MEDITERRANEAN MARKET UPDATE
Economic Situation ...................................................................... page 2
Softwood markets ............................................................. page
2
American Softwoods Activities ........................................ page
5
Calendar ............................................................................ ..page
8
The economical situation remains
at reduced levels of activity with no defined trend in the short term. There
are expectations that once the common European currency becomes available to
citizens, it will rebound from current low levels, thus relaxing the overvalued
US dollar and facilitating exports.
European GDP remained nearly flat during the last quarter in 2001, but
forecasts do not anticipate a depressive cycle during 2002, although it will
remain sluggish. A recovery in the economy is expected to take off during the
second quarter, while inflation in the eurozone will stay around 1.7% for the
whole 2002 (2.6% in 2001). The Euro/dollar exchange rate is forecasted in the
range of 0.94 by the end of June 2002.
The main stock indexes
NASDAQ/Dax show a growing trend. The Spanish Ibex 35 stock index is anticipated
to exceed the growth rate of the other main European stock indicators during
the first semester in 2002.
Data for
the Spanish economy are showing during 2001 healthy GDP of 4.1% while the
forecast for next year contemplates a reduction in activity to just 2.6%. The
inflation index will reduce also from the end of year 2001, and is expected to
reach 2.7%. The average EU inflation rate will be around 2.5%.
Top
10 suppliers
|
2000 |
2001 |
% change 00/01 |
|
Sweden |
410,000 |
347,128 |
-15.3 |
|
France |
196,795 |
233,218 |
18.5 |
|
Portugal |
213,476 |
220,775 |
3.4 |
|
Finland |
141,995 |
132,568 |
-6.6 |
|
Russia |
83,644 |
113,714 |
35.9 |
|
USA |
121,611 |
97,168 |
-20.1 |
|
Brazil |
78,843 |
49,338 |
-37.4 |
|
Germany |
24,994 |
40,064 |
60.3 |
|
Poland |
21,457 |
30,998 |
44.5 |
|
Chile |
15,325 |
23,567 |
53.8 |
In the period January-August 2001,
Spain’s total softwood lumber imports grew by a modest 0.3%. As shown in the
table, significative volume reductions from Sweden, the USA, and Brazil
occurred. A possible explanation to this may come from a slowing down of the
demand for softwoods in general which affected mainly the Swedish lumber, and
the impact of the overvalued dollar for American exports. The Chilean exception
can be explained because its exports of clear grade material can stand better
current tightening conditions, and also induced by the shortages in Spanish
Radiata pine production used mainly in furniture manufacturing, as suggested by
the average price of the lumber from this origin. In general, geographically
close suppliers gained market share, as did Eastern European countries.
Despite the decrease in volume, the
USA maintains in a solid second position after Sweden if CIF value is taken
into account. The average unit value of US lumber is about 1.5 times higher
than the second in price and three times the value of Swedish lumber. During
periods with a depressed economy it is understandable that the demand for
highly valued raw material is somehow derived to other alternatives. The
situation, if prolonged, might result in permanent market share loss, as opined
by several timber traders. A major obstacle for the retrieval of lost ground is
the exchange rate that places US lumber advantages secondary to economical
imperatives.
Another is a common belief about
the poor performance in exterior applications of Southern Pine, which has been
a traditional market niche because of its clear face and attractive pattern. To
address this constraint, SPC has commissioned a testing program to the Forest
Research Center - Spanish National Institute for Agricultural Research
(CIFOR-INIA) to show that Southern Pine is equally or more durable than other
species if properly finished.
Increments in prices are observed for the
first three months in 2002 from Swedish and Finnish producers, following the general
trend of other countries. First contracts closed with price increases between 3
and 5 euros per cubic meter, according to grades. This is specially marked for
large sawn lumber producers.
General basic price references (Euros / m3)
C.I.F. Mediterranean ports1)
Redwood Spruce
U/S= 255-265 € U/S = 220-225 €
V =
193-198 € SF = 195-203 €
VI =
150-160 €
Domestic Softwoods -- Radiata Pine1)
Prices remained stable,
in the range of $170/m3 ex-mill on truck, seasoned dry. Demand
weakening following the general trend in the sector, with increased pressure
mounting from Eastern Europe and Chilean producers. However production of
Radiata Pine is always limited.
Southern Pine1)
Lumber offered has diminished compared with several
weeks ago, due mainly to temporary closure of sawmills in the U.S. south. As a
consequence, prices for clear grades did not show changes recently.
Expectations based on the proximity of the access to the Euro currency were
partially confirmed with a modest inflexion of the dollar against the Euro.
Price references1),
CIF.Valencia. $/ M3
Southern Pine Saps
|
4/4 X 6 |
4/4 X 8 |
4/4 X 10 |
4/4 X 12 |
|
980
|
1,010
|
1,080 |
1,150 |
|
5/4 X 8 |
1-5/8x 6 and 8 |
1-5/8 x10 and 12 |
8/4 |
|
1,090 |
900 |
1,000 |
1,050 |
Prime &Btr. Flitches #1.
|
5/4x 8 and 10 |
12/4 x 6 and wider |
8/4 x 10 and wider |
12/4x10 and wider |
|
980 |
1,200 |
950 |
1,150 |
1) Source: Aeim
Maderalia Trade Show. Valencia
November 6th – 10th
Maderalia
is the most important show in the Mediterranean for semifinished and finished
wood product suppliers. It allows visitors to view a complete cross-section of
the wood industry not only from Spain but from Portugal and Italy mainly. Over 550 exhibitors participated this year,
a 20% increase from the previous exhibit. The number of visitors exceeded
50,000, comprising of timber traders (42%), carpenters and wood industry (30%),
trade associations (12%), and contractors (7%). SPC’s booth had a regular flow
of visitors, many of whom provided interesting information on market trends.
Nearly 45% of the visitors were currently dealing with softwoods from the USA.
Observation
of the firms exhibiting at the fair also provided a realistic impression of the
relative position of Southern Pine within the Spain’s wood industry. It
confirmed the healthy situation of this species with respect to the following
market sectors: interior and exterior doors (in solid lumber and composite
doors), turnings, moldings and, to a lesser extent, in windows and complementary
elements (shutters). Conversely, no pine flooring was on display, which
suggests the otherwise confirmed impression that Southern Pine is seldomly used
in flooring at present. U.S. Douglas fir was not visible anywhere at the trade
show, and there were no requests about this species from visitors to SPC’s
booth.
Another
aspect of interest was the opinion of relevant voices from the wood industry
about a perceived change toward lighter color woods for interior and exterior
carpentry, and consequently relatively lower interest in tropical hardwoods in
Spain.
A
market niche for Southern Pine Sap grades is turnings and carvings. In this
sector Southern Pine is the number one choice in softwood. Every exhibitor
exhibiting turnings and carvings featured this species.
Significant
requests for additional information on hemlock were collected at the show from
several window manufacturers. Besides more detailed information on the
characteristics of hemlock at a technical level, information for sourcing this
lumber was provided
Iroko exterior door
In
general, there is a maintained interest for coniferous lumber from the USA,
proved by the number and type of companies displaying articles made with
Southern Pine. Comments from timber traders suggests a more competitive
position in 2002 as the strengthening of the Euro is expected to occur with the
recovery of the economy in the Eurozone and internationally.
Southern Pine Wood Technology
Seminar. Seville , November 23rd
A seminar was held in Seville
targeting local carpenters and wood distributors in the area. The session was
arranged in cooperation with the Spanish Wood Importers Association and a major
local wood importer. Over 30 attended the full day session on the main
characteristics of Southern Pine, including working properties, treatments, and
finishing for exterior use. The seminar was followed with interest and
finalized with a practical session at a lumberyard to observe in detail the
main features of Southern Pine and natural growth characteristics as well as
the different grades available in the local market.
During
the practical session, our host mentioned the differences he observes between
the species in the Southern Pine category (e.g. longleaf, shotleaf, slash,
etc.), based on his preferences for certain origins, for use in demanding
applications like windows or flooring. The criteria of density was generally
agreed to be a better visual predictor of lumber characteristics instead.
Attendees added that demand for Southern Pine remains strong despite forecasts
for a decrease in window and door manufacturing in the upcoming months.
SPC held meetings with
Italian timber trade associations to discuss joint efforts at promoting the use
of American lumber to the trade. A number of organizations were visited to
learn about current activities and potential cooperative activities.
Fedecomlegno,
the umbrella organization of the Italian wood industry, maintains privileged
relationship with the Austrian organization ProHolz, which is tasked with
promoting Austrian timber exports. Both organizations signed an agreement to
promote generically the use of wood in Italy. The partnership is heavily funded
by the Austrians; the Italian partner contributes on-site support and market
intelligence to develop a number of activities across the country. This is an
informational and promotional endeavor intended to encourage wider use of wood
and wood products aimed at specifiers, professionals, and end users. This
project has been in place since late 1999 with the goal of increasing Italian
per capita (Austrian) wood consumption.
Meetings
were also held with Mr. Tengg, Vice President of Assolegno, to analyze the
potential to work together as well as a number of private companies for
observations on the situation of the demand for American softwood lumber in
Italy. The conclusion after a number of interviews does reflect a lost of
interest for softwood products, being that the Italian market is focusing more
on tropical hardwoods and to a lesser extent temperate hardwoods. It can be
said with some confidence that Italian demand for softwoods is nowadays
satisfied from Europe and East Europe mainly, with the major supplier Austria
across the border being difficult to beat in terms of market service and
delivery terms. American exporters might rather tackle specific market niches
with the best achievable product range, such as high-end windows and doors.
A meeting with the
trade publication Il Legno was
arranged to discuss several options for developing a regular presence in its
pages through press releases and announcements which the staff offered gently.
Additionally, they were asked to provide backup for carrying other initiatives
such as mailings using its distribution database. This services would be
subject to charges and must be negotiated for each one.
A meeting was held at
the U.S. Agriculture Trade Office in Rome with Ms. Ann Murphy, Agricultural
Attaché, and Ms. Dana Biasetti, Marketing Specialist, to inform them about
SPC’s current activities. Full support to our program was offered from this
office and even the possibility of traveling to specific events where the
presence of FAS representatives might be deemed necessary.
Finally, a visit to timber trader Nava Legnami was arranged, who confirmed the small activity of US suppliers in the Italian market and the sluggishness the Italian economy is facing at present. In Mr. Nava’s opinion, the potential of the Italian market is very solid for imported wood products but it is also very exacting which means only the highest quality products have the possibility to reach a solid position in the long term. Italy remains loyal to high grade Douglas Fir which in turn seems to be in very short supply, and is forcing many industrial consumers to replace this species for others that are more widely available. Southern Pine lumber on the other hand does not receive the same appreciation and its demand is limited to a small number of window manufacturers but with a decreasing trend.
The Spanish trade magazine Tecnimadera Forestal included a feature article about the market for Southern Pine lumber in Spain with special emphasis on the market of treated wood. This is part of the ongoing cooperation with the press group Tecnipublicaciones where a number of articles on Southern Pine have been placed over the past months.
January – Set-up and
oversee testing program comparing Southern Pine durability to competing
species.
Feb 19-22 -- Trade
servicing in Portugal
February 14 -- Seminar targeting door manufacturers in
Villacañas
March 20-24 -- Participation in Saiedue 2001 trade show
March 18 – Seminar
targeting wood finishing/preservation industry in Barcelona.