Prices have held up remarkably well through December and January. By the end of this month Chinese new year celebrations will be over, and West African exporters are optimistic that the firm market conditions will continue.

Renewal of the UN embargo on exports of timber from Liberia and continued internal unrest in Côte d’Ivoire all contribute to the overall lower supply. The recent small rise in South Sea log prices and the generally tight supply reported in the Far East give added confidence.

Cameroon has just imposed an increase of 5% in annual concession charges and it is clear also that most governments in West Africa are pushing for more stringent conditions for concession holders. Cameroon concession holders are allowed to harvest in only 2,500ha of their concession each year but pay the annual taxes on the whole concession area.

On the buyers’ side, there is now more pressure from European countries for sourcing supplies from sustainable and certified forests. Exporters realise they will have to comply but see this as another cost that will be hard to regain from buyers.

In the last West African report we reported that, from January 2006, the Gabon government was to allow exporters to sell logs direct, instead of through the State selling organisation SNBG. It has now decided that SNBG will continue its technical services for measuring and grading and is expected to assist with sales on behalf of smaller producers and exporters that do not have their own commercial contacts in Europe and China. It is rumoured this sales freedom was a result of pressure from the large, mainly French-owned producers; however, some small- and medium-sized exporters say that, despite recurring financial difficulties, at least SNBG was strong enough to fix and hold prices, especially for the predominant okoumé and ozigo logs.

There are worries that in a free-for-all, the few big exporters may fight for market share by cutting prices, to the detriment of the whole sector. Gabon exports of okoumé logs have fallen dramatically from a norm of around 1.7 million m3/year to only 700,000m3/year, with the slack taken up by a swift increase in lower price exports from Congo Brazzaville.

Log export quota
By the end of 2006 Gabon has proposed to put in place a log export quota scheme similar to that in Cameroon whereby up to 75% of logs will be reserved for domestic processing.
Sawn lumber prices also survived the past three months without substantial change. There had been expectations that azobe and sapele would be weaker but, in the event, some modest buying for the Netherlands in mid-January held prices stable. Sapele had been in oversupply through the third quarter of 2004 but has since been in rather short supply as rains curtailed production.


On the buyers’ side, there is now more pressure from European countries for sourcing supplies from sustainable and certified, managed forests. Exporters now realise they will have to comply but see this as another cost that will be hard to regain from buyers

Low supplies of meranti from South-east Asia are keeping sawn lumber prices very firm. The major worry for some of the region’s medium and large sawmillers is the sudden, spectacular increase in the numbers of small, portable “bush” sawmills. One contact reports that manufacturers say they sold 400 of these mills in Cameroon alone during 2004 and are now actively selling in Gabon.

Established, fixed mills allege that bush operators are unregulated, do not have licensed concessions but cut anywhere in the bush, and do not pay taxes, so easily undercut market prices. In some countries there are traditional cutting rights for villagers, allowing a limited number of trees to be cut, though it is not certain all these can be well supervised.
Volumes from these activities are not inconsiderable with contacts estimating that as much as 6,000-7,000m3 per month is being exported, much of this having been re-machined to exact dimensions, re-graded and sold on by the larger mills.

Word is that overseas aid agencies are assisting villages to buy these portable mills in the belief they are helping to promote “local enterprise” but without considering the impact of any unregulated harvesting. In contrast, Ghana is very strict on the activities of portable or chainsaw milling which can be very wasteful of raw log input.

Chinese interest
Exporters report that buyers for China are becoming more interested in a diverse range of species, not only for their fast-growing furniture export industry, but increasingly as decorative features in housing.

China continues to predict strong growth in the timber importing sector, with less emphasis on softwood logs from Russia and New Zealand and more on sawn lumber in both softwoods and hardwoods. It is not yet clear what impact there will be with the EU’s imposition of an anti-dumping duty on imports of Chinese-manufactured okoumé plywood. Some exporters with “economic” status are having to pay between 6.5-23.5% but the general rate is now 66.7%.
Japan has forecast a slight drop in estimates of wood imports for 2005 after a volume gain of around 3% in 2004. A modest rise in Far East plywood prices has petered out in spite of the firmness in the log market.

Freight rates for West African exporters have eased a little, largely because of lower production and slow demand. Trade is reported as very quiet but producers are well aware of the steady attrition on the supply side both in this region and in competitor countries in South-east Asia and are determined to maintain firmness in price levels.

Governments’ ambitions to continue to increase tax and other revenues from the forest sector, much of this policy through advice by external agencies such as the World Bank and the IMF, may sometimes have mixed economic results as reports are that producers tend to respond by spending on capital projects to modernise and increase throughput but with a consequent decrease in employment.