With the odd exception, the second quarter of the year has been characterised so far by static or falling prices for most species of hardwood. Nowhere has this trend been more pronounced than in North America where market confidence has been dented by worries over the US economy.

The price of 4/4 hard maple has fallen by between US$200-300 in the past couple of months, and considerable weakness has also been reported in the thinner specifications of tulipwood and ash – not least because both species can be brought to market with relative speed. The price of the former is said to have dropped by between 10-15% since the start of the year, while the latter has declined by around 10% over the same period.

Elsewhere, cherry has weakened less dramatically, while white oak is among the more stable species in terms of price. The only North American hardwood species to be widely described as ‘firm’ this week was black walnut but, as one contact noted: ‘There isn’t any to be had.’ Another agreed that this fashionable species was ‘almost impossible’ to source in anything other than minute volumes.

This general weakness in North American hardwood prices is occurring against a backdrop of still relatively strong consumption and house start statistics on the other side of the Atlantic, as well as relatively high log prices.

At the same time, however, some major domestic consumers in the US – such as the furniture manufacturing industry – have suffered declining business fortunes. There was also a suggestion of oversupply in dry timber creating a pressure on storage. ‘Confidence is the missing element,’ said a trader who had recently returned from a visit to the US. ‘People have been bruised by what is happening to the stockmarket and have been putting off their buying decisions until later and later.’

Cautious buying

Worries over domestic demand in the US have been deepened by evidence of a more ‘hand to mouth’ approach to buying in some previously strong overseas markets, such as Spain where North American hardwood sales rose by 15% in volume terms last year. Orders are continuing to come out of the UK but falling prices have led to more cautious buying, with agents having to work hard for business.

According to several contacts, many hardwood stockists in the US appear to have panicked and are trying to move whatever volumes they can through the export market. ‘The overall market is still hard to call, so time will tell whether they got it right,’ observed one source this week.

According to another, some North American mills had sought recently to ‘minimise their exposure’ to this uncertain market by curtailing production and shedding jobs. This has thrown up the possibility of the supply chain being unable to respond if hardwood purchasers were suddenly to return to the market en masse.

It will be interesting to see whether these falling US hardwood prices will affect annual sales on this side of the Atlantic. Recently-released figures from the US Bureau of the Census (TTJ April 21) show that US hardwood lumber shipments to the UK increased in volume by 1.6% last year to 126,286m³, while the total for Ireland soared 55.2% to 24,428m³. The 840,274m³ dispatched to the EU as a whole represented almost 44% of total world exports when excluding shipments to Canada.

In terms of total exports of US hardwood lumber, white oak was easily the leading species on just over 50,000m³ in 2000, more than double the export volume of ash in second place.

According to the American Hardwood Export Council, the volumes shipped to the EU were encouraging given the higher prices of many species and the increased availability of European hardwoods as a result of the Continental storms of late 1999.

All quiet

Of scant comfort to the Americans will be the know-ledge that no other major hardwood producing region of the world could be described as buoyant at present. The Far East market, for example, has been ‘bouncing along the bottom’ with both the dark red meranti and keruing markets described as stable to slightly weaker. The price of 2in dark red meranti is said to have fallen by two or three percentage points in the past couple of months as sellers attempt to stimulate more interest in a generally uninspired market.

As in the US, there has been evidence of curtailments in production in the Far East while some mills have not come back since Chinese new year, it is alleged.

Japan’s impact

Japan, which imported just under one million m³ of hardwood last year comprising 627,000m³ of lumber and 347,000m³ of finished products, is still experiencing economic difficulties and is thereby creating negative sentiment throughout the region.

&#8220Of scant comfort to the Americans will be the knowledge that no other major hardwood producing region of the world could be described as buoyant at present”

Meanwhile, western European buyers are quieter than Indonesian and Malaysian hardwood shippers might have hoped at this stage of the year. From the UK perspective, importers are suggesting that dark red meranti is slow in selling; with margins pared back, some have opted to concentrate on other, more lucrative species, it was suggested this week.

Ramin ban

Within the past few weeks, hardwood traders in the UK have been urged to support a ban on the import of Indonesian ramin after a probe by the Environmental Investigation Agency and Telepak Indonesia revealed it was being extracted illegally from a national park (TTJ April 28). A moratorium has been put in place pending further evaluations.

According to one source contacted this week, the impact has been ‘almost immediate’ in that ‘a lot of shippers are already running scared’ of the effects of the announcement. While the UK is not a large volume buyer of ramin, there was now ‘a lot of head scratching’ among the small number of end users in this country because no other species offered the same range of properties in terms of colour, density and machinability. The difficulties associated with an outright ban would be more far-reaching in other European countries such as Italy where ramin consumption was significantly higher, he added.

The majority of sources contacted this week were somewhat sceptical as to whether a ban on exports of Indonesian ramin could be made effective.

A key feature in the African hardwood sector has been the dearth in Irish orders for iroko. Ireland is a leading buyer of this species but is suffering ‘acute indigestion’ after having received huge volumes in the first quarter; stocks in the country are still ample, partly as a result of the dampening effect on demand of the foot and mouth crisis and the economic slowdown in the US, according to one regional expert. Prices from the Ivory Coast are said to have weakened on the back of demand uncertainty.

In Ghana, an additional government tax on air dried and kiln-dried lumber has provoked something of a stand-off, with the result that shipments have dwindled to nothing in recent times. However, a working compromise appears to have been agreed and the flow of material is expected to resume shortly.

Sapele weak

Supply from Cameroon, meanwhile, has been described as ‘fairly tight’, partly because of problems with concessions.

Overall, some West African hardwood prices are on the weak side – notably sapele which has witnessed a fall in demand from some key markets such as Spain. However, prices could not be said to have fallen to any dramatic degree. As for sipo, however, the species was described this week as ‘gold dust’, with the Germans prepared to pay high prices ‘to snatch anything that is going’.

Supply tightness and Brazilian mahogany are becoming almost synonymous. At best, supplies of the species are ‘dribbling’ into the UK – albeit often several weeks or months later than originally anticipated; at worst, several contacts maintain ‘there is not a stick to be had’. Asked about prices, one contact said: ‘For what you can’t get, the price doesn’t really matter.’ Unverified rumours of an even tighter supply regime for Brazilian mahogany next year have increased the uncertainty surrounding this species.

Overall, the UK market has become something of a struggle for hardwood sellers given that the majority of end users appear to have had a first quarter of the year that was some way below expectations. The second quarter has provided little in the way of fresh impetus, not least because of the disruptive Easter and bank holiday breaks. As always, buyers are proving reluctant to invest in timber supplies when prices are still showing signs of weakness.

On a more positive demand note, the Scottish Executive has commissioned Highland Birchwoods to conduct a study aimed at identifying ‘innovative future use of timber cladding on buildings in Scotland’. The project team is compiling data on past and present timber cladding in Scotland, making comparisons with other countries, and finally flagging up the potential for more widespread use of softwood or hardwood timber cladding in Scotland. Its report, due to appear in the summer, will have the status of a Scottish executive policy discussion paper.

Kilning demand

As indicated in the previous hardwood report, prominent kiln operator Stockwells Ltd has closed down its kilning operations because of losses brought about by adverse exchange rate movements, reduced demand from key markets, and rising energy, labour and transport costs. Twelve of the 14 kilns located at the company’s premises is Stokenchurch, near High Wycombe, have been put up for sale.

The demise of Stockwells’ kilning operations has meant a perceptible increase in demand for some of the UK’s other kiln operators. While nobody is pretending that the UK kilning sector is buoyant, at least one leading company expects to push through another price increase in the near future. ‘The last time we put up our prices was around Christmas last year,’ he said. ‘We are putting up prices again and it looks like the market will reluctantly pay it.’