2016-12-13

Cautious optimism for the autumn

It is always difficult to try to form an opinion about how international trade in wood products will develop during the autumn months. During the warm summer period, with holidays in most of Europe as well as in Asia and the Middle East, there is less activity in the market. From a global perspective, however, we can be cautiously optimistic about the autumn.

 

FOR THE EUROPEAN markets, development for sawn wood products still looks stable with the UK and Germany as the main drivers. However, there is still uncertainty about the possible effects of Brexit, primarily in the UK, but also whether this will have negative impact on other markets in Europe. 
So far we have not seen a declining trend for wood consumption due to Brexit. On the other hand, market prices for Swedish exports to the UK are negatively affected by the development of the pound sterling since the referendum. But since the euro has been affected in the other direction at the same time, this has led to an improved price scenario for Swedish wood in other European markets.

Asia is a driver 
Asia, led by China, continued to drive the global wood products market. For Setra, the Chinese market has grown at an explosive rate during the last three years and China has today developed into one of Setra‚Äôs largest export markets. 
Looking ahead at the Chinese market we can see continued high demand in manufacturing industry during the autumn as well as a stable order intake. However, we do expect some slowdown in the fourth quarter since we consider that stock levels are generally above normal, particularly at importers. 
The Japanese market continues to show high demand. There is stable activity for new construction and the balance of stocks is good in most product areas.

Some uncertainty continues to characterise the markets in North Africa and the Middle East. This applies in particular to Egypt where the Egyptian pound has fallen considerably in value in relation to the US dollar. This has led to some price turbulence which in turn makes new business difficult before the market has found its new level. Other markets in the areas, with the exception of Libya and the Yemen where there is outright war, are currently functioning relatively well. At present it is too early to say how the current uncertainty will affect the markets in this area.

Increased construction in the US 
The American market is seeing a steady increase in new construction. The present rate indicates about 1.2 million newly built units per year. Wood product prices have improved slightly in recent months and the development of the dollar makes it slightly more interesting to ship to the American market. Volumes from Swedish producers will probably be greater in 2016 than in the previous year but without approaching the volumes shipped regularly before the 2007 financial crisis. 
From a global perspective, wood consumption is stable and the Swedish wood products industry can probably view the autumn with cautious optimism.