Plywood prices have held reasonably firm in the Far East at around Indo96 list -15. Not only are mills continuing to experience log problems, supply is also likely to be affected in the coming weeks by religious festivals and the onset of the rainy season. Delays to shipments are a distinct possibility, it has been suggested, while a few of the Far East mills are reportedly looking to clear their inventories ahead of the festival season.

By contrast, the UK market has been weakened slightly by the arrival of a number of vessels in quick succession which, it is claimed, has caused some space problems at Tilbury. With stocks duly replenished and no perceived problems with availability, many buyers “have gone quiet all of a sudden”, it was suggested. The inter-importer trading witnessed during the summer has now largely abated.

The last six months have been relatively strong for Far East hardwood plywood importers, despite the ‘blip’ caused by ‘vessel bunching’, and ongoing log problems are expected to bolster prices well into the new year. Malaysian mills in particular are understood to be experiencing log problems, while in Indonesia APKINDO has warned that new concession arrangements relating to log sizes could lead to the closure of 75% of plywood companies and the loss of 500,000 jobs. Logging volumes could be reduced from 12 million m3 this year to around 6.8 million m3 in 2003.

Restrictions bite

“Restrictions are already beginning to bite in Indonesia,” said one contact. “Some mills have got logs but a lot of others have not.”

Also predicted for next year is the continuing import of reasonable volumes of Chinese plywood. Several contacts alluded to what one contact called the “commercial assassination” of this product but insisted that a significant number of Chinese mills were producing a more than acceptable product for the UK market and that this was finding its “niche”. The standard of incoming material depended on “importers doing their homework” and ensuring that only the higher quality mills were used.

That said, concern was still being expressed this week about regulation and testing of Chinese-made product entering the UK.

The Brazilian plywood market is offering something of a contrast at present. The elliottii pine plywood price has continued to firm over recent weeks and was recently around US$25-30 above its low point of the summer. The annual duty-free period tends to bring a slight reduction in the price but, in the light of the consistent firmness witnessed over recent times, the trade seems less than certain about what will happen in the next few months.

Brazilian prices

Meanwhile, Brazilian hardwood plywood prices are said to have dropped by around US$30 over recent weeks, although at least one contact believed that the decline had been even more sizeable. Most of the gains made in the summer have been lost by virtue of, as one trader put it, “the Brazilians pushing their prices up too quickly”. Another said: “The situation has been complicated by middle-men having unsold stock.”

It appears that the earlier rising prices for hardwood plywood induced some mills to re-enter the market but, by the time their production was available, orders had already begun to dry up. “It is a case of the market staying one step ahead all the time,” TTJ was told this week.

The increase in the elliottii pine plywood price has been attributed at least in part to the reduced volumes going through the mills because, several months ago, it had become more lucrative to run hardwood rather than softwood veneers. However, this latest turnaround in prices was described this week as “a possible cause for concern” for elliottii since mills may now choose to revert to the pine plywood and, with more on the market, this could impact on its price.

For the moment, some UK experts have pointed to evidence of a slight shortage of elliottii pine plywood in certain thicknesses – most notably 9 and 12mm, according to one source. Meanwhile, there were reports this week of slight delays at Tilbury in de-stuffing containers of elliottii.

&#8220North American plywood could be about to come back into the picture. With elliottii rising in price, we could see more interest in certified plywood from North America.”

Industry source

North American view

A UK agent for North American plywood had no hesitation in describing 2002 as “the worst I have known” in almost a quarter of a century in the trade. While some sales of southern yellow pine plywood have been concluded for arrival in the new year, the product has continued to struggle in the face of an estimated 15% price differential favouring elliottii from Brazil.

Latest statistics from APA – the Engineered Wood Association reflect the dearth in business on this side of the Atlantic. In the first seven months of 2002, a mere 3,373m3 of North American plywood was imported by EU nations compared with 20,176m3 in the corresponding period last year. The respective UK totals were 1,063m3 and 7,873m3.

Load-bearing applications

North American plywood interests welcomed the wood. for good campaign highlighting the importance of complying with BS 5286 Part 2 in load-bearing applications, although one expressed disappointment that the message was still going unheeded in a significant number of construction projects.

Sturdifloor and CDX sheathing are enjoying reasonably stable prices and “pretty good” sales levels in the US, where housing starts remain above those of 2001. A UK agent commented: “I am reasonably hopeful for next year. I think the tide will turn against cheap alternatives.” Another trader noted: “North American plywood could be about to come back into the picture. With elliottii rising in price, we could see more interest in certified plywood from North America.”

The plywood mills in Russia and the Baltics also have reason to be upbeat since they find themselves in the midst of a “very busy” period, during which prices have increased by between 5-10%. Lead times are out to an average of six weeks although there is a slightly more ready availability reported for the thicker sizes.

UK stocks of Russian and Baltic plywood are said to be running low across the 3-12mm size range. Buyers have largely accepted the higher prices and, according to a regional expert, “the mills will be pushing for more without any doubt in 2003”.

Baltic/Russian competition

Competition from the Baltics and Russia has continued to impact on Finland’s birch mills, whose lead times have been put at anything between four weeks and two months. According to one major producer, UK demand is healthy for film-faced products and average for normal coated board. Prices are reasonably firm and are expected to remain so throughout the first quarter of next year.

The Finnish spruce plywood market, meanwhile, has enjoyed relatively stable prices throughout 2002 and no significant movements are anticipated before the end of the first quarter of 2003. However, a producer who has already taken a significant number of orders for the new year believes there may be scope for a price increase by the spring.

A far from satisfactory year for OSB producers is culminating in further price pain and further confirmation of production as a “below-cost operation”. Over recent weeks ‘domestic’ producers introduced a reduction of around 10% because, as one senior spokesperson put it, “we could not carry on losing business to the French and the Bulgarians”. The UK market is regarded as a prime target given the well-publicised economic problems in Germany, he added.

According to a market expert, no European mills are running flat out in the face of “lacklustre” demand and high availability. “Mills need to take downtime to balance these things out,” he said.

Prices remain weak and no major change in this situation is anticipated in the foreseeable future, thereby intensifying the frustration among OSB players who point to “relatively strong” demand for the product and to its excellent prospects for long-term growth.