For a significant proportion of 2007, the hardwood markets were rightly fixated by supply issues. But with buyers around the world adopting a more cautious approach in response to a more uncertain economic outlook, demand rather than supply is now appearing to dictate the direction of most of the hardwood markets.

At best “moderate” hardwood sales were reported for the first two months of this year by UK hardwood agents who claimed buyers were nervous about economic prospects and were therefore adopting a more hand-to-mouth approach to purchasing.

This is certainly not the whole picture: one major importer said that business had been brisk across a wide range of species – including European oak as well as West African sapele and utile – and that sales were currently ahead of those recorded by this stage last year. Another leading importer, however, said order levels were lower than for the same period in 2007.

US?exports

The widespread sense of unease has been most apparent in the US. The export avenue is becoming increasingly important to the country’s hardwood producers and traders because of reduced demand from the domestic housing and flooring markets. However, business with some of the leading overseas markets for US hardwoods has declined significantly in recent months; for example, white oak orders from the key Mediterranean markets of Spain and Italy have been described as “truly awful”.

For US exporters, freight issues have conspired to offset the advantage of a weaker dollar; trucking costs in the US have risen markedly while container rates are said to have leapt by US$500-900 per box for east coast shippers since the end of last year. Furthermore, exporters are understood to be facing delays of up to three weeks between ordering and receiving their containers.

A UK hardwood specialist commented: “It’s been a nightmare trying to get anything shipped. Most of the wood on board these vessels is sold to some degree. What worries me is that customers will cancel orders because of the delays.” The same source also described UK demand for North American hardwoods as “erratic” at best.

US hardwood buying interest in the UK has continued to focus primarily on white oak. For the first time in a long while, prices are said to be “stable but negotiable” as agents and traders strive to move stocks. One regional expert commented: “UK demand for white oak is down 20% in volume terms compared to the start of 2007 as buyers are being cautious and are only topping up supplies when they need material.” There was evidence, he added, of “some lower-priced deals being agreed, particularly with some of the larger stockists on the Continent”.

The 4/4 and 5/4 white oak markets are broadly in balance at static to slightly weaker prices, whereas the 6/4 price has been firmer because of the difficulty attached to sourcing this specification. Meanwhile, the 8/4 price has weakened more significantly on the back of oversupply.

With regard to North American hardwoods, the other major volume purchase in the UK is tulipwood. Demand for this utility species has been steady at decent price levels, although a couple of contacts pointed to evidence of some “weak sellers” in the market.

After an extended period of unquenchable demand, the UK market for American black walnut is said to have eased. “A lot of US suppliers are now phoning us rather than the other way round,” TTJ was told. “We are being chased hard for orders.” That said, one contact argued that best-quality material was still proving easy to sell at firm prices.

The hard maple market is generally stable although tighter supply has reportedly boosted the price of 6/4 material. Demand for ash has been “ticking along” whereas UK demand for American cherry is limited mainly to high-quality material.

&#8220It’s been a nightmare trying to get anything shipped [from the US]. Most of the wood on board these vessels is sold to some degree. What worries me is that customers will cancel orders because of the delays”

Red oak continues to be the subject of a focused promotional campaign by The American Hardwood Export Council (AHEC). While emphasising that the species remains competitively priced, the organisation acknowledges that “manufacturers are still clearly nervous about its market acceptance” and are therefore “reluctant to experiment given the tougher market conditions that exist at the moment”. This perception is borne out by latest feedback from the market place: some stockists have been tempted to trial red oak “but many of them are now struggling to move it”, TTJ was told.

Nevertheless, AHEC points to “growing evidence that consumers and architects do like the look of red oak, and the fact that in many instances, once a finish is applied, it is hard to differentiate from white oak, it may only be matter of time before red oak is much more widely used”.

Meanwhile, “this has been the worst start to a year for West African hardwood suppliers for a number of years”, it was suggested by a regional specialist. “The US, European and Chinese markets have all gone cold,” he said. “Some of the trading companies in Africa are heavily discounting because of the stocks they have out there. And some have been trying to cancel orders with producers, especially on sapele.”

The sapele inventory both in the UK and on Continental Europe is said to be sufficient to service current demand. For UK buyers purchasing from the Continent, euro-based prices have dropped more than 10% since the start of this year, according to one expert. “The exchange rate is proving to be a real problem at the moment and people are dropping their euro price levels,” he said.

West African species

As for iroko, the market has been relatively stable despite a dearth of demand from traditionally active markets such as Spain, Italy and Ireland. It is understood that producers in West Africa have reined in their output. The Italian market has been showing more interest in wawa out of Ghana at healthy prices; demand for the same species in the UK is relatively quiet, with several contacts complaining about shipment delays.

Following a prolonged period of exceedingly tight supply, framire is now proving easier to source. Substantial volumes have been shipped from Africa against old contracts so stocks in the UK are now significantly healthier. Over recent times, some buyers of framire have switched to dark red meranti.

Staying with the Far East, several contacts noted attempts by mills to raise prices in a bid to counterbalance rising freight costs. Mills and traders are eager to sell in order to turn stock into cash but, for the moment, UK stocks are sufficient to meet less-than-enthusiastic demand levels.

A hardwood species that has retained its tightness over recent months is keruing. It remains “extremely difficult” to obtain the leading sizes demanded by the majority of UK buyers. “Contracts are running very late,” noted one regional specialist. “Some customers have got orders which are easily six months late. But prices are extremely firm and suppliers are basically adopting a ‘take it or leave it attitude’ because they can easily sell the material elsewhere.”

Brazilian exporters are continuing to struggle in the face of rising costs, limited demand in key markets and the continuing strength of the real in relation to the US dollar. Trade with the UK has been focused mainly on the decking grades, with ipe commanding high prices and proving difficult to source in the face of strong competition from, among others, the Americans and the French.

Staying with the Continent, demand for European oak has remained strong although several contacts expressed concern that the material may “price itself out of the market”. For thicker sizes, the price of European oak is currently running an estimated 15% ahead of North American white oak. Once again, the UK market is said to be adequately stocked to meet current demand.