Central/West Africa: Steady demand but caution when it comes to raising capacity

Source:
ITTO/Fordaq
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There were no price movements for either logs or sawnwood over the past two weeks in Central/West Africa as international demand remains steady with no moves by either buyers or exporters to disrupt this long period of stability.

Since growth in demand remains moderate Central/West African producers say they are not experiencing supply side problems.

In these calm trading conditions, which followed on from the sudden fall in business through the first half of 2015, businesses are marking time to see which way demand will go before contemplating major new developments or investment to raise production capacity.

Producers content with demand from China

Trade with buyers for the Chinese markets is said to be ‘ticking along steadily’ but the volumes traded, mainly logs, are well below levels seen 12 months ago. A substantial recovery in the volume of sales appears a long way off. Nevertheless, traders are becoming a little more optimistic as the year progresses.

Sawnwood sales continue to be supported by demand in Europe and prices are firm but unchanged from last month.

Strategy to balance output is paying off

During the trade slowdown last year many large companies cut back production to sit-out the slump in demand and safeguard their existing investments. Some smaller producers and traders simply ceased business.

Those mills that cut back on production are now seeing this was a successful strategy for themselves but also for importers who had built up stocks too high. A reduced production from African producers helped importers clear stocks without incurring losses as prices were kept steady.

This unprecedented cooperation on the part of producers and importers stemmed from improved transparency in the trade and has seen the sector has been able to stimulate the beginnings of a recovery in volume sales while maintaining stable prices.

Market prospects into the third quarter are difficult to forecast but the consensus amongst producers appears to be one of confidence that markets are unlikely weaken and that, in the medium term, a slow but steady recovery in trading volumes will be seen.

Log Export Prices

West Africa logs, FOB € per m³
Asian market
LM
B
BC/C
Acajou/ Khaya/N’Gollon
230
230
160
Ayous/Obéché/Wawa
260
260
180
Azobe & Ekki
230
230
160
Belli
250
250
Bibolo/Dibétou
150
145
 
Iroko 330
290
260
Okoume (60% CI, 40% CE, 20% CS) (China only) 200 200 160
Moabi 335 305 225
Movingui 210
210
160
Niove
160
160
Okan
250
250
Padouk
310
285
225
Sapele 315 305 220
Sipo/Utile
345
340
265
Tali 320 320

 

Sawnwood Export Prices

West Africa sawnwood, FOB
€ per m³
Ayous FAS GMS 410
Bilinga FAS GMS 500
Okoumé FAS GMS
350
Merchantable 225
Std/Btr GMS 270
Sipo FAS GMS
610
FAS fixed sizes 610
FAS scantlings 640
Padouk FAS GMS 930
FAS scantlings 1020
Strips 680
Sapele FAS Spanish sizes 610
FAS scantlings 620
Iroko FAS GMS 630
Scantlings 700
Strips
440
Khaya FAS GMS
450
FAS fixed
460
Maobi FAS GMS
610
Scantlings
630
Movingui FAS GMS
420

 

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