Business continued to slow, and demand has fallen further from the previous fortnight. Log export volumes are currently much lower than normal, up to one-third less than would be expected for this time of year. Buying for India is taking place, but volumes are reduced and tough negotiations on prices have led to some concessions. As previously noted, West African producers have made quite severe reductions in logging volumes and areas, laying off workers and generally taking all sensible steps to hold production down to the current demand.
Logging for sawmills has also become more selective for particular species and sawn lumber production has been kept at moderate levels while matching as closely as possible the expected demand for premium timbers. European buyers are very cautious since they have adequate levels of stock overall and made lower offers for purchases or are waiting for prices to fall. Many believe that time is on their side in what is now very much a buyers’ market.
As noted, market conditions in all areas are very difficult and there is no sign of any upturn. While the steep costs of fuel may not yet have worked through the system, there is little doubt that producers will face substantial increases in fuel costs, especially in transportation of all products. Higher bunker surcharges on sea freight costs also will impact buyers landed costs. This may mean that when many months have passed, the current lower log and lumber prices will in retrospect look more attractive than buyers now believe.
