7th September 2o22

LHC – Market Meeting – 7^th September – The Globe Moorgate

We had 24 members including guests at the Globe for the Market Meeting. 

Rupert Walker opened the meeting, welcomed both members and guests and mentioned  absentees. Reference was made to Morgan Timber (Kent) who close their business due to retirement at the end of September after 100 years of trading and the sale of E & S W Knowles business. 

After grace we enjoyed a very good 3 course meal.

1^st Speaker – Hank Marchal – Robinson Lumber Company USA – North American and South American Hardwoods.

North America - During the 2^nd qtr of 2022 the USA exported/shipped large volumes of American Hardwoods into Europe with the UK taking the most volume. In particular shipments of White Oak and Tulipwood were up some 40% in comparison to the same period in 2021. 

Sawmills and exporters caught up quickly with existing and older contracts/commitments and there was more space available on container boats leaving the East Coast USA for Europe (in comparison to the previous 6 months or more).

As a result of the extra volumes all arriving in a relatively short time frame, the summer holiday season on the continent and a slow down in demand prices have come down as sawmills started to discount to stimulate sales. In some sizes (4/4 mainly) price reductions have been sharp and come in a relatively short time frame. Thicker sections (6/4 and up) seem to be less affected due to longer time in the dry kilns.

Hank believes American producers have come to accept they will take a ‘hit’ on current inventory but won’t have an appetite to keep production at recent levels if it’s not profitable and sawmill volumes will be reduced in line with demand and logs prices will have to come down as production costs continue to rise (labour & transportation) but North America is not seeing the same steep rises in the price of power (electricity) as we are seeing in the UK and across Europe.

Hank also spoke about production and supply from South America. Reports are similar to the situation in the USA in that production has exceeded demand in species like IPE and Cumaru. Overall supply/production has started to slow and mills are looking at growing/focusing on domestic business. 

Sea freight rates from South America continue to rise and availability of boats calling into ports for loading has reduced.     

2^nd Speaker – Ken Walsh – Danzer – West Africa

West Africa - Ken reported two very good years of trading. Supply is generally short and the rising cost of crude oil is becoming an issue and causing increases in both shipping and production costs due to a three fold increase. Shipments from the port of Douala are delayed due to ongoing problems surrounding the dredging of the sea way/estuary to allow larger boats to access the terminals and boats are skipping the port causing more delays. There are also delays in obtaining the correct documentation and certificates for exporters and production delays due to routine sawmill equipment maintenance. Prices are set to stay firm into this Autumn and little chance of over production in the coming months and supply remains tight.

3^rd Speaker – Rupert Walker – Timber Link International – European White Oak

Europe – There are shortages of W.Oak logs across Europe and the current situation in Ukraine (which was the 2^nd largest producer of White Oak behind France) is adding to the supply shortage. European manufacturers and buyers are looking for alternative sources of supply form other areas. 

French sawmills are facing large price increases in log prices going into this Autumn and have been selling their sawn yard stocks. Mills are also facing large increases in production and drying costs due to increases in energy prices and also staff shortages and higher labour costs. Road transport prices are also on the rise. There is a strong demand for W.Oak from Croatia who are also facing log price increases of around 25%. European Ash is still trying to find its place in the market as an alternative to Ash from the USA and European Beech prices and supply are stable.

4^th Speaker – Frank Cosentino – Tradelink - Far East

Far East – There is a shortage in supply from Indonesia going back to the beginning of this year. Replacement costs are up due to increased production costs associated with labor and supply is tight. Sea freight rates have started to fall from their peaks of around $17k per box (Pre covid avg of $1,500 +/- per 40ft container)   

Availability and shipments of Meranti eased in June of this year but it’s a relatively small volume specialist timber product in comparison to years gone by. Balau decking shipments have become more regular but £ prices are higher  due to the exchange rate(GB£ v US$) .