Market Meeting Report
Another well attended meeting with 42 members and guests including some recent and imminent retirees from the trade.
We were treated to a detailed and interesting market update from three different perspectives.
Trader – Nick Goodwin of NHG Timber
In his last full week in the hardwood timber trade before retirement. Nick has been a long term club member and has strongly supported its activities. We were privileged to hear his final take on the international market for African hardwoods to which he has devoted his career.
Nick explained that in some ways little had changed in 45 years in Africa. Log exports are still the preferred option for those countries where it is still permitted. Sawmilling is still a struggle for many and has never been very profitable. He noted that there were two distinct groups of producers in West Africa: The Western European companies who by enlarge do a good job and comply with all the rules and: The ‘Others’ who are difficult for the former to compete with. Almost 40% of the forest in Africa is in DRC, but this is largely untouched as it is not an easy country to work in. FSC certification in Africa is not as easy to apply as it is in other regions. China is currently taking 45% of all African supply and together with other Asian markets is the preferred route for many producers. They take a wider range of species, easier specifications and pay 50% up front! Demand globally is strong in all species with the possible exception of Mahogany as the US market was quiet on this species. The Middle East market was also noticed as being slower than in recent years. The Southern European market has come back strongly and Nick predicts a good year ahead with rising prices for West African hardwoods.
Importer – Nick Hornsey of Timber Connection
Nick started by recalling the last market meeting that took place a week after the Brexit vote, when there were currency issues and significant concern within the trade. He pointed out that since then business had been generally good with turnover up as a result of the fall in sterling, but volume static. Prices were difficult to pitch as a result of cyclical price increases set against currency fluctuations. The last 11 months has in many ways been something of a rollercoaster!
There was a general observation that there is more market sensitivity to value over pure price. Buyers are beginning to better understand yield and the result is loyalty to certain premium productions. Good examples were Northern White Oak and Superprime Walnut.
Modified products - thermos/composite/engineered are becoming increasingly important in the market.
FSC certification remains important and there is a steady increase in availability and sales.
TC’s sales are 70% temperate and American White Oak is still the largest volume species sold. Prices are up by around 20% owing to currency changes. Still the long term trend of European Oak taking AWO market share prevails, especially in thicker stock. EO is particularly challenging in supply terms at the moment and the push into a variety of lower grades adds further complications to trading in this species.
Supply is generally tight in North America with still strong sales in AWO for staves. There are some signs of a weakening in 4/4. The new export rules for Ash that have seen the disbanding of the quarantine system and a move towards heat treatment is in its infancy.
Poplar remains firm despite being a widely available species – there have been gaps in some sizes and lengths but these are improving.
Walnut remains firm and with the shift to premium grades – TC barely stocking ‘standard’ FAS anymore.
On the tropical front, worldwide strong demand for Sapele was resulting in rising prices – margin as ever difficult to achieve in this commodity species. Iroko reported to be firm and difficulty in obtaining 3rd party verified or FSC stocks. Meranti prices also rising. Nick reported a disconnect between landed and forward prices in a number of species with the expectation of price rises.
Merchant – Dale Mayhew of Thorogood Timber
Caveating his comments that Thorogood is a niche business concentrating on higher grades, Dale reported a good last 12 months despite a politically tumultuous year. The main reasons for this were volatile prices and falling value of Sterling.
An increasing demand for high grade/quality AWO was echoed as a result of tight EO supplies. It was felt that some of the heat was coming out the Walnut market in the UK, but the persistent strong global demand meant a reduction in price for this species was not on the cards. A small but significant increase in the sales of Cherry were noted for the first time in 10 years – but with a focus on higher grades. Tulipwood appeared strong and stable and Maple sadly still remains unfashionable!
European Oak remained very tight in supply terms and prices rising and higher grades increasingly difficult to source. Similar comments were also made on high quality log sawn material from France.
Overall Dale was optimistic for the year ahead.
There followed a Q&A session with questions about how the UK could maintain its market requirements in the face of Asian markets taking easier specifications. Secondary species and shorts, strips and engineered products that were made from them seemed to be the answer. The steep price rises in EWO were questioned. The absence of South America from the UK supply chain was raised. The new FLEGT licences from Indonesia didn’t seem to have increased sales of machined hardwoods, but it was supposed plywood had benefitted. Teak imports into Europe were discussed in light of recent announcements in other EU countries. The ‘freight nightmare’ in the Far East was seen as a frustration with a consensus that the shipping industry was still in a period of great change.
All in all an engaging meeting that doubtless continued in greater detail in a less formal atmosphere as some cold liquid refreshment was consumed at the end of a hot day.
Companies and organisations represented:
Timber Connection, NHG Timber, Thorogood, Tradelink, Lathams, Tradelink, DW Mouldings, Danzer, MTC, Wellwood, TFT Wood Experts, Horndon Timber, Bridgeport Forest Products
Palmer Timber, Robinson Lumber, Attwell Associates, Timber Link, Vandecasteele, Lathams
Green Timber, Millbrook, English Woodlands, Timber Dimensions, Peel Ports, Morgan Timber, Moss Timber, Cowdy Timber Agencies, E. O Burton, Southgate, RJC Agencies, Forestec, Tyler Hardwoods, Timber Link International.
Retired members of the trade present from James Latham and Tradelink.
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