| The forecasts of trends in the trade made in June have proved correct: the
Dutch market for timber, and in particular for Malaysian hardwoods was highly influenced
in July and August by the summer holidays. As will be remembered the market in Holland had
not been moving for many months but July and August turned out to be even quieter than the
previous months. Things will only get back to full swing once everybody has returned from
vacation, which will be by the end of August. In this quiet spell, since the value of the
US-dollar gained some strength again in relation to the euro, prices have not moved much. There
is a completely different situation in Malaysia. The supply of typical dutch items such as
Bukit 3x5" in PHND remains tight and with a poor log-stock at many sawmills in
Peninsular Malaysia it is unlikely that this situation will ease soon. If anything this
situation could be aggravated by the rain season (wet monsoon) which starts again soon.
The tight supply situation in Malaysia has resulted in an increase in CNF
Rotterdam-prices.
Also adding to trading difficulties is the view held by suppliers in Peninsular
Malaysia that the Dutch market for Meranti will pick up very soon. This idea is perhaps
triggered by the fact that the demand for Tembaga in German sizes grew which caused some
prices (e.g. Tembaga 3x7"/wider) to jump to USD 970 per ton CNF Rotterdam. Also the
slightly revived interest from Belgium for Nemesu just before the holiday-season created a
move to push a price increase.
Because the important Dutch market has been on at a low profile for
many months, exporters have the feeling that Dutch buyers will again soon step in to begin
buying. With this in mind the price increase for Nemesu and for Tembaga and the price
levels for KD Bukit PHND and KD DRS PHND now are moving up. In addition to the sentiment
driven increases, part of the price increase can be explained by the fact that container
freight for 40ft GP boxes has increased drastically over the past few weeks.
In June the rate for a 40ft GP box Port Kelang to Rotterdam was around USD 1050. The
rate has gone up to close to USD 1500 per box and further increases during September are
in the air, rumours have it that USD 1600 will soon be charged. Other negative news is
that the availability of containers for the route Port Kelang-Rotterdam have reportedly
dropped significantly.
All this has to do with the enormous demand for containers from mainland China where
container rates have gone up to as high as USD 2200 per box according to shipping sources
in Port Kelang. The result of this has been that some Dutch importers experienced 'roll
overs' of containers and shutouts of cargoes.
The question, of course, is whether the Dutch market will really pick up soon, is it
wishful thinking or is a realistic view. The view from Dutch traders is that no-one can
tell at the moment. When checking with several traders in Holland the impression is that
the business is not likely to go wild, not many enquiries have come in to Dutch importers
and analysts in Holland hear that in the woodworking sector many are crying out for orders
to kep the plants occupied.
The general view is that the idea that the Dutch market will pick up is based on flimsy
evidence and wishful thinking but, as traders say, "hopefully we see it wrong".
Looking at the economic situation in the Netherlands traders cannot ignore the fact that
the economy is not doing well at all. For some time signals from the Central Bureau of
Statistics) have indicated a serious economic decline. Some experts even think that the
Netherlands is on the verge of a recession.
In the last week of August CBS released new negative data. Consumer-trust/confidence in
the economic situation is nose diving and it seems that this negative view will not be
reversed anytime soon. It has been seven months now that there has been negative economic
indicators. The situation in Holland has reached now apparently fallen to the level of
March 1993 (the previous low of the previous economic recession) according to newspaper
'De Telegraaf".
Consumers are lesser prepared to spend or invest much and are certainly not interested
in costlier items. The Dutch market for household furniture is at its lowest point since
mid 1985 and consumers have no high expectations about a recovery of the economy in
Holland for the next 12 months. More and more unsold houses are apparent and it takes
considerably longer time before real estate is sold. The unemployment rate has increased
and the general expectation, by a growing amount of people, is that this figure will
continue to rise still and any recovery could be a long time coming. Unfortunately, no
further progress can be reported at this stage regarding the Keurhout Foundation accepting
the new Malaysian timber certification scheme. The Malaysians have put in a lot of effort
to gain acceptance and even sent an official mission to the Netherlands.
The trade feels that it is a real pity that we seem to be at a dead end. Dutch traders,
as well as the Malaysians realise that certification is of paramount importance and that
we cannot go back on this path. In other news the Keurhout Foundation has had to accept a
set back on an earlier certificate issued on African timber from CIB, but more on this in
futuer issue of this report.
| CNF Rotterdam |
per ton of 50 cu ft |
| Malaysian DRM Bukit |
| KD |
Sel.Bet PHND in 3x5" |
USD 880 |
| Indonesian DRM Bukit |
| KD |
Sel.Bet PHND in 3x5" |
USD 860 |
| Malaysian DRM Seraya |
| KD |
Sel.Bet PHND in 3x5" |
USD 910 |
| Indonesian DRM Seraya |
| KD |
Sel.Bet PHND in 3x5" |
USD 860 |
| Merbau KD |
| Sel.Bet Sapfree in 3x5" |
USD 900-910 |
All based on container shipment.
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