At this time of the year it is usual to look back at last year to try and determine a starting point for the New Year. This is easier than predicting the complexities of price, demand, currencies, rules and regulations which will influence importers’ buying decisions over the coming months. There is a rather vague but normal trend that shows prices for tropical timbers move upwards through the year and then begin to tail off and fall during the 4th quarter, and 2015 was no exception to this generality. But there were very different market changes in 2015. Of course the sudden, steep decline in business with China had the most serious effect on West and Central African producers and exporters but this was to an extent balanced by the almost 20% increase in EU imports of tropical timbers in the first half of 2015 compared with the same period of 2014. The UK was the largest importer of tropical timber in the first half of 2015, and as the year progressed France, Germany, Spain and Netherlands increased their imports also. Belgium and even Denmark and Portugal and other European countries were more strongly buying during the year, albeit some of them from a very low base. The weak euro meant that the increase in value was more than the increase in volume but this steady increase in imports acted as a market stabilising factor through what was a difficult year for African producers. Looking at some UK statistics, hardwood imports for the first three quarters of 2015 were over 50% from Europe, almost 30% from North America 10% from Africa and 6% from Asia. The major non-European source was 24% from USA. These figures show African producers with only a tiny share of the total and their imaginary year-end report might read – "could do better." Now to prices, which overall have weakened in the 4th quarter. For Netherlands buyers there has been an average drop of around 7% for all imported timber, and for UK DRM is some 8% down and still falling due partially to substantially lower freights, while at the year end sapele and sipo are lower by around 23% in US dollar terms than the mid year price. Even so with the exception of the real losers, okume, sapele and sipo, most prices including temperate hardwood imports are still on average marginally above those of the same period of 2014.

For West and Central African producers and exporters 2015 was a tough year. Importers in China had bought optimistically for shipments arriving early in the year, anticipating another bumper year while producers had geared up production in the most heavily traded species, especially okume logs and lumber, and sapele sawn lumber plus a range of others. As early as March – April some producers realized all was not well and when the Chinese stock market ran into problems the mid year effect on producers was almost immediate as buyers for China postponed shipments and their timber import markets basically shut down. As we have documented in previous market updates producers responded by reducing production and looking hard for alternative markets. This remains the current situation with timber importers and merchants in China still reporting they are heavily overstocked and that there is very low demand as real estate developments and building construction have declined with no immediate signs of recovery.

Some observers believe all is not doom and gloom as the Chinese economy is still strong while going through a transitional, restructuring phase. GDP growth in 2015 is around 6.9% and although exports fell, imports fell much harder resulting in a positive balance of trade of plus US$60bn, figures which would be hard to match anywhere else in the world.

Timber imports have not halted altogether and one port alone was expecting some 300,000m3 of logs during December, but the recovery to previous import levels seems quite some time away. Chinese New Year falls on February 8, 2016 – a period of traditional celebrations and extended vacations so it is likely timber businesses will stay in the current very low-key phase at least through into the second quarter.

This leaves African producers with restricted production and with cash flow problems but determined to sit out what in former times might well have triggered price meltdown.

Other markets are available, Cameroon and Ghana have niche business in US, India is a large potential market for African exporters and should North African and Middle East areas return to a settled and peaceful phase the demand there would be very substantial.

Meanwhile, West and Central African forestry authorities had already begun to tighten up controls on timber companies and exporters, Cameroon log exports will be restricted to only ‘secondary’ species as from January 1, reserving the premium species for processing – a move that is welcomed by Cameroon’s very successful sawmillers and lumber exporters. Congo Brazzaville is already strongly enforcing the log export quota system as well as insisting all forest concessions must be certified and is reported to be discussing a new forest policy. Gabon has a specialist forest unit that inspects, scrutinizes and monitors concession holders’ Forest Development Plans with penalties for any infringements, however a recent crackdown discovered a long running scandal as entrepreneurs had been buying the much sought-after valuable kevazingo/ bubinga directly from landowners, felling the trees and transporting the logs for export hidden in containers.

The forests minister suspended many officials locally and at senior level. Bubinga is banned for export as logs and only a few specially-licensed sawmills have the rights to export the sawn lumber.

These and other controls in African producer countries are being reinforced following the successful and influential COP21 meeting in Paris and plans are already announced for forest conservation and reforestation in the region to be stepped up following initiatives on climate change agreed in Paris.

So, how do West and Central African timber producers and exporters view prospects for 2016? Reliance on markets other than China will hold the key. EU and Middle East business is expected to remain steady and improving slowly through the European spring and summer months.

Possibly the current and long-running European design fashion for the pale and insipid, light coloured timbers may begin soon to change to the warmer tones that would favour tropical timbers. Cameroon and Ghana may well be able to sell more into US now that house building there has begun to rise. Vietnam is a steady buyer, feeding the highly successful furniture export trade, but the waiting period for a really significant increase in business with China may be prolonged and depends very much on how long it will take for importers to sell existing stocks. Normally in this market situation buyers would hold off in the expectation that prices would fall, but because producers have been willing to reduce production and hold price stability for almost all species, this market price advantage has been available only for okume and one or two other species.

If a forecast is possible it may envisage an increased level of new business in China for major species beginning at the end of the first quarter. Meanwhile there is trade in the very top end timbers.