The Foreign Trade Day of the The General Association of German Timber Trade (GD Holz) took place online for the first time this year and, with a gratifyingly high level of participation, brought a valuable exchange in unsteady times. For some of his colleagues, the farewell to long-term chairman Stephan Bührich was probably the biggest turning point, at least from a human point of view.
Jürgen Sudeck was unanimously elected as Bührich's successor during the online meeting. He will be joined by Jan Patrick Merten (overseas timber department), Peter Pieper (import plywood) as well as Fabian Heins and Peter Pagnia (import brokers, agents and planing works) - also newly elected to the board of the GD Holz department foreign trade. In addition, the umbrella association was able to recruit five new members for the field of foreign trade last year.
Brexit, fumigation and trade in Brazil
First, however, Stephan Bührich gave an overview of the current hot topics in the German timber foreign trade. As is well known, these include the Brexit and its effects, the constant pressure from NGOs on EU politics, which has a strong influence on trade with Brazil, Russia, Ukraine and Myanmar, the still pending harmonization of the EUTR and the wood fumigation requirements for example when importing from the USA. It is no secret that huge amounts of wood are shipped to the USA and is causing far greater unrest in the market. This was one of the main topics in the market discussion moderated by Nils Olaf Petersen.
Global plywood market out of control
Maximilian Zumsteg initially reported a mixed 2020 for the import plywood department. In the first quarter, the year began with very good demand, after which demand from the packaging and automotive industries collapsed in the second. Birch plywood and shuttering panels continued to hold up well with the stable construction. Softwood plywood saw a particularly sharp fall but rebounded in the third quarter. The price level in 2020 was generally below the previous year. The industry refrained from building up stocks significantly.
The market then spiraled out of control in the first quarter of 2021. The strong global demand exceeded the production and delivery capacities. The shortage of roundwood was accompanied by high glue and sea freight costs. Instead of going to Europe, the vast majority currently goes to the USA, including Brazil, although demand is also increasing in South America itself. There is little left for Europe, now that industrial demand is rising again and warehouses are empty. According to Zumsteg, this is due, among other things, to the higher local quality standards.
The shortage is exacerbated by multiple orders that block each other even though they are supposed to help. The prices are rising accordingly, but even those who are willing to pay have no delivery guarantee. In addition, up to 50% less birch plywood from Russia reaches Europe, which was a mystery for timber traders due to the lack of alternative buyers of this size.
Deficiency management instead of flourishing business
Volker Reinecke reported for the specialist department import brokers & agents, who in his 42 years in the timber trade has not yet experienced such a sharp increase in demand and prices. In his opinion, too, the market is out of joint. American classics such as white oak, yellow poplar, western red cedar, sitka spruce, hemlock and Douglas fir are simply no longer available or, in rare exceptions, at double the price. The same applies even to many replacement woods.
Since April there has been a corresponding slump in demand due to the management of shortages and the immense price increase. Reinecke does not dare to judge whether the situation will improve from summer onwards. Basically, however, he is of the opinion that the price increases can also have positive consequences, provided that the customer supports them because he appreciates the added value of the building material.
Import planing mills fear for their supply
Andreas Cordes, who was able to report on a good 2020 for the import planing department, which was partly due to the booming home and garden market, is also hoping for a long-term higher quality of wood products. In March, demand skyrocketed and supply chains remained largely stable. With the first lockdown, however, some sawmills cut their production due to uncertainty. In the fourth quarter in particular, demand rose again and resulted in major price adjustments. The warehouses emptied over the year and have been since then.
In the first quarter, there were also weather-related cutbacks in production at the sawmills and interrupted supply chains. The supply is becoming ever scarcer and quantities are being allocated and prices are being renegotiated. The planing mills fear for their supply. Siberian larch 6 m in length is hardly available anymore and one notices a strategic focus on the Chinese or US market in some companies. The prices for KVH and BSH are increasing weekly and have practically doubled within a few weeks. Cordes, however, soon saw the end of competitiveness here. In general, he does not expect the delivery bottlenecks to end yet. After all, China stopped imports in the 4th quarter of 2020 due to price reasons and now has to fill up empty warehouses.
Export stop in Myanmar and renegotiation for loading in Belarus
From the overseas timber department, Jürgen Sudeck reported waiting times of 2 to 3 months for a container to be loaded in Africa. In addition, there is a lack of loading equipment. The sawn timber imports of African timber are declining accordingly, although demand is good and processors are fully booked until September. Finding new suppliers is currently extremely difficult.
Business in Asia is normal with a generally good business situation at Bangkirai and Meranti. Only Myanmar causes a headache, because due to due diligence requirements that cannot be met, even finished parcels are not allowed to be shipped. How the future will develop depends primarily on China and Vietnam, the increase or decrease in demand of which has a strong influence on price developments.
The BLE's view of reducing the importance of FSC certification in Ukraine with regard to the EUTR was also discussed, the current anti-dumping proceedings on Russian birch plywood and the price renegotiations for Belarusian birch plywood that were sometimes required at the time of loading.
The economy turns from a peacemaker to a geostrategic weapon
At the end of the online event, Dr. Josef Braml, Secretary General of the German Group of the Trilateral Commission and USA expert, insights into the US market. He dealt with both Biden's challenges in domestic politics - and with it the expectation of a comprehensive economic stimulus package for infrastructure - as well as future demands on the EU. In a world in which globalization will soon dissolve into a USA and a China-centered part and the common economy will no longer be used as a peacemaker but rather as a geostrategic weapon, be it Europe, not just an economic union to understand and instead to reach political agreement.