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EU CONSTRUCTION REMAINS BRIGHT

Viewed as a whole, actual construction projects and permits to build throughout the EU continues to improve. Some countries have seen spurts of growth while others experience steady if not spectacular improvement. So for the majority that is good news.

The only country not showing any form of improvement is Italy where the housing and construction market remains in a poorly state. You could argue the point that it is slipping into negative growth. The Netherlands by contrast are in the midst of a construction boom. The UK can be categorised, like the remaining EU countries as steady if unspectacular improvement.

The source that provides us with the insight to the health of the construction sector come from a survey of Architects spread over the main 8 EU countries. The question that was put to them was what current and up and coming jobs they have on their books. Further analyses of the figures point to continuing growth into 2016 and in some cases into 2017.

Confidence for the future within the industry remains high.

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GERMAN PELLETS FALL

We all know that if you have a wood burning stove you don’t tend to use it in the summer, and as a result the cost of buying logs in say July is cheaper than in January. Bearing this in mind, how many of us have thought that this pattern also applies to wood pellets.

As we approach summer we are informed by the DEPV, they are the German energy and wood pellet association, that the price of pellets has fallen and to such a degree that they are now cheaper than heating oil. While a lot of the price drop maybe seasonal it is interesting to note that, compared to the same ‘summer’ period last year the current price is below last years. Demand has obviously collapsed. Have the Germans fallen out of favour with pellets and turned to oil? Worrying if you are a German pellet manufacturer.

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EU: TROPICAL HARDWOOD IMPORT BOOM

Particular woods, like most things, go through cycles of being ‘The’ thing to have or ‘So’ last year’s trend. At the end of the day it comes down to design choice coupled with practicality and these days of course sustainability.

Bearing in mind the increasing traceability and availability of tropical hardwoods, it is not surprising that rising imports have once again put this wood in the consciousness of architects and designers. Where once this product was an ecological ‘no,no’, it is fast becoming a ‘Hipster’ choice. It is a group of versatile and beautiful woods that merit a serious look at.

Belgium, France, the Netherlands and Spain have all seen considerable rises in tropical sawnwood imports. Certification seems to be a key factor providing both importers and consumers with product confidence. The only trend buckers are the UK and Italy, where imports have fallen slightly.

Brazil and West Africa currently provide the majority of the imports, even into countries where demand has fallen.

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EU AND VIETNAM: LEGALITY AGREEMENT

Transparency and traceability in our industry have gone beyond mere watchwords. These days they are woven into the fabric of new and existing trade deals. They not only give the consumer confidence but they also insure that we continue to trade, reforest and secure jobs.

In the latest of such moves the EU, one of the largest importers of Vietnamese timber has acknowledged and agreed that the Vietnamese system of regulation which legally assures its timber and wood products, known as VNTLAS, will cover all timber and wood products from that country imported into the European Union. VNTLAS licenced products will therefore not need to be controlled by the EU’s timber regulation restrictions.

It is probably correct to assume this will cut a lot of red tape.

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EU: TROPICAL SAWN HARDWOOD IMPORTS INCREASE

2015 revealed that there was a significant increase of imports of tropical sawn hardwoods into the European Union. It was not only the volume of landed product that increased, but the value. This has been attributed by industry analysts to the Euro being weaker than US dollar.

While on the face of it this is good news, it is argued that import levels of cubic metres are still well below those from before the global financial crisis, the market share is just below that of 2008.

The volume of imports, although increasing, are still sluggish compared with those of temperate sawn hardwoods.

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CANADA: CURB ON HOUSE BUILDING?

As you might expect, when it comes to the exteriors and interiors of Canadian houses an awful lot of wood is involved, which is why this story is of interest to us and our industry.

In brief, the government of British Columbia is worried about the amount of homes currently being built, as it fears that foreign investors are fuelling the boom and are pushing up prices.

It is unclear if the B.C. government will, or indeed can, implement measures which will reduce house prices or if it will try and have a quota system on new builds, which of course will affect our sector.

In the meantime, our industry will continue to supply wood and wood products for new builds as demand dictates.

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EU: HOW WILL THE UK WOOD INDUSTRY VOTE?

With the coming vote on whether the UK should remain in or leave Europe, it is no surprise that the industry group Confor has decided to poll its members for their opinions, but not just on the question of EU membership. Confer would like to know if its members feel that the government are providing enough information on the consequences of either staying or leaving, in order for them to make an informed choice based on fact.

The results of the in or out question would give Confer an indication of the outcome of the referendum as a whole, and they would be able to start looking at the implications for the UK forestry and wood product sector if the country voted the same way. However, all that would be based on an opinion poll ‘prediction.’

It is well to bear in mind that opinion polls before a vote, take the last election, can be spectacularly wrong! Surely it would be better, for its members and the industry, if Confer looked at how none EU countries trade with Europe?

The only certainty in all this is that the UK needs to plant more trees irrespective of the outcome of the referendum.

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UKRAINE LIFTS 10 YEAR BAN

Last week the parliament of Ukraine decided to lift the self-imposed 10 year ban on the exportation of timber which was put in place just 1 year ago. The reasoning behind this swift about turn in legislation was that the ban contravened the Ukraine/EU conditions and agreement which provided so called international macro- financial assistance for the former Soviet republic.

Under the new export terms timber will be sold at government auctions however Ukraine residents by which the agreement must mean individual citizens and / or Ukrainian registered companies trading from Ukraine will not be able to export timber. So to put it simply only non-Ukrainian companies can bid for and export wood sold at the auctions.

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SAWLOG DEMAND AND PRICES FALL

2015 was not a good year for suppliers of sawlogs. Central Europe, Russia, Western Canada and Brazil all suffered from the reduction of lumber and log prices. Europe saw the most dramatic fall in prices. So what do the experts put this down to? The most obvious is the strengthening US dollar combining with weakening European currencies. There was also a considerably reduced demand from Asia, namely China, Japan and south Korea, but they still accounted for half of the world’s imports!

Of the major sawlog regions, only one saw prices rise, and that was the US South where production actually increased over the past few years.

This decline for the majority of regions is in its second year and surly must be ringing alarm bells to deafening levels by now.

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2015 FINAL QUARTER RESULTS SUMMARY

These final results of profitability and demand for our industry provide interesting reading and give the most accurate indicator of the state of the all the wood related sectors which make up the market in which we work.
In simple terms, are we healthy or sickly as we move further into 2016?

Global Sawlogs
With demand in Europe and Asia falling, combining with the strengthening US dollar, the price of Sawlogs has fallen to such an extent that they are at their lowest since 2009.

Global Pulpwood
With the exception of the south of US and New Zealand, prices for hardwood and softwood fibre are in decline, with the biggest falls felt in Brazil, Germany, Indonesia, Chile, France and Russia.

Global Pulp
Good news. Prices rose in 2015 compared to 2014. Exports from the Netherlands, Brazil, Russia and Canada. Production, apart from in Western Europe, also rose.

Global Lumber
The 20 largest softwood lumber consuming countries imported more product in 2015 than in 2014. This is significant as it was the highest level of importation by these countries for a decade. While a number of European countries increased their imports, this was slightly offset by a fall in demand from the Middle East, Japan and the northern African countries. Russia, still the main supplier of lumber to China, saw a decrease in demand from the Asian giant.

Global Biomass
Mixed fortunes. While Sweden once more maintained a steady production, its demand for imported pellets fell. While the US exported more, in fact to a record high.

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