Central/West Africa: Difficult market conditions linger for West African producers
01/07/2008 - 16:43
The slowdown in new business has continued. The European market has been very depressed, and while there was some activity for Asian destinations even this was at a much lower level than volumes that producers would have considered normal only a few months ago. Producers were matching this slowdown with reductions in output through temporary closures of concessions and a reduction in workforce. There were concerns that the effects on finance and banking arrangements may cause problems for previously negotiated agreements.
Okoume has been particularly hard hit. There has been business for new, fresh logs, but there was a considerable stock of older logs that would have had to be sold at low prices, with the risk this could have also depressed the overall okoume log market. Some producers were reported to have ceased logging okoume and were concentrating on the more marketable red species, while others were logging only for their sawmills and veneer mills. As noted previously, market conditions in all areas have been very difficult and there was no sign of any upturn. Although the asking prices for many log and lumber species were reportedly relatively stable, there were some changes, a few moving upward on demand for Asia and short supply while the majority either moved down or remained unchanged. There was a tendency to hide the fierce negotiations on price which were taking place, with sapele very hard hit and no baseline price. Buying for Europe was very quiet. Internal trade between European countries was reported as being more than usually competitive with some transactions at below cost. Possibly stockists were prepared to clear existing stock at below cost price as they could replace stock with imports at the present lower price levels.
