Summary
• Brazil’s export markets have declined.
• Increasing efforts are being made to reduce illegal logging.
• Ipé prices have increased.

How to expand exports in the current difficult market has been one of the main questions vexing Amazonian timber companies.

With North American and European demand drying up, solid wood exporters are targeting Africa and the Middle East, as well as expanding business in the likes of India and China and the Brazilian domestic market.

Against this background are big currency swings making Brazilian tropical hardwood more expensive in the UK, as well as continuing moves to halt illegal logging.

The Brazilian government, the state of Pará (the largest producer of Amazon timber in Brazil) and the logging industry have agreed to work to ban the trade of illegal timber from the Amazon.

The Pact for Legal and Sustainable Timber includes law enforcement measures to police the sale of illegal Amazon timber and incentives for environmentally responsible companies. And in December the government set a target to cut Amazon deforestation by 70% over the next decade.

Palmasola, whose operations include a timber facility in Brasnorte, Mato Grosso, remains optimistic about prospects. “The reduction in sales volume in foreign markets has been offset by increased sales in the Brazilian domestic market,” said Palmasola commercial director Marciano Rubel. “We believe that the volumes sold in 2009 should be the same levels of 2007.”

Mr Rubel said more investment and focus was needed in forest certification in order to maintain sales and ensure raw material was available for future generations.

But he said popular species of wood were continuing to be marketed without significant impact. Palmasola’s solid wood products include the species angelim pedra, garapa, jatoba and itauba and typical end uses are furniture, doors, windows and flooring.

Curtis Stanton, a Rio Grande do Sul-based buyers’ agent, said North American, European and Chinese business had dropped off and despite the “helpful” 32.5% devaluation of the Brazilian Real against the US dollar, more logging restrictions was hampering timber’s availability, including stalwarts ipé and massaranduba.

He said many mills were operating at reduced capacity and if poor markets continued some mills could fold.

“The outlook for hardwoods is becoming more difficult except if you can be FSC-certified. I think certification is the future.”

Sawmiller Cikel was at Interbuild last autumn hoping to drum up business for its solid wood products. It wants a UK agent/distributor for its range of timber products, such as FSC-certified tropical hardwood decking, flooring and lumber. Species produced include ipé, cumaru, massaranduba and jatoba.

But for UK traders, business is likely to be a tricky proposition during 2009, according to Brazilian hardwood decking specialist AJ Smith.

“It’s a double whammy,” said a spokesperson. “The pound has collapsed against the US dollar and prices are being forced up into a market which is seeing lower demand. Imported goods are going to cost more and it’s not going into a market which is buoyant because of the impact of the credit crunch. It’s very hard to predict how things will go.

“In previous years the problem has been getting sufficient supplies to meet demand. That’s not going to be the problem this year.”

Another hardwood decking supplier, Deck Supply Company said the higher prices may have mean some customers looking at options other than ipé.

Mike Bekin, of Ecochoice Ltd, said business had dropped 15-20% in last few months. “Up until September the volumes had been fairly robust with regards to the credit crisis,” he said.

But he said people were still sitting on stock and many traders were doing more business in Africa, because of the difficulties in getting product out of Brazil and due to more FSC-certified forests being in Africa.

In neighbouring Guyana, Girwar Lalaram, executive director of the Forest Products Association (FPA) of Guyana, said demand for greenheart has always been high but exports have recently reduced.

Mr Lalaram said Guyana was moving forward in its efforts to prove the legality and sustainability of its timber products on a “step-by-step” basis. A legal verification certification and a tracking system has been developed, with the former likely to be implemented soon.

An increase in log export taxes from 2% to 7% from this month will lead to a reduction in log exports and is designed to stimulate the domestic processing industry and the production of value-added timber, he added.