Concerns over the implementation of the EU Timber Regulation (EUTR) have to an extent overshadowed reports of the ongoing very dull conditions in timber importing markets. The latest downgrading of the economic forecast for the EU, the downgrading of the UK’s financial rating and deteriorating exchange rate does not give any confidence that 2013 will bring a recovery in demand.
Producers in Africa are not optimistic and echo the assertions of major importers that the current year is going to be tough.
Under the EUTR tropical hardwoods are certain to be under major scrutiny by NGOs and, as mentioned in our last West Africa report there do appear to be some areas where it is not fully understood that it is the importer, named in the regulation as the ‘operator’, who must carry out the due diligence procedure and is responsible for making sure their imports are compliant.
Producers are possibly more nervous than is justified. Most exports are now from large producers, almost all owned by outside investors or groups of timber companies operating in more than one country. It is hoped that opportunities for large-scale unscrupulous, unregulated logging are reduced as in recent years governments in producer countries have introduced stronger controls on their forest areas and on limiting annual logging to agreed areas and permissible volumes. The systems in Africa, Asia, and South America aren’t perfect but it is hoped that governments and the industry have reached a stage where it must be assumed that legality is the default rather than the exception.
Gabon has continued to tighten controls on forest concessions and has recently cancelled the concession of a large number of operators for either not producing the obligatory Forest Management Plan or not paying their land taxes. Forest officers are stationed at every sawmill and all containers are opened and inspected before being allowed into the port for export.
Cameroon has just imposed a 4.5% export tax on the invoiced value of timber exports and the government had already put in place regulations listing the minimum price for every export species that must be followed by exporters.
Where species are endangered, governments in the region have taken steps to ban exports and/or ban harvesting. Bubinga is one of the species affected. Gabon has banned cutting of douka/makore and now Gabon and Cameroon are banning export of the now popular boules and the sawn through-andthrough ‘clean cut’ logs. Governments felt these were not within the spirit of their long time log export bans and not sufficiently processed to pass as sawn timber. This mainly affects padouk and ovangkol, which have been purchased in large volumes by China and India over the past two or three years.
Meaningful volumes
In terms of log exports, only Congo Brazzaville, which has a quota system, and Democratic Republic of Congo are still able to export any meaningful volumes. Congo Brazzaville is seeking new inward investments in timber and plantations and certainly the log export quota is a substantial attraction because of China and India’s continued strong demand for round logs. Low wage rates and labour supply are also key factors that have led to some new operators already signed up.
Ghana was the first country in the region to implement a log export ban many years ago. Now it is reported that it needs to import logs in order to maintain production in existing mills. No doubt neighbour Ivory Coast will help out, although there have been recent questions over legality of supply because of the recent civil unrest and virtual division of the south and north of the country.
Producers are not rushing to increase output but are just balancing the supply and demand and at all cost avoiding overproduction during the current quieter period.
Buyers for Europe are tending to concentrate purchases on an even further reduced number of the best-known species. Sapele lumber is in strong demand again and in limited supply, although it is expected that Cameroon has the capacity to increase production. If sapele prices rise it could be possible for Central African Republic to increase exports of high quality material, although for the moment some reported civil unrest and very high transport costs from this landlocked country may still make this questionable.
Stock levels
Many European buyers are reported to have built up stocks in advance of the EUTR, making new business very slow and hand to mouth.
Iroko prices are trending weaker on lower interest from buyers for China; okan prices are also under pressure; demand for azobe is low; although producers are expecting some demand for the European spring favourites of decking sizes in fazobe, okan and bilinga.
Okoumé prices are very firm and demand is high for Middle East and other markets, with the exception of South Africa where buyers report that money is tight and they have yet not begun restocking after the usual quiet period over December/January.
India has shown some interest in padouk, as have buyers for Belgium, which has halted the recent slide in prices which will inevitably lead to an increase, possibly back to the high levels of early 2012.
Overall in the market there has been almost no change in the stable price conditions and few changes are seen or expected over the next few weeks for either logs or sawn lumber.
