1. CENTRAL/ WEST AFRICA
Business inactive as Europe breaks for holidays Trade continues very subdued in West Africa, with European buyers out of the market as the Christmas and New Year’s holiday period approaches. The European manufacturing sector has already been hard hit by the economic downturn. Those producing doors, door sets, windows and roof trusses have been badly affected and consumption of both hardwood and softwood has fallen to very low levels. Importers and merchants say that demand has been weak and that stock reduction continued to be the main focus.
The impact of slow business on West African exporters has been minimized by the curtailment in production. However, the effects of this have now begun to cause concern in government forestry and financial departments as tax revenues in forest operations, production activities and export taxes have been far lower than expected, while unemployment in the timber sector has become a serious problem. Producers in turn complain that taxes have been too high given their current financial situation.
Exports of logs to the Asian region have been fairly active for the reduced number of exporters able to offer prompt shipments in moderate volumes.
For sawn lumber, there has been little relief in sight. Prices for sapele and some other lumber species have fallen marginally, though firm orders were very few and, with low production volumes, producers were not disposed to accept low offers. Lead times for new orders for special sizes have said to be extended and prices for specials have at times been above those for regular specifications.
2. GHANA
Ghana’s timber exports rise by volume and value Ghana’s total exports of timber and wood products for the first nine months of 2008 increased to 430,100m³, a 7.7% rise when compared to the same period in 2007. The corresponding total revenue for the first three quarters also increased 4.2% to EUR144.42 million in 2008, up from EUR135.55 million in 2007.
The gain resulted from higher volumes recorded for sliced veneer (13.6%), plywood (8.7%), rotary veneer (7.5%) and kiln-dried lumber (4.3%). Decreases in volume were recorded for furniture parts (82.6%), curl veneer (35.5%), boules (34.7%) and air-dried lumber (12.9%) as shown in Table 1 below:
Table 1: Ghana’s Timber Export Statistics, January-September 2007- 2008 (Note: 1- lumber (AD) includes lumber overland; 2-sliced veneer includes layons; 3- plywood includes overland)
Plywood (24.4%), kiln-dried lumber (21.2%), air-dried lumber (13.3%), sliced veneer (7.4%) and rotary veneer (5.8%) altogether accounted for 72.2% of the total volume exports during the period, with twelve other products accounting for 27.8%.
Plywood exports, including overland exports, during the period recorded an 8.7% increase in volume over that of the previous year to reach 104,960 m³. The corresponding revenue was EUR30.35 million, showing a 16.3% rise in 2008 compared to the same period in 2007. The three leading exporters were Naja David Veneer & Plywood, John Bitar & Co. Ltd. and Asuo Bomosadu Timbers, which contributed 70.0% of total volume exported. The main species were ceiba, chenchen and mahogany, and the leading importing countries were Nigeria, Burkina Faso, Niger and Togo.
Kiln-dried lumber rose from 34,360 m³ in 2007 to 36,000 m³ in 2008 during the first three quarters registering increases of 4.3% and 4.8% in volume and value, respectively. Of the 96 exporters, the two leading companies were Ayum Forest Products Ltd. (12.0%) and Samartex Timber and Plywood (9.9%). When compared to 2007, air-dried lumber exports suffered a decline of 12.9% in volume with a corresponding 18.1% decrease in revenue for the period January – September 2008.
Sliced veneer export rose 13.6% to record 25,460 m³ for 2008 against 23.12% registered for 2007 during the same period. The main leading exporters were Logs and Lumber Co. Ltd. and John Bitar Co. Ltd., which together accounted for 49.2% of total export volume with revenues of EUR11.2 million.
Total rotary veneer exports for the first three quarters were EUR24,910 m³, a 7.5% gain over 2007 figures. The corresponding revenue for the same period also rose from EUR5.42 million in 2007 to EUR6.08 million in 2008.
Tertiary products accounted for EUR10.86 million of the EUR144.42 million earned in 2008 as against Euro 12.27 million from the total revenue of EUR138.55 million of wood export for the same period in 2007. Secondary products for the January – September 2008 period were also EUR133.56 million as compared to EUR126.28 million in 2007.
Ghana’s trade was notably directed to the European Union (EU), which accounted for 45.04% and 33.25% of the total export volume and value, respectively, for the period under consideration. The key markets in the EU included France, Germany, the UK, Belgium, Spain, Ireland and Holland.
The US accounted for 9.01% and 12.66% of the total export volume and value, respectively, in contrast to the period compared 10.23% and 13.33% in 2007. The US market maintained its dominance as the largest destination market for Ghana’s lumber (KD) and rotary veneer exports.
The ECOWAS market (mainly Senegal, Nigeria, Niger, Gambia, Mali, Benin, Burkina Faso and Togo) also absorbed EUR30.35 million (96.54%) of Africa’s EUR31.44 million wood imports from Ghana during the period. Plywood and lumber (air-dried) continued to interest the Nigeria, Niger, Burkina Faso and Senegalese markets.
The emerging markets in Asia and the Far East - India, Malaysia, Taiwan, China, Singapore and Thailand - altogether contributed EUR23.07 million (15.97%) to Ghana’s total of wood export value during January – September 2008. India continues to be the leading importer of teak lumber (AD).
The Middle East countries, notably Saudi Arabia, Lebanon, United Arab Emirates and Israel, together represented EUR7.88 million (5.46%) of the total export value for the period.
3. MALAYSIA
Sarawak merchants seek favorable production trends from China Log prices in Malaysia began to stabilize, particularly in West Malaysia, where the year-end monsoon has caused widespread flooding and landslides, making it difficult and dangerous for the harvesting of logs. Timber merchants in Sarawak are hopeful that China will increase its imports of logs from the east Malaysian state at the end of the winter season. Wood Resources International recently reported that China’s timber production has substantially increased over the first seven months of 2008, although production was expected to be down during most of the fourth quarter of 2008. Timber merchants from Sarawak have also faced enormous competition from New Zealand, which has increased its export of radiata pine logs to China during third quarter 2008, up about 58% from third quarter 2007 levels. Nevertheless, traders in Sarawak are hopeful production trends in China will turnaround in 2009 and offer promising opportunities.
Malaysia furniture makers take interest in Saudi Arabian markets Furniture manufacturers continued to take interest in the Kingdom of Saudi Arabia. According to a report by Jones Lang LaSalle, a leading international real estate investment and advisory firm, the Saudi Arabian real estate market is expected to grow substantially over the next four years. The country has had over five years of continued economic growth, with GDP increasing on average 15% annually since 2002.
Despite this news, sawnwood processors and wooden furniture manufacturers were facing sharp challenges, reported the Khaleej Times, as raw material supply continued to tighten and the Gulf Cooperation Council (GCC) countries’ real estate and construction industries began to slow down. Banks in the GCC, especially Dubai and Kuwait were also tightening lending rules and policies as crude oil prices fell below USD50 per barrel.
4. INDONESIA
Indonesia responds to US government guidelines on certification The Indonesian government acted quickly and positively to set up a team of officials from various ministries to address certification of the country’s timber products for the US market, reported The Jakarta Post. The Trade Defense Director of the Indonesian Trade Ministry, Mr. Martua Sihombing, commented that the team will be composed of officials from the forestry, trade, agriculture, finance, foreign affairs, and industry ministries and representatives from the various timber trade associations. The team has been given the task to determine and identify procedures and constraints outlined under the US Lacey Act, which establishes new guidelines for certified timber products entering the US market. By July 2009, all timber products entering the US market must be certified by entities approved by the US government. Indonesia’s initial position will be known by 3 February 2009.
Sustainable Forest Management (SFM), Verification of Legal Origin (VLO) and the Chain of Custody (CoC) process will be addressed to meet the new guidelines. An exporter can choose to utilize any of the three certificates when exporting to the US. Indonesian Pulp and Paper Association (APKI) chairman, Mr. Mohammad Mansyur, said the Indonesian pulp and paper industry was ready to comply with the required US regulations. Indonesian Furniture and Handicraft Association (Asmindo) chairman, Mr. Ambar Tjahjono, added that certification was understandably necessary for wood products to compete successfully in the global market. Indonesia’s global exports of wood products stand at USD2.48 billion for the first 10 month of this year, down 3.9% from USD2.58 billion for the same period in 2007, according to the Indonesian Central Statistics Agency.
HSBC to scale back lending for forestry schemes in Indonesian and Malaysia Reuters and The Guardian (UK) newspaper reported that environmental concerns have caused HSBC, a major British banking group, to scale down lending for forestry schemes in Indonesia. HSBC will sever ties with a third of forestry clients in Malaysia and Indonesia, including clients involved in palm oil, soy and timber by end 2009, according to Mr. Francis Sullivan, the bank’s advisor on the environment. HSBC is planning to terminate 30% of client relationships in the forest land and forest products sector in ‘high-risk’ countries, including Malaysia and Indonesia, due to non-compliance with HSBC’s forestry policy.
5. MYANMAR
Prices hold steady as orders fall The market situation for Myanmar teak and other non-teak hardwoods has not improved over the last fortnight. Some Indian buyers are shipping small quantities of teak and gurjan, but in comparison to ground stock in Yangon, the shipments have been minimal.
As reported in a previous TTM report (TTMR 13:21), buyers hoped that the Myanmar Timber Enterprise (MTE) might reduce its list price. Many buyers believe that the six month average prices and the September 2008 list prices may have aggravated the situation. While in its 60 year history, MTE has not needed to reduce prices it has set, this may change due to the current effect of prices on traders. Some buyers do not expect the situation to turnaround soon. Analysts believe that MTE may need to rethink its pricing strategy to alleviate the plight of buyers and stockists (both foreign and domestic).
Local sawmills in Yangon are reported to be facing difficulties due to high raw material prices and falling orders. Exports of sawn timber are also down. One representative from the industry noted that even if prices of raw materials are adjusted, it would still be difficult to run the sawmills, as there are no new orders from abroad. The only possible way that MTE may be able to avert future problems is to reduce felling in the current harvesting season, thereby reducing supply. Analysts admitted that it was not easy to anticipate this potential move by the MTE.
The prices below are from November’s tender sales. The December tender will be held around 22 December.
6. BRAZIL
São Paulo promotes wood from legal sources According to Cadmadeira/DiárioNet, the Secretariat of Environment of the state of São Paulo recently launched the State Registrar of Companies (CADMADEIRA) commercializing forest products and by-products from natural forests in São Paulo state. The registry, which was launched in December, is voluntary, but according to the Secretariat of Environment, only companies registered in CADMADEIRA will be able to participate in the state bidding process for wood supplies as of July 2009.
The Environment Secretariat has also designed a seal to show forest products or by-products are from sustainable, certified sources. This informs consumers about companies that sell forest products and by-products in a responsible manner, providing consumers with options to buy wood from legal sources. To receive the seal, a company should voluntarily adhere to CADMADEIRA and will be subject to surveillance, certification and evaluation before receiving the seal. The seal also certifies that the company’s tax situation is in conformity with appropriate regulations and has no pending tax disputes.
The National Forum of Forest-Based Activities worked decisively to establish CADMADEIRA. The decree that created the organization also sets out the establishment of a technical chamber for forestry matters to improve the control system and promote forestry activities in the state of São Paulo.
Wood waste shows income generation potential During the last International Fair of the Amazon (FIAM), the National Institute of Amazonian Research (INPA) presented its project designed to create technologies for the utilization of wood waste from sawmills and forest management projects, reported Agência de Notícias da Amazônia.
For example, with the technology developed at INPA, sawmill waste, has been used in the art of marquetry, which is a collage of different types of wood. The technique of marquetry has been already used in the city of Cruzeiro do Sul, in the state of Acre, where the Yawanawá Indians also have been manufacturing furniture and wood handicrafts for decoration.
A researcher of INPA studied techniques of marquetry for the manufacturing of products that are expected to bring greater development to the region. According to INPA, this marquetry wood work project benefits the company that produces the artifacts, creates jobs in the region and offers new business opportunities.
INPA studied the industrialization of lesser-known tree species in the Amazon to implement the project and conducted technological research on the quality of tree species. At present, many people believe that only species such as cedar and mahogany can be commercialized, increasing the demand for these species, which end up being overexploited.
The project has been supported by the Foundation for Research Support of the State of Amazonas (FAPEAM) and the National Funding Agency for Studies and Projects (FINEP).
Storm affects Santa Catarina furniture industry The furniture companies of São Bento do Sul and Rio Negrinho municipalities, Brazil's main exporters, are already facing difficulties meeting international delivery deadlines after the recent flooding in Santa Catarina state. Itajaí Port, where 4% of Brazilian exports are shipped, was closed as a result of the storm. Portal Moveleiro reported that the storm, which hit the state at the end of November, has caused economic problems along the entire supply chain of timber and furniture. Santa Catarina is the leading Brazilian exporter of furniture, with exports worth USD378 million in 2007, or 32.8% of total Brazilian furniture exports, according to the Federation of Industries of Santa Catarina State (FIESC). Entrepreneurs are now subjected to higher costs, complex logistics, renegotiation of delivery dates with international customers, and risk losing customers for breach of contract.
Since no furniture shipments were being made through the Port of Itajaí, product costs will be higher, as products will need to be rerouted through the ports of São Francisco do Sul (SC) and Paranaguá (PR). The costs of shipping through these ports are now twice as high as shipping through Itajaí. Customers have not been accepting renegotiation of contracts because they believe it is the state’s problem.
According to the Secretary of the Ministry of Foreign Trade and Development (MDIC), Brazil's exports dropped USD370 million by value in November 2008 because of the severe damage at the Port of Itajaí. For the Union of Construction and Furniture Industries of São Bento do Sul (Sindusmobil), logistical problems will add costs at year end, since prices of contracts are already fixed. There are no new contract negotiations scheduled for the moment. Economic losses for the furniture industry in Santa Catarina state is expected to be severe.
Africa may be potential market for Brazilian wood products The Brazilian timber industry is actively seeking alternatives to traditional North American and European markets. According to the Brazilian Association of Mechanically-Processed Timber Industry (ABIMCI), economic growth of some African countries with growth rates above 10% a year and countries with demand for civil construction products such as South Africa, Angola, Morocco and Egypt may represent potential markets for the Brazilian solid wood industry.
Despite the small per capita consumption of these countries, the population of the region is large and economic growth has been accelerating, with their imports above the world average. It is estimated that imports of forest products by African countries may grow in the coming years at rates higher than 8% a year. Imports of wood products from Brazil by African countries are diverse and focus on plywood, coniferous sawnwood, wood panels and value-added products such as furniture.
Several African countries are both producers and exporters of tropical timber, but do not produce much value-added products; the majority of exports are logs and sawnwood. In addition to obtaining a specialized market for furniture products, another advantage in exporting to these countries is the fact that there are no limitations with regard to nontariff barriers.
Besides Africa, other developing countries represent market alternatives for Brazilian companies. These include markets in China, India, Taiwan and Vietnam, the United Arab Emirates, Qatar and Saudi Arabia. In many of these emerging countries, Brazil is already present, but there are still opportunities to be explored.
7. PERU
Peru’s Environment Minister to raise funds for forest conservation Peru’s Minister of Environment, Antonio Brack, has begun a journey to various European countries to raise funds for environmental conservation. According to Brack, Germany has already contributed EUR4 million to the Ministry of Environment in Peru for rainforest conservation. Some European countries have also expressed interest in collaborating with Peru on environmental conservation, he said. He added that he would seek funds from countries in Asia, saying that he had already established partnerships in Japan to conserve and develop forests.
Brack explained that Peru, through the Ministry of Environment, was making an international proposal to preserve 54 million hectares of tropical forests. He noted that the proposal would include protected Indian lands and that carbon credits generated from this land would be sold in the international carbon market. This way, he noted, deforestation would not take place and biodiversity and Indian culture would be preserved.
Peru has a number of projects addressing carbon offsetting, which could be offered to different countries. Minister Brack noted that Peru could collect over USD5,800 million in the next few years if the 106 businesses carrying out environment projects with carbon benefits are completed successfully.
Wood exports grow 9.6% in first three quarters of 2008 Wood exports from January to October 2008 were USD194.20 million, up from USD177.25 million during the same period in 2007. While this represents a 9.6% growth in the value of exports, the growth has slowed in 2008 when compared to previous years, since exports to main destination markets (Mexico, US and China) have fallen. For instance, the total value of exports has dropped in the Loreto region due to the lower imports from Mexico.
From January to October 2008, exports were concentrated in three main markets representing 84% of total exports of the wood sector. Mexico represented 36% of these exports, while China represented 28% and the US 20%. Of total exports, sawnwood was the highest exported product. Emerging markets for Peru’s products were the Dominican Republic, Italy and Hong Kong.
8. BOLIVIA
9. MEXICO
Mexico and Italy agree on bioenergy projects The National Forest Agency (CONAFOR) and the Ministry of Environment and Territory of Italy are working together to reduce greenhouse gases and mitigate climate change by generating bioenergy while preventing forest degradation. The two countries signed a Memorandum of Understanding in November 2008, and Mexico has already started a national energy progamme, which includes a programme to save firewood and reduce the incidence of respiratory disease. In 2008, 185 million Mexican pesos will be invested for the installation of 120,000 stoves in the country. Another component of the program will promote commercial forest plantations for the generation of biogas and bioethanol. Mexico and Italy will promote technical and scientific cooperation for the prevention of forest degradation and sustainable forestry and exchange experiences on bioenergy generation to promote sustainable development.
10. GUYANA
Guyana’s value added products continue record growth A year-to-date analysis of the volume and value of shingles exported when compared to the same period of 2007 revealed gains of 16% by volume and an overall rise of 57% by value. This robust growth by value is mainly attributable to the higher price paid for shingles in the Latin American/Caribbean markets and larger demand for Guyana’s shingles. Volumes of exports to these regions have increased by 5.6% and 40% by value over the first 11 months of 2007. The average price received for shingles in the Latin American/Caribbean market was 33% higher than in other markets. Other main markets for Guyana’s shingles were in the African region, which has also shown rises in the volume and value of shingle imports over 2007 levels. Prices of shingles to the region on average increased 10% over prices in 2007. Despite lower volumes of shingle exports to the North American market in 2008, the value of these products were 12% greater than in 2007 and average prices jumped 69%.
In another added value product class, exports of kabukalli doors showed marked improvements for the period January to November 2008 by both volume and value when compared to the same period of 2007. Increases of 30% by volume and 38% by value were recorded over the review period. This was closely followed by improvements in exports of locust doors, with gains of 65% by volume.
The highest volume of shingles exports has been seen over the past fortnight, when compared to all other periods this year. As projected in the last fortnight, log exports continued to rise by both volume and value. Prices for logs recorded average increases of 35% over the previous fortnight’s average. Sawnwood exports were also higher over the last fortnight, 85% by volume and 80% by value. The smaller improvement in value can be attributed to the larger export volumes of less popular and commercial timber species.
Guyana launches avoided deforestation model On 5 December 2008, the Government of Guyana launched a technical report, which will form the basis of international support on avoided deforestation and for climate change mitigation and adaptation. The document recognizes the economic impact of deforestation across the globe and uses a model to estimate economic losses from deforestation to Guyana and the world. The report concludes that while Guyana may benefit from short-term gains from quick harvesting of its forest resources, a more appropriate long-term strategy to align national and global interests is necessary.
The President of Guyana, when presenting the model, said funds generated from the market-based model on avoided deforestation could help Guyana shift to using clean energy technologies, which would supply low-carbon electricity to the country. The President noted that targeted funds could also provide an unprecedented amount of assistance to forest communities and develop the economy by expanding eco-tourism and other schemes and support diversification of the economy. Other benefits identified for Guyana under such an incentive scheme include investing heavily in public development and upgrading the sea defence and irrigation systems along coastal areas.
GFC and USAID host forum on US Lacey Act The Guyana Forestry Commission and USAID Guyana hosted a forum on the US Lacey Act on 11 December 2008. The forum was attended by stakeholders, including both primary and added value producers, and exporters, many of whom export to the United States.
At the meeting, representatives from the US Forest Service presented the background and context of the recently amended Lacey Act, the changes and new requirements which are contained in the legislation, an outline of the products that will be affected, the handling of violations and upcoming developments regarding the implementation of the Act. Several key areas within these general discussion points were examined, including exclusions and exemptions under the Act.
Several recommendations were made at the forum, including: having access to a check list of requirements to comply with the new provisions; the need for a core set of documentation required for these provisions; and the recognition of national level legislation in determining legality of forest products harvested and traded. Guyana, through the GFC, has identified trade relations with international partners as a priority area for 2009, with emphasis being given to the requirements of key markets, including the US and EU markets.
At the forum, Guyana also discussed a legal verification system it has developed. The system is expected to be implemented in 2009.
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