The cost of logs from New Zealand rose a little in October. This however did not affect exports to China, the largest importer of New Zealand Logs.
The reason for the continued growth in exports was the low shipping costs combined with low exchange rates. It is expected that as a result of China’s continued demand that export levels and prices will remain sold.
The only product for which the price dropped was pruned logs. Having said that China was N.Z’S biggest customer their interest in pruned los has waned meaning that they are now earmarked for the domestic market.
With the recent increased demand for domestic spruce roundwood as well as pulp, in truth the demand for pulp is outgrowing the demand for roundwood, Finland is putting more investment into its forest industry.
It is predicted that growth for next year will exceed half a million cubic meters and may well loom towards three quarters of a million.
For the period January to August 2016 the results show higher growth than in the corresponding months of 2015. This demand for spruce roundwood is expected to continue into 2017 as a direct consequence of investment in the forest industries.
The price of pine and birch still remains below that of spruce. Prices for all three remain below that of 2015 but the good news is that analysts are predicting price rises in 2017.
The latest figures to come out China indicate that growth for September has remained the same as that of August. On the one hand this is reassuring but, on the other may indicate that economic growth in China is once again stalling rather than growing. However this is for state run industries only and doesn’t take into account private enterprise, which may or may not be doing better.
On closer scrutiny the amount of people in state employment and the amount of raw materials supplied was down below the government’s threshold. This may be due to rising debt and a thermally inflated housing market. The factor which stabilises figures and brings them out of the negative, but affords no real growth, is that exports rose by a fraction.
The market for wooden furniture within the EU is to say the least massive. This sector is dominated by domestic suppliers and but this we mean manufacturers within their own countries and from the EU as a whole. At present there trade surplus. Now in part this is due to the large amount of imported furniture coming in from China, Vietnam and Malaysia. After all there is only so many tables and chairs that an individual or family require.
It is fair to assume that European domestic suppliers are dealing in soft woods and oak and that far eastern suppliers deal in tropical hardwood.
Seeing that the market would seem to be saturated at this point in time even though tropical hardwood furniture is offered at a competitive price, it does come as a surprise that Indonesia wants to increase its imports now
In 2015 Indonesian imports rose but not to the same levels as its far eastern competitors.
Where do you think that the vast majority of imported plywood to UK comes from? Surprisingly it is not from countries within the European Union or nor is it from Russia or Scandinavia.The largest supplier of Hardwood plywood into the U.K. is China. Brazil supplies the largest amount of softwood plywood. Of the countries in the EU who ship to the UK are Finland, Latvia and France. They are, in terms of volume, light years away from China and Brazil.
As we have highlighted on many occasions we are a very green and sustainable industry, that doesn’t me we are backward looking technophobes. The image of the forester with an axe and a chainsaw is these days a little romantic and unrealistic and totally inefficient for the demands we have to meet.
When it comes to felling, debarking, regeneration and thinning there is a new product on the market. A harvester head that can be fitted to track based machines of 20 tonnes and over. This head offers fuel economy, outstanding productivity and precision cutting.
This technology insures that we continue to deliver quality timber to the public.
It has always been the case in any sector of business that the price of raw materials to manufactures and end product prices to consumers is dictated to by supply and demand.
As France embarks on the new season of timber auctions it is predicted that the price of the raw material, in this case oak logs, will rise. Sawmills are concerned that in order to cover this increase they of course will have to pass on costs to the customer. Now here in lies their problem. The current prediction of price rises will put the cost of logs at near pre financial crash levels. So for eight years consumers have enjoyed oak at a reduced price. It is feared that this increase will have a detrimental effect on sales.
Oak cannot be planted and harvested within a ten year window it needs up wards of 200 years to reach maturity and although oak is by no means, indeed the planting of saplings is an ongoing project, the stock of fully mature trees is a little reduced. Hence the supply and demand factor.
However, a quality product will always cost more and consumers will always be willing to pay a premium for such a product.
After two good years of rising exports in both wood and rattan furniture the Indonesian government have decided to put in place a plan for long term investment, a way of encouraging growth not only in the two sectors pointed out but also in what is referred to as craft industries. The aim is to make these sectors more competitive as export commodities as well as boosting the domestic market in the face of imports.
Indonesia is dependent on exports and the proposed Five year plan will, it is hoped, help the country’s financial stability. The ‘plan’ is being put in place to help small and medium sized business’s.
As you would expect after Brexit exporters are uncertain about the effect that decision will have on the import of their products. We have seen Sterling fall against the Dollar and the Euro which has made imports rise in price but as yet the effect has not been passed to the British consumers. The markets are just reacting to uncertainty. No trade deals have yet been set up.
Central and West African countries who export Sipo and Sapele are nervious because they export using the Euro. As we stand in August 2016 neither UK or EU purchasers are requesting exporters give them lower prices to compensate for the markets fall. While there has been a slowing of EU imports of tropical wood from Central and West Africa we must factor in that the EU goes on holiday in August which is why the month is traditionally slow.
Once trade deals have been sorted and the UK officially leaves the EU then we will see if the price of tropical timber does indeed rise considerably. The UK is one of the largest importers of that product so Cental and West Africa will be keeping a weather eye on the situation.
Newly released figures from Canada show that the amount of new building starts for that month has risen, this is based on a six month average that has been seasonally adjusted. British Columbia and Ontario are leading this trend particularly for low cost homes. Both of these provinces also lead the way when it comes to the amount of unsold new builds ie most new builds are occupied.
As with most sets of figures and statistics there is another story. In this case that the isolated monthly figures for Canada are slightly down based on urban starts, the good news is that prairie starts have increased. Perhaps this shows an appetite for rural living.