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No change in depressed European market  for tropical sawn lumber

17 March 2009

No change in depressed European market for tropical sawn lumber

There is little change in the European market for tropical sawn lumber. There is still very little forward demand for sapele, the main commodity species, as large importers in the UK and the Benelux countries continue to off-load stocks at below replacement value.
Due to very slim margins, there is very limited incentive for importers to engage in trade in this species – as one major UK importer commented recently ‘I haven’t made any money on sapele in over a year’.
He noted that the same could be said of sipo, although a few other lower volume species have been performing a little better, for example iroko and framire. Confidence has been obliterated throughout a large swathe of the European hardwood importing trade.
This combined with continuing lack of access to credit and insurance cover has meant that the focus is still on reducing stocks – despite the clear evidence that supply further down the pipeline has been greatly reduced.
There is however a feeling that prices are now very close to the floor, if not already there. A frequent comment by European agents is that with the so little buying for so long, forward prices could rise quite dramatically in the second half of the year if importers do at last turn their attention to replenishing their depleted stocks.