This is your new CBI T &TP newsletter.
In this issue:
1: CE Marking update with new dates.
2: FLEGT update
3:
The Dutch government
and buying policy changed.
4:
Wood Products and the
banking crisis.
Previous issues of the newsletters can be found
at the T&TP website (only about our programme). The site is regularly
updated and more and more info can be found on it. Everything is easily
downloadable and it doesn’t cost you hours to find the information. This is
your link to go there now:
http://home.scarlet.be/nvforest/CBI/CBI.html
Enjoy your newsletter!
1: CE
Marking.
The
implementation date for CE marking on some wood products for constructions is
delayed. For most products this date was 2008. It has now become the 1st
of September of 2009.
To
refresh your memory, here is a short summary of CE marking:
This is the
EU definition for construction products: “a product which is produced for
incorporation in a permanent manner in construction works, including both
buildings and civil engineering works, and which is placed on the European
internal market.”
We’ve
updated the full list of products and dates. Check this link to find your
product and the date when CE is mandatory:
http://home.scarlet.be/nvforest/CBI/Downloads/CE%20products%20in%20groups.doc
See for
more info about CE; newsletter 2 and 18
Cameroon has joined
Malaysia, Ghana and Indonesia in starting formal VPA negotiations.
Bilateral technical working group sessions have been held in each negotiating
country to examine the systems they propose to assure the legality of their
timber exports to the EU. Negotiations are expected to be
finalised in 2008. Several other countries, including Liberia,
Congo Brazzaville, Central African Republic and Gabon have formally indicated
their intention to start negotiations.
DFID has engaged
consultants to assist the European Commission Delegations in Ghana and
Indonesia with FLEGT VPA
preparations. Andy Roby, currently Head of Environment and Corporate
Social Responsibility at the UK Timber Trade Federation will work in Indonesia,
while Jaap Vermaat,
supported by Clare Brogan from the consulting firm FRR, will provide similar
services in Ghana.
The European Commission has
engaged consultants to undertake an impact study of potential additional
options to address trade in illegal timber entering the EU but not covered by VPAs. This will inform an impact assessment report to
be published by the Commission, expected by January 2008.
The FLEGT Regulation, adopted in December 2005
specifies the formation of a committee to oversee its implementation. The
FLEGT Committee, which comprises
representatives of the Commission and Member States, convened on 16 July.
The principal topic is the FLEGT
Implementing Regulation, which will describe in detail how the authorities in
each Member State will implement border controls for timber shipments from VPA
countries when the licensing system becomes effective.
Source: Proforest website.: http://www.proforest.net
See for
more info about FLEGT; newsletter 11
3: The Dutch government and
buying policy changed.
Recently
the Dutch government decided that, by 2010, 100% of products bought by the
central government should come from sustainable sources. Municipalities need to
buy 75% from sustainable sources and Provinces & Water bodies 50%. A couple
of weeks ago a special commission concluded what sustainable means in the
Timber sector: It means that all Timber products that come with FSC or PEFC
Germany & Finland are counted as sustainable. This means that the Dutch
government now finally decided to buy only FSC from the southern countries.
That means that, by 2010, all tropical timber used in any central governmental
building, construction etc etc need to have FSC. It
is estimated that more EU countries will follow the same guidelines.
More info
and source (Dutch Government): http://www.vrom.nl/pagina.html?id=37627
4: Wood Products and the
banking crisis.
Report from Europe and the UK
European economic confidence severely dented by
banking crisis Widely reported measures by the UK government to bailout failing
banks have quelled the worst fears of European investors and depositors of an
imminent and disastrous economic collapse. Steps have been taken to inject a massive
amount of state money into leading retail banks and significantly reduce
interest rates by several central banks, including the euro area’s European
Central Bank. Nevertheless, economic confidence in Europe has
taken a severe beating over
recent weeks, as evidenced by weakening currencies and forecasts that Europe
may be facing its worst recession since the early 1990s.
UK.
In the UK, the scale of the bank rescue plan
has been particularly dramatic, the government having pledged GBP400 billion to
guarantee that no UK bank fails. However the very need for such drastic
measures seems only to have underlined how bad things have become. By putting
its full weight behind the banks, the government has signaled
its determination to avoid a worst-case outcome. But confidence has been shaken
to the core, while concerns are now being raised over the severe fiscal risks associated
with such a large input of public money. The government is now deeply in debt,
leaving no room for increased public sector spending to tide the economy over
the bad times and holding out the prospect of tax increases
which will further dampen private sector spending.
UK confidence was ebbing even before the real
scale of the banking sector crises became clear in early October 2007. Business surveys of purchasing managers for both manufacturing and
the services sector touched record lows in September. Construction is
wilting as homebuilders put projects on hold and lay off workers. As much of
the UK’s recent growth had been driven by the City, and based on a financial
model whose defects have now been brutally exposed, expectations are that the
nation’s economy will
be particularly hard hit. The UK economy now
seems certain to have entered a recession during the second half of 2008. This has
led to a rapid fall in the value of sterling against other currencies.
France.
Economic conditions in other European countries
are less dire, but still the outlook is not good. Due to relatively tight
regulation of the banking sector and relatively strong retail banking networks,
France has had to bail out just one bank, Dexia, a
small Franco-Belgian lender. This was intended merely as a precautionary,
confidence-boosting measure. Nor have the French been on a huge credit binge. The
household savings rate remains high. Nevertheless third-quarter GDP figures are
likely to show that the
French economy is already in recession and the
IMF forecasts growth of just 0.2% in 2009.
Germany.
Germany’s bank rescue package is backed by a
state guarantee of EUR400 billion with the aim of ensuring that no
‘system-relevant’ bank will fail and no depositor will lose money.
Nevertheless, indications are that Germany will not avoid a slowdown. The IMF
expects no growth at all next year. Germany has sounder public finances, less indebted
enterprises and more competitive wages than
others. Yet it is more dependent on
exports, so
will be hit harder by a global slowdown.
Italy.
Italy’s banks have not been so exposed to the
global crises as those in other parts of Europe partly because, as the nation’s
Finance Minister recently admitted to parliament, they are ‘less advanced and
sophisticated’. The government is still forecasting GDP growth of 0.5% in 2009
but this is now a minority view. The employers’ federation, Confindustria,
expects the economy to shrink by 0.2% this year and 0.5% next.
Spain.
Spain’s banks lack liquidity but none has
needed rescuing thanks to the Bank of Spain’s tight regulation and the prudence
of Spanish bankers. But Spain is worse off than many others on the broader
economic front. The banking crises has further undermined confidence already
reeling from the effects of a burst housing bubble. The IMF now expects the
economy to shrink by 0.2% next year and unemployment is rising.
Netherlands
The Netherlands' economic growth could slow
down drastically this year due to the international credit crisis, according to
a report released by the International Monetary Fund (IMF). One of the largest
banks in the Netherlands (Fortis & ABN Amro) is nationalised. Some other major banks received huge
credits from the Dutch governments. Most of the NL banks are
still not trusting each other and did not give any credit to other
banks. The housing marked in slowing down and rules for mortgages are becoming
stricter.
Tropical hardwoods and demands.
Tropical hardwood sawnwood markets take a hit Judging
by the comments of European agents and importers, the effects of the banking
crises on demand for sawn hardwood have been immediate and fairly dramatic. One
major supplier to the UK notes that ‘our sales of sawn hardwood were doing
reasonably well until the first week of October 2008 when the panic over the
stability of the banks came to a head. Demand picked up a little the week following
the announcement of the bank bail-outs, but it has
gone quiet again now’.
Overall consumption of hardwood
sawn lumber in the UK and NL has taken a hit from the rapid decline in
new residential construction. This has particularly affected demand in the mass
production joinery and window manufacturing sector.
This in turn has fed through into particularly weak demand for commodity
tropical hardwood species.
To some extent the decline in UK demand from
new residential construction has been offset this year by continuing
consumption in the renovation sector. With house prices falling and credit
tightening, less people are moving house but they have been spending money on improvements.
The concern now is that increased nervousness over the banking crises will
undermine even this source of demand while tightening public finances will
reduce demand from public sector projects.
Demand in the Benelux countries also remains
very subdued. One agent in the region suggested that importers are still
carrying very high stocks of standard items. For example, sales of tropical
hardwood decking fell well short of expectations this year and stocks remain
very high at a time of year when they should be low. This will inevitably feed
through into much reduced orders for the spring 2009 season. Given the current
stock position and the obvious desire in the current market situation to avoid holding
excess stock, this agent was told by one of his leading buyers not to expect
any new orders for at least three months.
Reports are coming through of slow sales of
hardwood to the Italian furniture and flooring sectors. Many Italian furniture
and flooring factories are now only operating three or four days per week and
several have closed permanently. This reflects both declining domestic consumption
and intense competition in export markets as manufacturers from all regions are
now chasing declining orders. Hardwood orders from Spanish and Portuguese manufacturers
have also been declining, with the signs of particular stress in the Spanish
door industry.
Plywood.
European plywood importers fail to step up purchasing.
The credit crunch and economic slowdown has meant that European plywood
importers are very reluctant to commit to purchasing in any volume while stock
holdings are seen more and more as a liability. However there may be a few opportunities
to find buyers before the year is out. According to a plywood trader quoted in
the UK’s TTJ ‘the biggest factor in the UK and European markets at the moment
is fear….Stock reduction is running ahead of demand
reduction and, as we run into autumn and winter, we will see some shortages.
The trade has still got some buying to do before the New Year’.
European imports of Chinese plywood have been declining
due to recent consolidation of the Chinese plywood sector, combined with rising
costs of raw material, labor and energy, and the
downturn in European consumption. The same TTJ article notes that despite recent
consolidation in the Chinese plywood manufacturing sector, UK buyers continue
to receive huge numbers of offers of plywood from mills in China. This suggests
that there is still excess supply in the pipeline, a fact also reflected in a
slight softening in prices for poplar/bintangor
plywood from China. In addition to slow consumption, reluctance amongst many
European importers to buy Chinese plywood reflects continuing concerns over
variable quality of product.
Meanwhile, there are signs that the price
differential between Malaysian and Indonesian tropical hardwood plywood on
offer to EU importers is narrowing. A relatively high price for Indonesian
plywood in recent times has meant that Malaysia has been the main beneficiary
of partial shift away from Chinese plywood in the EU market. However, according
to the German trade journal EUWID, prices for 4X8ft BB/CC grade Indonesian plywood
for shipment in October/November 2008 stand at Indo96 +32% to +34%, a decline
from Indo96 +37% at the end of August. Meanwhile, over the same period Malaysian
prices have risen from Indo96 +19% to +20% to Indo96 +24% to 25%. The price gap
for European importers is expected to narrow further next year when EU import
duties on Indonesian plywood are due to be lowered from 7% to 3.5%, equivalent
to the duty currently imposed on Malaysian plywood.
Source and more information: http://www.globalwood.org/market1/aaw20081002e.htm
This newsletter is made by CBI’s
Timber & Timber products team. If you have questions, remarks or if you want
to unsubscribe to the newsletter please let us know.
CBI Program manager: Peter J. van Gilst. pgilst@cbi.eu
CBI Consultant: Rop
Monster. foresta@telebyte.nl
CBI Product
Consultant: Marco
Bijl.
marco@nvforest.com