UK hardwood buyers will be returning from their summer holidays to find significantly lower availability and substantially higher prices for key species.
Far Eastern dark red meranti and many of the most popular African hardwoods – including sapele – are proving very difficult to source. Having continued to firm, sapele prices are said to be between 15-25% higher than they were at the start of the year; over the same period, industry sources reckon the price of meranti has leapt between 35-40%. And once the full impact of these rising prices filters through to end users, some leading players in the UK hardwood trade fear their response will be to look for alternatives – possibly from outside of the timber trade.
Over recent years, a large proportion of the sapele entering the UK has arrived through major stockists on the near Continent but these organisations are now also struggling with the restricted flow of wood coming out of West Africa. As a result, the UK market is witnessing particularly acute shortages in the 1-, 2-, 2.5- and 3in thicknesses. According to one hardwood trade alchemist, kiln-dried sapele has been transformed into “gold dust”.
The rainy season in Africa has traditionally resulted in slow or delayed shipments. However, a relatively new phenomenon is attracting most of the blame for the lack of supply – China is buying sapele logs on a massive scale, thereby restricting the volume available to other markets. “For the industry in Africa, it’s easier money to sell logs rather than to process them,” a regional expert explained. “As a result, Europeans are suffering from a lack of material.”
Perhaps in acknowledgment of these supply issues, UK demand for sapele has been reasonably good during the summer. The species has also been the focus of significant inter-importer trading.
Chinese demand
Among the African hardwoods, shortage of supply is not restricted to sapele. Chinese buying activity has also dented the availability of sipo while framire is proving difficult to source, with the result that the prices of both species have been tending to firm. Framire’s role as a joinery hardwood that is widely seen as an alternative to meranti has meant that shortages have been focused on the 2-4in thickness range – in other words, the large joinery frames sizes. One contact said of framire: “We can practically sell anything by picking up the phone.”
Meanwhile, the rainy season in Ghana has affected the logging of wawa and, consequently, the flow of material to the mills and ports. Here too, strong buying by China and, to a lesser extent, India has had an adverse impact on the availability of the species to other markets. “Old contracts are not being shipped to us,” said a UK-based contact. “And because there is not much coming through, there are big shortages in the UK right the way through the range of sizes.”
By comparison, the iroko market has been static, with UK demand at relatively normal levels for the time of year. Stocks are adequate in the context of current demand and prices have remained stable of late.
The availability issues surrounding many African hardwoods are not about to disappear, experts concur. One major UK player said: “I expect there to be a severe shortage of sapele and utile. For sapele, the shortages are really going to bite. Nobody has got anything to offer going forward – we can’t even get a price out of our main supplier.”
Return to stability
Looking at the meranti market in more detail, several sources reported that, after a prolonged period of upward movement, there had been signs of a return to greater price stability and to a welcome improvement in availability, although several contacts pointed to ongoing difficulties in sourcing thicker sizes in particular. The main factors fuelling supply tightness include strong demand from China as well as mainland EU countries, and the clampdown on illegal logging in the Far East. “In the UK, gaps have definitely appeared in 2.5-, 3- and 4in,” TTJ was told. “We always seem to be waiting for the next shipment, particularly of the thick items and wide board.”
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“ For sapele, the shortages are really going to bite. Nobody has got anything to offer going forward Ð we can’t even get a price out of our main supplier ” |
The meranti price is claimed to have risen by as much as 25% over the last three to four months. UK demand has remained relatively solid although several contacts reported an increasing tendency among buyers to “shop around”.
However, with tropical red hardwoods proving generally elusive, many consumers are being forced to “bite the bullet” with regard to high meranti prices.
As for Far Eastern keruing, UK demand has slowed noticeably in recent times owing to a steady reduction in the number of consumers. Whereas this species was once widely employed in joinery and agricultural applications, its main outlet in more recent years has been the trailer flooring market. However, some users in this sector are understood to have switched to thick plywood. In line with other hardwood markets, keruing logs have attracted strong demand from some of the world’s big hitters, including China and India. In Brazil, problems in acquiring transport permits have staggered the flow of hardwood exports. “The aim of the permits was to stop illegal logging – but they have ended up stopping everything,” said a regional specialist. The uncertainty surrounding the issuing of permits was negatively influencing investment decisions, he added.
With the mahogany market remaining a non-event, many UK traders have been concentrating on cedar, although this hardwood is suffering from “crazy” prices as well as sorely limited availability. A leading UK player said: “We have not had a kiln-dried cedar offer for nine months. There is never any continuity to the trade so it’s a no-go.”
Difficulty in sourcing bankirai from South-east Asia has led to an upturn in interest in some of Brazil’s decking grades such as ipe and garapa. The price of the former is understood to have increased by around 15% over the last month or so, partly as a result of the supply issues.
North American species
In North America, white oak continues to reign supreme among the temperate hardwoods. Prices have gained a further 4-5% over the summer thanks in large part to Chinese log buyers “making a big dent in the white oak supply chain”. Lead times for 2in material in particular are already extending well into the fourth quarter. Further price rises appear inevitable, with one contact suggesting that exporters are reluctant to quote for white oak “for fear of leaving money on the table”.
The other red hot North American hardwood is black walnut, which is subject to limited supply and widely varying but decidedly firm prices.
As for the other North American hardwoods, UK demand for tulipwood has been steady-to-good at relatively stable price levels, while orders for hard maple have been reasonable despite a prolonged period of price firmness. Ash was described this week as “a big disappointment” because of the drop-off in UK demand over recent years, although prices have remained steady of late. Prices of red oak have been stable-to-firm recently, such that the differential to white oak has continued to widen.
One hardwood to attract contradictory comments this week was North American cherry. Several sources described UK demand throughout 2006 as “a dead duck” but others suggested demand and enquiries had improved in recent months, notably for 2in material destined for high-class joinery.
While North American white oak continues to set the market alight, European oak is experiencing less frenetic trading conditions. Growing demand has been tempered by reasonable availability, leading to some contacts predicting no major upturn in prices before early next year. Predictably, much of the new buying pressure is coming from China.
Meanwhile, demand for European beech was described as “low key”.
