Introduction Speaker: Nationality: Michael Hermens (52 years old) Dutch (but left The Netherlands 30 years ago) Background: 1982 Bachelor degree Civil Engineered specialized in public housing using timber structures 1982 1987 Five years in construction industry in Saudi Arabia 1987 Arrived in Singapore and joined IMS Group as partner & MD of IMS Kiln Drying 1996 IMS was sold and started the foundation for timber business Page 1 of 12
1998 incorporated Asia Panel Products and later renamed APP Timber 2000 2012 Frequently invited to contribute articles for leading magazines and as guest speaker at conventions APP Timber has marketing operations in China, India, Indonesia, Malaysia, Thailand, Vietnam APP Timber has warehouses in Indonesia, Malaysia, Thailand and Vietnam We have sourcing offices in Europe and USA but we source from over 30 countries worldwide Trading value in 2011 was USD29million, expected to grow to USD40million in 2016 Page 2 of 12
South East Asia Traditional hardwoods exporters like Indonesia and Malaysia are struggling to provide sufficient supply for domestic use PNG will increase hardwood exports to China and India (PNG has less strict regulations on unsustainable forestry and China and India have less regulations on less sustainable imports) Hardwood prices will continue to increase Chinese demand for rubberwood has created uncertainty in Thailand, Indonesia and Malaysia Rubberwood prices will drop this year but fluctuation is expected Asean will be greatly affected by the EU Timber Regulations implemented in March 2013 Demand for imported sawn timber will grow fast; especially certified timber (FSC, PEFC, etc.) Page 3 of 12
China Reduced availability of raw material (imported but locally processed) due to reduced import of logs from Africa, Malaysia, etc. Increased labour costs making China less competitive as producer and exporter semifinished and finished products (plywood, panels, etc.) Increased demand by the local construction industry so less exports Prices for export products will continue to rise The good news might be that the current slow-down in China means less exports to China and foreign suppliers will focus more on South East Asia which might result in reduced prices Page 4 of 12
Russia One of the world s largest forest reserves Less softwood and hardwood logs export to China due to increased tax since 2007 Lack of infra-structure Increased operational costs Uncertain how important Russia will become (not in the least due to lack of information) Page 5 of 12
Australia Not a major exporter of softwood logs and sawn timber; resources are predominantly used for local market (except chips for pulp) Australia is importing softwood sawn timber from New Zealand and has started to purchase from Europe and North America Most hardwood operations are small and after Gunns sold their hardwood operations no large volumes of hardwood sawn timber left for export Jarrah, Tasmanian oak, Spotted gum etc. volumes reduce; prices will continue to increase Page 6 of 12
New Zealand A major exporter of radiata pine logs predominantly to China and India Local sawmills are struggling to pay the same log export prices; some mills will close There is a recent drop in exports partly due to lesser demand in Asia and partly due to increased competition of Canadian SPF (Spruce Pine Fir) sawn timber Radiata pine sawn timber prices recently dropped 10% and not expected to improve or to exceed 2011 prices Page 7 of 12
Africa Has become a net importer of softwood sawn timber Less availability of hardwood logs for exports Hardwood sawn timber supply to Asia is stable probably also due to the crisis in Europe (less demand) Prices of certain species have dropped for example sapele Cost of certification is very high and at this moment consumers are not willing to pay the extra cost Most mills are struggling due to high operational costs, corruption, freight, etc. Certain species are becoming legally difficult to obtain such as bubinga, doussie, iroko, wenge, etc. (especially when the EU Timber Regulations are imposed in March 2013 Page 8 of 12
Many European softwoods mills are in trouble due to collapse of domestic construction industry (some will close) Softwood sawn timber prices have started to drop 15% and might drop further this year Remains a constant supplier of beech and oak logs and sawn timber Supply is stable, many forest is certified (FSC or PEFC) The Euro will continue to weaken against the USD so prices in USD will drop significantly Beech will be one of the most suitable replacements for rubberwood Page 9 of 12
North America (USA and Canada) Large volumes of Canadian SPF sawn timber have been sold to China and we see more SPF sold in South East Asia SPF prices are in general low but quality is low too and less suitable for furniture (more for construction and/or core material) Remains the world s most important supplier of hardwoods logs and sawn timber The supply is legal, available in good volumes and well regulated (NHLA and AHEC) Prices are market driven and will continue to fluctuate (it is my personal opinion that both buyers and suppliers will benefit from a more stable and long-term pricing strategy) Disadvantage is lack of certified hardwood timber (FSC, PEFC) Page 10 of 12
South and Central America A large supplier of softwoods (radiata pine from Chile and taeda pine from Argentina, Brazil, Uruguay) Most softwood sawmills own the forest plantations; the supply is growing and prices are relative stable Traditional hardwoods like ipe, jatoba, angelim pedra, cumaru etc. are under pressure due to legal availability Exports have become less and prices continue to increase Will become the largest supplier of sustainable plantation hardwoods such as Red grandis (from Uruguay), Lenga (Chile), teak (Brazil and Central America) often FEC and/or PEFC certified Page 11 of 12
Questions? Thank you. Page 12 of 12