India: Reserve Bank of India releases latest monetary policy review

Source:
ITTO's Tropical Timber Market Report
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The Reserve Bank of India's (RBI) recently issued a press release on its March, mid-quarter economic review:
http://www.rbi.org.in/scripts/BS_PressReleaseDisplay.aspx?prid=28335

It outlines the rationale for the 25 basis point cut to 7.5% in the rate at which it lends to banks, with other rates remaining unchanged. The review notes that since the Third Quarter Review January 2013, global financial market conditions have improved. However, domestic growth has decelerated significantly, affected by relatively high levels of inflation.

The review indicates that India’s GDP growth in Q3 of 2012-13, at 4.5 per cent, was the slowest in the past 15 quarters. Of particular concern is the weaker output of the services sector, the mainstay of overall growth. While growth in industrial production was positive in January, capital goods production and mining activity continued to contract.

Lower GDP growth forecast
In the quarter under review India’s trade deficit narrowed significantly as exports increased and non-oil imports fell. However, between April 2012 and February 203 the trade deficit was higher than a year ago.
The review notes that there are still major risks in the global economy. Nevertheless, leading global indicators are positive but future growth is expected to be very slow.

On the domestic front, the priorities are to raise the growth rate, restrain inflation pressures and mitigate the possible impact on the economy from external forces. The Central Statistics Office has projected GDP growth for 2012-13 to be lower than the Reserve Bank’s baseline projection of 5.5 per cent, reflecting slower than expected growth in both industry and services.

The key to reinvigorating growth, says the RBI, is accelerating investment. The challenge in returning the economy to a high growth trajectory is revival of investment. A competitive interest rate is necessary for this, but lower interest rates alone cannot solve the problem. Issues such as bridging supply constraints, fiscal consolidation and improving governance need to be addressed says the RBI.

Extending new areas under rubber plantations
Kerala state is the centre for latex production in India. Tripura in the north east of the country is the second Indian state to follow the example of Kerala in developing rubberwood plantations. To-date around 57,600 hectares of plantations have been established generating employment for more than 50,000.

Having witnessed the benefits of investment in rubberwood plantations, the state of Arunachal also aims to establish a commercial rubberwood plantation sector. In collaboration with the Rubber Board of India, the state government in Arunachal aims to produce 100,000 tonnes of latex. The rubberwood plantations will yield roundwood and also facilitate production of minor forest products such as honey.

Currently, Gujarat state has only a small area of rubberwood plantations but that may soon change. The state has a received a proposal from a tyre manufacturer to build a factory in the state. To encourage this investment, the state government plans to invest in rubberwood plantations to provide the latex raw material for this new industry. The establishment of commercial rubberwood plantations will also provide an opportunity for growth in the wood processing sector in the state as rubberwood logs will be available when the plantations are periodically felled and replanted.

Sales of Teak and other hardwoods from Indian forests
Auction sales of teak and other hardwoods were concluded in the government forest depots in Western India during March. Prices for freshly harvested logs were good but the price received for log lots felled some time ago were low. Average prices during the March auction are shown below. Prices are per cubic foot ex depot.

Teak logs Per cubic foot
A quality for ship building Rs.2400
B quality for ship building Rs.2200
A for sawing Rs 2000-2100
B or sawing Rs 1900-2000
A Long length logs Rs 1800~1900
B Long length logs Rs 1700-1800
Long length, Medium Quality Rs 1600-1700
Short Length, Medium Quality Rs 1300-1400
Short Length, Average Quality Rs 1100-1150


Prices for Haldu (Adina cordifolia) and Laurel (Terminalia tomentosa) logs

3m to 4m Length Per cubic foot
46 to 60 cm. girth Rs 175-250
61 to 75 cm. Girth Rs 300-350
76 to 90 cm. Girth Rs 400-450
above 91cm. girth Rs 500-550


Imported Teak logs
Supplies and shipments remain stable as do price levels. The turnaround in imported timber is very quick due to the shortage of domestic hardwoods.

Imported Plantation Teak Prices (C&F)

  US$ per m3
Tanzania Teak sawn 450-800
Côte d'Ivoire logs 450-850
PNG logs 450-550
El-salvador logs 400-550
Guatemala logs 400-500
Nigeria squares 300-500
Ghana logs 350-650
Guyana logs 300-450
Benin logs 500-1000
Benin sawn 700-800
Brazil squares 400-600
Columbia logs 400-600
Togo logs 400-500
Ecuador squares 350-500
Costa Rica logs 450-650
Panama logs 350-450
Sudan logs 500-600 

Variations exist based on lengths and average girths of logs in a parcel. Prices also vary with measurement allowances given for bark and sap in different countries of origin.

Domestic sawnwood prices
Prices for air dried sawnwood remain unchanged. Prices are shown below as per cubic foot, ex-sawmill.

Domestic Ex-mill Sawnwood Prices for Imported Timber

Sawnwood, (Ex-mill) (AD) Rs. per ft3
Merbau
1500-1650
Balau
1600-1700
Kapur
1100-1250
Red Meranti
800-900
Radiata Pine (AD)
500-550
White wood
525-575


Prices for Myanmar Teak sawn in India

Sawnwood (Ex-mill) Rs. per ft3
Myanmar Teak (AD)  
Export Grade F.E.Q.
4500-10500
Plantation Teak A grade
3400-4000
Plantation Teak B grade
2800-3100
Plantation Teak FAS grade
2000-2600


The price range is the result of variations in length and cross section.

The trend of replacing Teak with other durable tropical hardwoods, continues because of high prices.

Imported (KD 12%) sawn wood prices per cft ex-warehouse

Sawnwood, (Ex-warehouse) (KD) Rs per ft3
Beech 1100-1200
Sycamore 1200-1300
Red oak 1400-1500
White Oak 1400-1650
American Walnut 2000-2150
Hemlock clear grade 1000-1100
Hemlock AB grade 950-1000
Western Red Cedar 1400-1550
Douglas Fir 1050-1100


Plywood market news
The rising costs of peeler logs, glues and other chemicals, transport charges and labour charges are affecting profitability in the plywood industry. Manufacturers from Punjab and Kerala recently met and agreed that price increases are inevitable. Analysts are concerned that the market may react negatively to this proposed price increase. Plywood prices after the agreed increases are shown below.

WBP Marine grade from domestic mills

Plywood, (Ex-warehouse) Rs per sq.ft
4 mm 30.00
6 mm 44.00
12 mm 67.00
15 mm 79.00
18 mm 95.00


Domestic Ex-warehouse Prices for Locally Manufactured Plywood

Locally Manufactured
Plywood “Commercial
Grade”
Rs per sq.ft
  Rubberwood Hardwood
4mm Rs.14.50 Rs.23.00
6mm Rs.21.75 Rs.31.50
8mm Rs.27.25 Rs.35.50
12mm Rs.32.75 Rs.41.50
19mm RS.46.00 Rs.56.50
5mm Flexible ply Rs.31.50  
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