Pace of growth in EU tropical timber imports slows in the third quarter

The EU’s trade in tropical wood products was more buoyant in the first nine of months of 2019 than the same period in 2018. However, the rise in imports, which began in the second quarter of 2018, has levelled off since June this year, reported ITTO.

Chart 1 shows twelve monthly rolling total imports (to iron out seasonal fluctuations) into the EU of all tropical wood products listed in HS Chapter 44 (excluding fuelwood, wood waste and chips). It shows that the 12-month rolling total dipped to 1.95 million metric tonnes (MT) in March 2018, then increased to a peak of 2.21 million MT in June 2019 before slipping back slightly to 2.19 million MT in September 2019.

The slowing pace of growth in European tropical wood imports coincides with mounting signs of weakness in the wider economy. In its new Regional Economic Outlook for Europe, issued on 6th November, the IMF points out that growth has slowed this year. Although that’s mainly due to weaker global trade (thanks to the US-China tariffs), and a slowdown in manufacturing this year, there are signs that the weakness is spreading.

According to the IMF, “for most of the region, the slowdown remains externally driven. However, some signs of softer domestic demand have started to appear, especially in investment. Services and domestic consumption have been buoyant so far, but their resilience is tightly linked to labour market conditions, which, despite some easing, remain robust. Expansionary fiscal policy in any countries and looser financial conditions have also supported domestic demand”.

IMF forecasts that Europe’s growth will decline from 2.3% in 2018 to 1.4% in 2019. A modest and precarious recovery is forecast for 2020, with growth reaching 1.8%, as global trade is expected to pick up and some economies recover from past stresses.

IMF notes that this projection masks significant differences between “advanced” (i.e. mainly Western) and “emerging” (mainly Eastern) Europe and that “growth in advanced Europe has been revised down by 0.1 percentage point to 1.3 percent in 2019, while growth in emerging Europe has been revised up by 0.5 percentage point to 1.8 percent”.

In total, the EU imported 1.66 million MT of tropical wood products in the first nine months of 2019, 5.3% more than the same period in 2018. The total value of EU imports of tropical wood products in the January to September 2019 period was €1.80 billion, 9% more than the same period in 2018.

So far this year, there have been gains in EU imports of tropical sawnwood, charcoal, plywood, mouldings, and joinery products. These have been only partly offset by a decline in imports of tropical logs, veneers, and flooring.

Rise in EU imports of tropical sawnwood

7% rise in EU imports of tropical sawnwood EU imports of tropical sawn wood increased 7% to 582,500 MT in the first nine months of 2019 compared to the same period in 2018. Import value increased 3% to €557.9 million.

This aligns with market commentary earlier in the year, with sawn hardwood importers reporting generally steady, in some cases strong trading in 2019 including in tropical timber, despite some slowdown in economic activity and increased downside concerns about the medium-term outlook.

Imports from Cameroon, particularly slow in 2018, increased 11% to 209,000 MT during the first nine months of 2019. Imports also increased sharply from several other countries including Brazil (up 30% to 105,100 MT), Gabon (up 8% to 79,600 MT), Congo (up 32% to 45,800 MT), and Ghana (up 20% to 13,300 MT).

Decline in EU imports from Malaysia

After a strong start to the year, imports from DRC were 10,100 MT in the first nine months of 2019, only 1% more than the same period in 2018. These gains offset a 28% decline in imports from Malaysia, to 57,500 MT, and a 6% decline from Côte d’Ivoire to 20,900 MT (Chart 2).

The decline in EU imports from Malaysia this year was attributed by some importers to a decline in the availability of PEFC certified product following the suspension of MTCS certification in Johor and Kedar states in May this year which led to the total certified area in Malaysia to fall by around 25%.

According to MTCS, both states are now working to regain their MTCS certificates. At present, MTCS certified forest areas consist of 4.2 million hectares of natural forests and 109,025 hectares of forest plantation.

 

Source: ITTO