American Softwoods

1^st QUARTER MARKET REPORT

FOR NORTHERN EUROPE

JANUARY – MARCH 2003

OVERALL EUROPEAN SITUATION:

There has been a slight improvement in the level of imports of US softwoods during the period ending in December 2002 where France, Germany, and Italy showed gains compared with 2001.

Table 1 shows an overall view of the US softwoods exports to the EU.

Table 1.

IMPORTS OF U S SOFTWOOD LUMBER BY COUNTRY-m3
===================================================================
COUNTRY	1998	1999	2000	2001	2002
AUSTRIA		54	89	157	243
BELGIUM/LUX	22912	21223	13277	9442	9364
DENMARK	1381	1940	803	878	452
FRANCE	22092	37925	27083	4773	6701
GERMANY	87108	53468	42170	11226	12261
GREECE	13390	11861	4786	6420	4768
IRELAND	9322	8365	6697	4713	3719
ITALY	127334	133942	67628	28628	31950
NETHERLANDS	14222	11322	9980	14166	8650
PORTUGAL	3593	5752	3655	1535	2623
SPAIN	146325	180980	157029	100353	78304
SWEDEN	103	53	390	14	8
UNITED KINGDOM	39524	40917	27232	15533	13598
TOTAL EXPORTS	487306	507802	360819	197838	172641

EU TARIFF – FSC Dispute

The latest information that has been announced regarding the proposed EU Tariff on American wood and wood products is that sawn timber from Douglas Fir and Southern Pine has been taken off the list of products which are subject to the tariff.

Belgium-Luxemburg

The economies of Belgium and Luxembourg continue to improve. However, as a consequence of Germany’s poor economic situation, Belgium - Luxembourg is still suffering from lower than normal economic levels.

Denmark

The Danish economy remains stagnant. The building and construction industry has been relatively quiet for the past few months, thereby affecting demand for timber products such as flooring.

Germany

The economic situation in the German building and construction sector continues to be sluggish. An indicator of Germany’s continued economic sluggishness is shown by the downturn in the sales of furniture, which are 11.8% down for the period up to October 2002, compared with same period in 2001. This downturn is further confirmed by the fact that the sales of interior doors is also down from 8.5 million units to 7million units.

The only sector that appears to be stable is the renovation/refurbishment sector of the building industry, where the installation of wood flooring continues to grow.

Table 2 shows the price comparison between the major timber species in the manufacture of wooden windows:

Table 2

Species & Prices for Window Scantlings € per m	February 2003	December 2002
Meranti White Seraya Spruce One-piece slats Finger jointed Pine One-piece slats Finger jointed Larch Oak Hemlock Douglas Fir	3.20 – 3.60 3.90 – 4.30 2.50 – 2.90 3.30 – 3.60 2.40 – 2.60 5.20 – 6.50 9.20 – 9.60 5.60 – 5.80 6.90 – 7.70	3.20 – 3.60 3.90 – 4.30 2.50 – 2.90 3.40 – 3.70 2.50 – 2.70 5.20 – 6.50 9.20 – 9.60 5.60 – 5.80 6.90 – 7.65
Source: EUWID

France

The building and construction industry in France has, over the past three months, slowed down. This has, according to a number of major timber importers, affected the demand for timber and timber products. However, CAPEB, the French building association representing the small to medium building companies, forecasts that modernisation, renovation and refurbishment activity will increase significantly during 2003. This will benefit American softwoods as a significant portion of the exports are used in this sector.

Ireland

The Irish building industry continues to slow down following many years of rapid growth. This slow down is reflected in the volume exports of US softwood during 2002.

However, a number of importers who have been contacted recently, indicate that this situation is likely to improve during 2003.

United Kingdom

The UK economy continues to grow steadily. New house building in the UK is anticipated to grow by 3.0%

Spruce and Hemlock imports continue to slowly increase. These species are generally used in the manufacture of joinery, such as doors.

According to the major timber deck installers the period January to March is normally relatively quiet. However, this year the level of enquiries and the number of deck installations are 20% up on the same period in 2002.

The opinion of the industry, as given by Stephen Young, Director of the Timber Decking Association, is that 2003-2004 will be very active in terms of the number timber decks installed in the UK.

The Netherlands

The Dutch economy has slowed down and the forecast is for this slow down to continue for the first half of 2003. This situation has severely affected the building and construction activity in The Netherlands resulting in a 10% drop in the number of new houses being built.

Unfortunately, according a number of major timber importers contacted, they do not anticipate a significant change occurring until nearer the end of 2003.

ENQUIRIES:

The UK office receives enquiries from all markets in Northern Europe.

Since the last report, it has received the following number of enquiries covering the period January – March 2003:

FLOORING: 7

STAIRS: 5

KITCHEN FURNITURE: 5

WINDOWS: 5

DOORS 6

INTERNAL CLADDING: 5

DECKING/GARDEN LANDSCAPING: 3

TIMBER FRAMES: 7

PURPOSE MADE PRODUCTS: 3

GENERAL: 173

TOTAL: 219

The public relations activity of advertising and editorials targeting the decking market, in a wide range of publications, has continued to generate a high level of interest for information on U.S. softwoods. The total number for the period covered by this report is 624.

The level of interest in the American Softwoods website “www.americansoftwoods.com” since it was launched in January 2001 continues to grow as can be seen by the number of hits the site has had:

HITS VISITORS PAGE REQ

2003 JANUARY: 47,938 1,787 6,802

FEBRUARY: 179,486 1,567 106,792

MARCH: 85,004 1,925 33,937

:

During the last Quarter of 2002 the American Softwood Website has been significantly upgraded and improved, providing more information, downloadable publications, and lists of suppliers in the European market who stock American softwoods.

It would appear that the improvements made have increased the interest level in American softwoods.
ACTIVITIES CARRIED OUT DURING JANUARY – MARCH 2003

February 2-9: Attended and participated at Bouw Beurs, in Utrecht, The Netherlands. Although the interest in American softwoods is still strong, the importers were stating the fact that the timber trade in The Netherlands was suffering due to the poor economy.

February 17 -18 Attended a Forest Based Industry Forum held in Brussels. At this forum a number of papers were presented ranging from wood waste and the problems of interpreting what is waste and what is not, to the use of wood products as an energy source as an alternative to fossil fuel.

February 20: Meeting at Speitkamp Werbeagentur, Aachen. During the meeting PR activities for Germany were discussed including the market research questionnaire sent out to the German furniture and flooring manufacturers.

March 1 - 4: Attended the spring meeting of the Western Wood Products Association in Scottsdale AR. During this meeting a presentation was given to members of International Committee on the European Market –see Trip Report dated April 7, 2003

March 5 – 7: During this period a number of lumber mills were visited in the Seattle and Portland, OR regions. Whilst in the northwest meetings were also held with representatives from a number wholesale companies interested in export activity.

March 10 – 11: Attended the spring meeting of the Southern Pine Council, during which a presentation was made on the marketing and promotion activities of the European timber industry.

March 20: Held a seminar on timber decking in Barton Grange near Preston. Although 20 had registered to attend and only 13 attended, the feedback from those who had attended was very positive and, in fact, the delegate from International Timber indicated that they will be including treated Southern Pine as part of their timber portfolio.