The mild optimism that accompanied the UK hardwood sector into the new year appears to have been justified in many instances. The vast majority of industry contacts confirmed that traded volumes were now either at normal or higher than average levels, while most reported increased scope for an improvement in margins.

However, the main topic of discussion was the strength of the euro in relation to the US dollar and the perceived impact of this on hardwood purchases. Dollar-quoted dark red meranti from the Far East is effectively enjoying a price advantage of between 20-30% over West African sapele, and yet most traders believe this has failed to induce any major switch in buying patterns. In previous years, such a differential would have certainly tipped sales in favour of meranti, but the majority of sapele users now appear prepared to pay the extra and stick with their red hardwood of choice.

Sapele prices

That said, sapele prices have weakened slightly despite steady demand. This downward movement is being attributed in part to healthy volumes of landed stock, not only in the UK, but also on the European mainland. The general view is that euro prices for this particular species will remain weak for the next few months, at least unless there is a sudden – and unexpected – upturn in demand. However, at least one regional specialist was suggesting this week that sapele prices may have “flattened off” after several months of weakness.

The current supply situation has been improved by reportedly more settled conditions in the Ivory Coast, although several traders reported arrivals of timber running up to five months late. “People who have already placed orders are reluctant to book more in case it all comes at once,” TTJ was told. Another contact reported “gazumping” on some shipments, with material being sold instead to the highest bidder.

By comparison, the meranti price “still looks cheap” despite the impact of freight increases, it was suggested this week. A number of regional experts believed supply in the UK was largely sufficient to meet demand, but expressed surprise that sales volumes had not improved more than they had. “UK importers haven’t been very adventurous in bringing in Far East hardwood,” it was argued.

Turning to other Far Eastern hardwood species, keruing is said to have become almost impossible to source, with any offers said to be “very firm” on price. Indeed, one contact commented this week: “I have got big orders to place but I just can’t get the timber”. Describing conditions for this timber as “the most bullish I have ever known”, another regional specialist blamed strong buying activity from the US and Japanese trucking sectors, as well as attractive offers from Thailand for specifications that were more convenient for the mills to produce. It was also suggested that the rainy season had created logging problems and that a large proportion of those logs becoming available were being absorbed by local plywood manufacturers rather than sawmillers.

Merbau supply

In similar vein, merbau is in short supply and prices have been on the increase, thanks in part to weather-related logging problems and to the Indonesian government’s clampdown on illegal logging.

As for other West African species, importers have been fielding an increased number of offers for iroko although prices remain very firm. Supply of random sizes has become easier although fixed sizes remain more difficult to source. In general, buyers have retained a sense of caution when wood is offered at high prices, even though there are few obvious alternatives to this particular species.

Availability of framire has improved over recent months thanks to significant arrivals and to the easing of unrest in the Ivory Coast, with consistent buying levels serving to keep prices steady. Utile, meanwhile, has been the focus of patchy demand.

Turning to Ghana, supply has tightened on almost all species due to logging restrictions and to the growing impact of a range of increased costs and taxes.

&#8220I wish I could get Brazilian mahogany; there is still demand but we just can’t get any. The Americans love it and tend to mop it all up”

As for the North American hardwood market, a slow start to the year in some quarters has given way to a general upturn in activity during recent weeks, with one operator describing February as “one helluva good month”. According to regional specialists, the still relatively unspectacular demand levels in the UK have prevented shortages from having a more pronounced impact on the market.

Short supply

However, all US hardwoods are said to remain in varying stages of short supply thanks largely to reduced production levels and to prolonged bad weather on the other side of the Atlantic during 2003. Even the December lull in buying activity apparently failed to change this perceived imbalance. “Logging has been down to a minimum and stocks of green lumber and kiln-dried have got shorter and shorter – so prices have started inching upwards,” TTJ was informed. “People are not in a hurry to buy anything in the UK but they shouldn’t really delay any longer.”

Shortages are said to have emerged particularly in 1in and 2in specifications of both white oak and hard maple. As one importer put it: “We haven’t had to reduce our prices on these items – which is something of a result.” Another operator was somewhat more bullish with regard to white oak. “The UK is a big user and prices are going up even though the market over here is quiet, so that’s been raising a few eyebrows,” he commented.

While the tulipwood, cherry and walnut markets were described as stable, the ash price was said by one regional expert to be trending upwards for the first time in recent memory. Indeed, several operators pointed to supply gaps in the thinner specifications of ash, most notably 1in material.

As for European hardwoods, beech is readily available and prices are described as weak, while a “groundswell of interest” was reported for FSC-certified European oak in particular. Despite the weakness of the dollar in relation to the euro, sales of European oak in general have held up quite well although buying interest has been more evident in the thicker sizes because the thinner specifications compete more directly with North American supplies.

Hardwood prices coming out of Brazil are said to have increased significantly since the latter part of last year under the influence of rising fuel charges and freight rates, as well as an ever-weaker US dollar. According to a regional specialist, “prices have risen by anything between US$30-50/m3 compared to the end of 2003, depending on how desperate the seller is to sell”.

Almost inevitably, little if any Brazilian mahogany is likely to reach these shores over the next few months. A sizeable volume of old production is understood to have been cleared for shipment but delays have emerged with export permits. In any case, the UK trade is laying bets that the entire consignment will end up in a US market which appears prepared to outbid all-comers. That said, China has also been providing an outlet for Brazilian mahogany.

Traders give up

Many UK traders appear to have given up on a species that has not been without its problems in recent years, although buying interest has not dried up by any means. One leading UK importer lamented: “I wish I could get Brazilian mahogany – there is still a demand but we just can’t get any. The Americans love it and tend to mop it all up.”

Staying with Brazil, cedar prices have been “pretty firm”, although shipments are widely reported to be slow. Meanwhile, increased interest has been mentioned for tatajuba, probably are a result of the recent difficulties in sourcing iroko from West Africa.

As a footnote, there were rumours circulating this week of a possible customs strike in northern Brazil starting from early March.