cooperative effort to promote tropical Manor, which is active in the retailing hardwoods?. sector with the Placette, Innovazione and Manor department stores and the Fly For more information on the trends in the UK furniture chain, increased its sales area by market please refer to www.worldwidewood.com 1% to sqm 328,700. In particular, turnover of the 12 Fly furniture branches accounted for SFr 57 million, with an increase of Other News from Europe 31% compared with 1998.

In 1999 the French bought FFr 57.8 billion For information on trends in the world furniture worth of furniture (taxes included), this markets try represents a 1% increase compared with http://www.csilmilano.com 1998 (growth on the previous year was 4.5%). In 1999 the average household spending on furniture was stable at FFr Short-term forecast for the North 8,250. Some 7.1 million households American Hardwood Market purchased at least one piece of furniture and 32 million units were sold in total. Inflationary pressure is gaining some strength and interest rates are widely Distribution centres for young clients, expected to go up again in the spring. such as Ikea, Habitat and Fly, accounted Nevertheless, a modest interest rate hike, for 9% of the French furniture market in both short and long-term, is not likely to 1999, with a FFr 5.2 billion turnover. As have strong negative impact on hardwood far as raw materials are concerned, wood markets. accounts for only 30% of the total, 50% of the wood used by the local furniture Evidence from 1999 shows that an interest industry comes from French forests but, rate increase does not necessarily harm the following the storm which damaged 110 economy. The housing market remained million cubic metres of wood last strong, as did the hardwood lumber December, a shortage in quality trees demand. Housing starts were good till (such as oaks and ash trees) is expected. year-end of 1999, even though we observed a modest deceleration during the The German furniture manufacturer Welle last quarter. Single family starts for 1999 (of Paderborn) is considering an alliance as a whole were estimated to be 1,680,000 with a partner specialising in the or 4% above the 1998 number. chipboard sector. The Welle unit, which reports a turnover of DM 100 million, is The hardwood industry entered the 21st currently in the red. The company is also century on an upbeat note, which will planning the move of particularly labour- probably be maintained for the fist half of intensive production in countries such as the year. Demand for lumber, particularly Hungary or Poland: the move should not for green lumber, should be very strong, in result in any job cuts in Germany. fact supply shortages have become a problem for some of the more popular According to the Finnish furniture species. association, in 1999 the total turnover of the Finnish furniture industry decreased by Conditions in the furniture industry are about FIM 150 million to FIM 3 billion, also good, especially in the mid to upper with exports accounting for about FIM 1.3 price range. Analysts believe that the year billion of the total. In order to compete 2000 will be even better than 1999. with large furniture manufacturers small However, more furniture sales do not companies should specialise further or necessarily mean more business for cooperate with other small producers. domestic lumber suppliers.

14 Furniture companies are constantly seeking out new ways to save money. The outlook is better for the export market More furniture parts or knockdown and it is possible that foreign sales in 2000 furniture are being imported and many could reach a new record. In particular, American furniture companies confine Asian buyers have an interest in the more themselves to assembly operations. inexpensive Red and White Oak. The overseas demand should suffice to offset Kitchen cabinets sales are driven by strong any decline in domestic sales. Prices will new home production and a high turnover continue to be held down by stiff of existing homes. Most cabinet makers competition. In addition to the competitive should find strong sales in the first half of battle among North American suppliers, 2000. Lumber supply may become a lumber production in Eastern Europe is problem for some manufacturers, growing, and the threat from non-wooden especially for those who are producing products is intensifying. Furthermore, cabinets of white Hard Maple. The any slowdown in domestic sales will drive demand for flooring and architectural producers to the export market, thus millwork is also healthy. However, more exacerbating the challenge to gain the flooring capacity will come on-line in the business of foreign buyers . All of this next several months, and competition from makes it difficult for sawmills to earn an overseas suppliers will also increase. acceptable return on export sales.

Sales of low-grade lumber are not as Turning now to the supply side, it is strong as for the higher grades. The believed that production will remain increased volume of recycled and rented steady this year unless adverse weather pallets will negatively impact the new condition will hamper the logging activity. pallets business and, by implication, the The high cost of timber may lead to the sales prospects of pallet cants and lumber. closure of small fringe sawmills and Also, sales of railroad ties are not likely to thereby curtailing the output of sawn improve and prices are under pressure. lumber. However, the lost output will The overall demand for low-grade lumber probably be offset by increases in in 2000 will be below 1999 levels which production of larger and more efficient may lead to the closure of several saw mills. mills specializing in such woods. The internet is likely to bring about The modest slowdown in the domestic profound changes in the way hardwood economy, which started in the last quarter lumber is bought and sold, it will enhance of 1999, may become more pronounced in market transparency. Sawmills and end- the coming summer. This could lead to users will be better informed, thereby lower housing starts and reduced orders contributing to less erratic price swings for manufacturers of furniture, cabinets, which are often based on rumours and millwork, and other secondary wood lacking information. products. It is possible that we will see an increase in the availability of hardwood, at There are significant price variances least for certain species, grades and between species and growing regions. The thicknesses of lumber. This will likely tables below demonstrate these differences result in price reductions for some items. during the past month. (Note that the Already, sawmills are becoming more comments and data refer to 1000 Board cautious and refrain from increasing their Feet (MBF) of top quality lumber, 1" inventory. thick. Imported lumber is quoted at dockside West Coast port of entry. In view of the strong lumber market in the Approximately $ 50.00 to $ 55.00 will first half of 2000, the anticipated softer have to be added for East Coast ports.) market conditions in the second half will not be enough to depress total sales this Mainly as a result of the ready supply of year below that of 1999. plantation logs, Mahogany and Meranti

15 lumber remains in a perfect balance. Prices of the species have been stable for The demand for the common grades is more than one year. weakening, mainly due to reduced purchases from truck flooring manufacturers. Strip flooring demand Mahogany (at West coast port of entry) shows a little bit more life. Nevertheless, KD US$2905 No Change the overall market conditions could cause AD US$2525 No Change some softening in low-grade prices. Export demand has improved and should remain fairly good at least until summer. It Meranti (at West coast port of entry) is possible that we may experience Clear, dark red moderate increases in top-quality White KD US$2385 No change Oak prices later this year. Clear, light red KD US$2220 No change White Oak North’n Region KD US$1300 No Change AD US$870 No Change Sales of good quality Red Oak lumber will South’n Region KD US$1170 No be steady if export markets remain strong. Change Prices for the upper grades are high in AD US$870 No Change most regions, especially for green boards. On the other hand, kiln dried lumber and Appalachians KD US$1343  US$25 thick stocks are readily available and AD US$955  US$30 prices may stabilise or even soften a bit later this year. Hard Maple has seen steep price advances Similarly, demand for the common grades during the past year. While Hard Maple by flooring plants may diminish in the demand and prices may increase more, it next few months as inventory levels are is possible that soon we will be high enough to meet their immediate approaching a plateau. needs. Therefore, price levels for flooring grade Red Oak may also soften. During the normally heavy winter production period, the species is more readily available, though most of the Red Oak increased output refers to lower quality North’n Region KD US$1675 No logs. Thus, prices of the common grades Change may fall toward the end of this quarter. On the hand, it is not likely that prices of the AD US$1355 No Change upper grades will decline. South’n Region KD US$1330  US$10 AD US$1055  US$20 Appalachians KD US$1510  US$16 Hard Maple AD US$1248  US$10 North’n Region KD US$2480  US$100 AD US$2180  US$115 The domestic markets for White Oak is Appalachians KD US$2320  US$80 quiet. This applies mainly to kiln dried AD US$2000  US$125 wood but less to green Appalachian lumber. In fact prices in the Appalachian are firming a bit. Due to limited production of thick boards, the supply is The strength of the Soft Maple markets is no longer exceeding the demand and tied to the demand for Hard Maple. prices are likely to remain stable. Shipments of all quality grades of Soft Maple should be brisk during the next

16 three months as sales to the furniture the next month. However, the species will industry remain strong. It is possible that become more readily available in the demand may be slowing thereafter. Spring and prices may drift lower, mainly for thick boards.

Soft Maple Regional Differences Northern Region KD US$1260  US$15 All regions experienced a minor cyclical AD US$930  US$15 slowdown of logging during the holiday Appalachian KD US$1365  US$50 season of December 1999. So far this AD US$1025  US$20 year, logging conditions were not favourable. The weather has been quite warm and wet in some areas. Generally, As with Hard Maple, Cherry demand is green lumber is in short supply. Several believed to be near its top. Much Cherry sawmills cannot find enough logs to has been logged recently and the lumber is operate at full capacity or they cannot now in the drying process. When it afford to pay the high log prices. There becomes available for sale we may witness are, however, a few exceptions. For some softening in the Cherry market. instance, it seems that the availability of Thick stocks and the common grades will Poplar is improving. be most affected. However, Cherry prices for the upper grades may continue to rise, In the Northern Region demand for almost up to 5%, during the next few months. every species is good, although the mild weather is hampering the logging activity, In the short-term, domestic Walnut most sawmills still have an adequate demand and prices are steady. If good supply of timber. However, unless the quality timber becomes available it is whether is turning colder, log inventories believed that sales will improve in the will decline in the months to come. longer-term. Presently, the foreign demand Already, inventories of Hard Maple are shows some renewed strength. scarce and Northern sellers may raise the prices of this species. Cherry Appalachians KD US$2925  US$20 A number of sawmills are reducing their production of less valuable species (e.g. AD US$2435  US$35 Aspen and Ash) in favour of an increased output of the higher priced species (e.g. Hard Maple). Producers of low-grade Walnut hardwoods are suffering under the weak Appalachians KD US$1948  US$15 demand for railroad ties. The markets for AD US$1370 No Change pallet lumber and cants are only marginally better. Other North American Species As with the Northern region, the spring- Demand for Ash, from domestic furniture like weather in the South is not good for plants and overseas customers, has been logging. The demand for Red Oak, good in recent months, a condition which Hickory and Poplar remains good leading is expected to prevail for a while. to moderately higher prices for the better Production of the species is not increasing quality grades. Flooring plants also fast enough leading to a tightening supply continue to buy large volumes of green of several Ash items. This is most common Red Oak and White Oak. On the noticeable for the common grades as well other hand, the demand for pallet cants as thick (good quality) lumber. and railroad ties is flat.

The demand for Poplar is healthy and Overseas buyers showed a renewed should remain near present levels during interest in wood from the southern region.

17 More Hackberry and Red Oak has been Basswood. Particularly strong demand shipped to the Far East. While European stems from flooring producers buying a lot customers are buying more White Oak, the of common Hard Maple and White Oak, species does not seem to be in high as well as from kitchen cabinet demand in Asia. Export prices are very manufacturers for Hickory wood. As competitive and some American lumber elsewhere, sales of railroad ties are sellers feel somewhat discouraged about sluggish and the demand from the pallet the Asian market. industry is only fair.

Logging conditions in the Appalachian were fairly good so far this year. The Compiled by AKTRIN from various sources production of several species could be including Hardwood Review, increased, above all Poplar in Virginia, www.Hardwoodreview.com West Virginia and North Carolina. In spite of good demand, only a few species are in short supply, such as Beech and Soft Maple. Nevertheless, good order books led to a general shrinkage of lumber inventories.

Items in strong demand, and subject to rising prices, include Cherry, Hard Maple, White Oak and Poplar of all quality grades, as well as thick lumber of Ash and

18 World Value of the US Dollar 11th February 2000

Aust ralia Dollar 1.586 Indonesia Rupiah 7,295.00 Aust ria Schilling 13.9862 Ireland P unt 0.801 Belgium Franc 41.0021 Italy Lira 1968.0541 Bolivia Boliviano 5.97 Japan Yen 109.59 Brazil Real 1.7665 Korea, Rep. of W on 1115 Cambodia Riel 3795 Liberia Dollar 1 Cameroon C.F.A.Franc 666.7246 Malaysia Ringgit 3.8 Canada Dollar 1.4486 Myanmar Kyat 6.4568 Central African Republic C.F.A.Franc 666.7246 Nepal Rupee 68.725 China Yuan 8.2795 Netherlands Guilder 2.2399 Colombia P eso 1950 New Zealand NZ Dollar 2.03 Congo D.R New Zaire 4.5 Norway Krone 8.1725 Congo, P eople's Rep. C.F.A.Franc 666.7246 P anama Balboa 1 Cote d'Ivoire C.F.A.Franc 666.7246 P apua New Guinea Kina 3.11 Denmark Krone 7.5613 P eru New Sol 3.441 Ecuador Sucre 24997 P hilippines P eso 40.425 Egypt P ound 3.4505 P ortugal Escudo 203.7729 Fiji Dollar 2.0251 Russian Fed. Ruble 28.875 Finland Markka 6.0433 Spain P esata 169.1172 France Franc 6.6673 Surinam Guilder 809.5 Gabon C.F.A.Franc 666.7246 Sweden Krona 8.573 Germany Mark 1.9879 Switzerland Franc 1.6314 Ghana Cedi 3600.5 T hailand Baht 37.465 Greece Drachma 338.13 T ogo, Rep. C.F.A.Franc 666.7246 Guyana Dollar 180.5 T rinadad and T obago Dollar 6.2729 Honduras, Rep. Lempira 14.72 United Kingdom P ound 0.625 India Rupee 43.6235 Venezuela Bolivar 658.25 EU Euro 0.9867

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

19 Appendix 1 Tropical Timber Product Price Trends

Tropical Log FOB Price Trends 1999 -2000

140 ) 0

0 120 1

9 100 9 1 n a 80 J ( x e d 60 n I e c i r 40 P

20 l t r r y v c b n g n p u c a p a o e e u u e a J A O J J F M A S N D M 1999 2000

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

Tropical Sawnwood FOB Price Trends 1999 - 2000

120 ) 0 0

9 80 1

n a J (

60 x e d n I 40 e c i r P 20 l t r r v c y b n n g p u c a p o e a e u a u e J A O J J F M A S N D M 1999 2000

Meranti Brazilian Mahogany Sapele Iroko khaya Utile Wawa

20 Tropical Plywood FOB Price Trends

100 ) 0 0 1 80 =

7 9 9 1 n a 60 J ( x e d n I

e 40 c i r P

20 l t r r y v c b p n n g u c a p a o e e u e a u J A O J J F M A S N D M 1999 2000

Indonesian 2.7mm Indonesian 6mm Brazilian Virola 5.2mm Brazilian Pine 9mm Malaysian 2.7mm Malaysian 9mm