Tropical hardwood plywood prices at record levels

CIF Europe prices for South East Asian and Chinese hardwood plywood increased dramatically in the second quarter of 2011 in response to tight supplies, rising production costs, currency movements and firm demand in Asia.

Prices have continued to rise for July and August shipment. Prices for Malaysian BB/CC raw plywood on offer to European buyers now exceed Indo96+40% and those for equivalent Indonesian products may be over Indo96+50%, levels never seen before.

However underlying consumption of plywood in Europe is still subdued so that few importers are experiencing significant supply problems. In the UK, there are even reports of importers reducing prices of their landed stock for onward sale in an effort to generate cash before the summer holiday season.

In this environment, most UK importers seem content towork from their existing stock holdings and few areshowing much interest in paying the higher CIF prices.

The German journal EUWID reports a similar situation in mainland Europe noting that “rather subdued demand for plywood imported from South East Asia on the whole has so far staved off any major shortages in Europe.”

On the other hand, the UK Timber trades Journal ( TTJ) notes that mainland European importers are showing much greater willingness to pay the higher prices for Malaysian and Indonesian plywood because, unlike their UK counterparts, they “are not prepared to go down the Chinese route”.

UK trade switches to Chinese made plywood The extent to which the UK has switched more to Chinese plywood products is revealed in the import data for the first quarter of 2011. During that period, the UK imported 109,000 cu.m of Chinese hardwood plywood compared to only 32,000 cu.m in the same period of 2010.

UK imports of hardwood plywood during the first quarter of 2011 from Malaysia stood at 25,000 cu.m, down from 43,000 cu.m in the same period of 2010, while imports from Brazil were less than 5000 cu.m compared to 10,000 cu.m in the first quarter of 2010.

A different situation prevails in mainland Europe. EUWID reports that in recent months several importers in this region have tested Chinese birch plywood and Chinese mixed light hardwood plywood as possible substitutes for Indonesian and Malaysian plywood. However they decided against placing large orders on quality grounds.

In mainland Europe, the most notable trend this year has been a revival in imports of Russian birch plywood as the supply situation has gradually improved after the dramatic fall in availability following the severe forest fires in Russia last summer.