After a number of years and with pressure from Chinese flooring producers the Chinese government has finally lifted its inspection tax which was not only eating in to the profits of manufactures but was also causing a number of firms to teeter on the edge of bankruptcy.
The other good news for the Chinese wood sector is that the tax on quarantine and entry and export commodities has been dropped.
There is good news for the South African timber sector. Demand for structural timber and transmission line poles is high and stocks are, at the moment, good. However there is a problem. Around twenty years ago restrictions were put in place to halt the expansion of plantations because of the effect they may have on ground water flow. It is predicted that within a few years South Africa may be forced into a situation of importing timber because the supply from domestic plantations won’t be able to cope. It is argued that the South African government must grant more plantation licences immediately to halt a long term problem.
US forestry and construction giant John Deere posted considerable profit rises for the first two quarters of 2017. A look at last year’s profits for the same period are interesting. First quarter profits were down on this years but when you look at the two quarters combined then 2016’s returns are the same as 2017.
Projections in its construction sector for 2017 appear to show Deere on course to make an operating moderate profit for the year in percentage terms. When you view this in terms of dollars it becomes eye wateringly large, we are talking hundreds of millions. Its forestry division is expected to show a little fall on last year.
A recent report shows that the amount of imported certified sustainable wood that come into the UK in 2015 accounted for nearly all of the UK’s imports. The small amount of uncertified wood that comes into the country is from North America and Africa which to put it mildly does not have a tradition of traceability.
This rise in sustainable product is as a result of pressure from business and a need/ desire to be seen to be green. There is an argument to say that in some cases timber is not specified and there for opportunities are lost because a particular product does not have certification. It is hard to think in the current climate of thinking this loss of business amounts to much.
It is good news for business and the consumer that we demand certified sustainability in our industry. It gives confidence and helps the sector to grow.
Prices in the French construction market are rising and as a result the price of softwood lumber is on the increase. Lumber specifically marked for beams and Spruce assortments, in other words medium cubic meterage has seen small but significant price increases. Small cubic meterage lumber prices remain stable. The winner is saw-log timber which has seen a discernible increase in demand.
These rises in prices are reflected in the regional wood auctions.
British Columbia and Quebec helped push the Canadian housing starts rate for April 2017 above that of March. This was apartment starts. Growth has exceeded unit estimates for five months in a row. Although this was in a small way off set by a fall off of multiple starts. All this is good news but as ever there is a down side and this is the stand alone seasonally adjusted figures which show a decline in all forms of starts throughout Canada.
A Brazillian newspaper has leaked a story that suggests a reversal of policy to allow land in the protected Jamanxim National Park to be used to expand a rail way to enable soybeans to be transported.
The story also contains details of a plan to downgrade some parts of the Amazon to allow deforestation. It has been estimated that the combination of these to projects could result in 1 million hectares of previously protected environmentally important land being lost.
Meranti the traditional wood used for windows and door frames in South Africa has fallen out of favor. Instead of the competition being another species the threat to the market is coming from aluminum.
Pine is also a wood which appears to be going out of favor prices at the moment are stable but should demand fall further analysts predict price reductions. Pine appears to be following plywood paneling where prices have fallen sharply.
American Hardwoods are the only woods which are holding their prices.
It is easier to view the whole picture if we break it down into manageable portions.
Ash. High end timber for domestic and export remains good whereas lower quality product bound for Asia is suffering due to shipping freight costs creating price drops and as a result a drop in profits.
Oak. There continues to be and probably will always be a strong market for this leviathan product. There are always buyers so life, where it is unfair to say is easy, is easier for oak producers and suppliers than other timbers. Standing timber on the other hand while not performing as well is at worst stable in price, and the market is not showing undue signs of concern.
Beech. Here is the real loser. On the export side, as with Ash, shipping freight costs have caused prices to drop, but the double wammy is aggressive competition from Russia whose export costs are lower. France is finding its traditional markets in Asia for this product difficult to access. When it comes to logs there is no real interest in Europe for Beech at the moment. Warehouses of this product are well stocked at the moment.
Switzerland along with the rest of Europe have continued to enjoy very good prices for oak indeed the market is rising steadily. The market for ash has not fared so well, in respect of rising prices. In spite of ash die back and falling exports volumes demand has remained satisfactory. The taste for beech has cooled with the first quarter of 2017 showing falling prices. Prices in the soft wood sector are similar to those of 2016.