• Log prices held up reasonably well following the drop in Chinese demand.
  • Gabon and Congo Brazzaville’s log export quota system has helped price stability.
  • India continues to be an important buyer of heavy log species.
  • West African sawn lumber prices have been more consistent than the log market.
  • Heavy rain is causing log supply problems in Cameroon.

“Disaster averted” might be the headline to describe the West African log market situation through June and July.

Export log prices did not react as dramatically as some observers had expected following the very sudden and unexpected almost complete halt in log buying for China in mid-April. To date, this slowdown continues, with the major effect on okoumé, ozigo and many of the less well recognised peeler species which China had been purchasing in very large volumes.

Producers and exporters reacted swiftly and were able to make some sales of okoumé to North Africa and the market in Europe which had remained quite strong for the up-market premium red species, including favourites sipo and sapele. These specie are also still in demand for China where full log shipments of many species continue but at much reduced levels than in the past two to three years.

The main reason for price stability has been the implementation of the long-awaited log export quota system in Gabon and Congo Brazzaville. The industry had been preparing for this for over two years, investing in building sawmills and other processing facilities that are a prerequisite to allow a proportion of the total of each operator’s production to be exported as logs. This is similar to the system that has been in place in Cameroon over the past few years and the immediate effect for Gabon and Congo was to take very large volumes of export logs out of the market.

Discussions and negotiations over the allotted quotas are still going on in both countries as some initial volumes would have been insufficient to keep sawmills at full production. The old state-owned SNBG monopoly log sales organisation in Gabon was allocated only one-third of the expected volume and some producers faced a severe cut-back in allowable harvest. The result has been to steady the nerves and hold most log prices reasonably stable over the past three months.

Looking at log price changes over since February/March, some light species (ceiba), plus others like ekop, canarium and niove, fell in price, though even these have been in the order of a drop of only €15/m3. More serious has been a drop for some of the better-known species for Asian destinations: okoumé logs down €50/m3, okan minus €60, and even movingui down €15/m3. Winners have been sapele, now higher by €16/m3, sipo LM grade up €41, B grade up €30 and BC/C up €23/m3.

The adjustments are reactions to demand patterns because of the temporary slowdown in buying for China. How temporary is not clear but producers appear to feel that it will be some months more before China returns towards any substantial increase in buying activity. However, one producer is optimistic enough to be pressing for a small price increase for okoumé.

Meanwhile, India has continued as a steady and important buyer of the higher density and heavy log species.

Over the past six months West African sawn lumber prices and demand have performed more consistently and stayed steadier than the log market. Many species are unchanged through the period and where there are price adjustments, all have been upwards. While because of an overstock in some species China has cut back on log imports, there has been strong competition from China with European buyers for the top of the range premium sawn lumber. Buyers in France have been particularly active for moabi and movingui and there has been heavy demand from all markets for bubinga (kevazingo) which is now some €200/m3 higher than at the beginning of the year. Sapele GMS is up by €60/m3 the scants up €75 and sipo (utile) up by similar amounts. Padouk is always in demand and prices up by around €40/m3 for GMS. Makore was popular and gained €57/m3 for GMS and around €40 for the scants. Tiama (ekki) was in demand and increased by €60/m3 while okan lumber was held firm and unchanged in spite of the log price drop. Okoumé sawn lumber managed to put on a modest but significant €25/m3, no doubt as a result of the ongoing strong demand from the larger importers and integrated downstream processors in South Africa. It seems to be difficult to interest European importers in this versatile timber.

There is heavy rain in some parts of the region, notably in Cameroon where log supply to mills is reported to be proving difficult.

In Gabon and Congo Brazzaville the main focus is on persuading the forest authorities to reconsider and increase allocations of logs on the newly imposed quotas. Producers do report some success on the grounds that their heavy investment in new processing mills, at government behest, must be supported by adequate log supply. Ghana has reported an improvement in wood products exports, a turnaround from the recent lower performance. Like neighbouring countries, Ghana is struggling with the common problems of trying to balance the maximum sustainable yield from the forest resource with the need to release for the industry sufficient volumes to maintain essential employment and generate revenue at home and from export sales.

Exporters report tough negotiation on freight rates but so far they have managed to hold rates unchanged.

While there is much relief in the region because the potential log price disaster was averted, the major players in Gabon and Congo Brazzaville will not return to full confidence in the market prospects until the negotiations on quotas have been completed and buying for China begins to revive. It does seem that governments are prepared to be reasonable and some quota volumes have been improved.

There is some reassurance in the good performance of the sawn lumber and downstream products sector and, though West African exporters note that Malaysian prices seem to have run out of steam, there is an expectation that demand will hold up and prices remain firm through the third and fourth quarters.