mena india oceania market report jan-mar2020 · 2020. 5. 12. · january | february | march 2020...

JANUARY | FEBRUARY | MARCH 2020

MARKET REPORT AFRICA | MIDDLE EAST | INDIA | OCEANIA

AMERICAN HARDWOODS ON SHOW FOR CAPE TOWN MONTH OF ART & DESIGN The Third Edition of the AHEC x Houtlander Collaboration Preservation Bench Dominates Pop-up Exhibition by Leading South African Artists

First seen at 100% Design South Africa in Johannesburg last August, the Preservation Bench then went to the UAE for Duba i Des ign Week in November, where it will remain on display at Dubai Design District until it is shipped to Mumbai for INDEX this June*. Now in its third edition, the bench, in white oak with a natural finish, was displayed as part of South African artist, Banele Khoza’s, pop-up exhibition in Cape Town for the month of February.

February in Cape Town is the month of art and design, featuring Cape Town Art Fair in the middle of the month and Design Indaba at the end of the month,

which is Africa’s largest gathering of the design community. The opportunity to engage with this community was taken by AHEC and, as a result, many hundreds of South African architects and designers visited the exhibition and were able to learn about American hardwoods and to see them in creative and beautiful applications.

www.americanhardwood.org 1

Above & right: Five signature pieces by Houtlander in American white oak, including the third edition of the Preservation Bench (top), the Interdependence Bench (above) and the Hlabisa Bench (below right), were on display the BKhz pop-up exhibition and regular talks with Houtlander’s Stephen Wilson were held with visiting architects and designers, with a specific focus on carbon sequestration in American hardwoods.

*It is expected that this show will be postponed until much later this year.

http://www.americanhardwood.org


QUIETER INDIAWOOD SHOW FOR AHEC, BUT MARKET IS READY FOR U.S. HARDWOODS Despite a fairly quiet stand at Indiawood, AHEC is confident that demand for American hardwoods in India will continue to grow this year*. The biggest of India’s timber trade shows, which is held every two years in Bengaluru (formerly Bangalore) attracted a significant number of visitors, but a combination of factors meant that the number of them who c a m e t o A H E C ’s s t a n d w a s considerably less than anticipated. Firstly, the national pavilions, including AHEC’s stand, were put in the newest and furthest hall from the entrance to the show and, secondly, due to fears over the coronavirus, no U.S.-based AHEC member company representatives attended the show.

However, in spite of this, those visitors that came to AHEC’s stand were more k n o w l e d g e a b l e a b o u t American hardwoods than previously and more open to using them in India. This is backed up by the U.S. hardwood export statistics for 2019, which show a 140% inc rease i n the v o l u m e o f A m e r i c a n hardwood lumber going to the market, as compared to the previous year. The total v o l u m e o f A m e r i c a n hardwood lumber shipped to India last year reached a

new record of 4,082 cubic metres, while the value reached USD 2.36 million. Hickory still dominated the mix of species shipped last year, which is in demand for tool handle manufacturing, while exports of red oak lumber saw a massive jump from 76 cubic metres in 2018 to 920 cubic metres last year, a rise of over 1,000%.


Above: AHEC had a large, generically-branded stand at the Indiawood show, which included a number of American hardwood lumber boards and technical

publications.

*This article was drafted before the magnitude and potential impact of the coronavirus pandemic was fully recognised.



Demand for oak in India has been increasing in recent years and a better understanding of red oak, coupled with lower prices in recent months has allowed it to make some gains over European oak in the market. India is extremely price-sensitive and if there is a way to do something cheaper, it will be found. Green and waney edge European oak is popular in the market, as it offers an affordable oak solution, but manufacturers then need to go through many processes, including drying and pesticide treatment, before it can be used in making furniture or joinery.

India’s appetite for sawn temperate hardwoods has been increasing over the past few years and, according to Trade Data Monitor (which replaced the Global Trade Alas), India imported some 11,000 cubic metres of sawn oak in 2019, with the vast majority coming from Germany and France. At the same time, India’s imports if sawn beech reached to around 20,000 cubic metres, with more than three quarters being sourced from Germany. According to in-country contacts, the majority of European hardwoods are being used in furniture and joinery production for the domestic market, where the “exotic” look of temperate wood species is becoming increasingly popular. This is good news for American hardwoods, which should be able to benefit from the rising trend. However, much more education is needed to help Indian end-users understand the added value of using kiln-dried hardwood lumber, which requires little to no further processing before use.

To tha t end , AHEC hos ted an educational seminar in Bengaluru on the evening of 27 February, which was attended by around 100 architects, designers, furniture manufacturers and hardwood importers. The biggest

takeaway from the seminar was that there was a very keen interest in learning more about American hardwoods. It is clear that India has woken up to using imported hardwood lumber, which it now needs more than ever before. It is, therefore, incredibly important that the American hardwood industry remains consistent in its visibility and promotion in the market. In the hope that the coronavirus pandemic will be under control later this year, AHEC is planning to organise factory visits and networking opportunities in both Jaipur and Jodhpur this October.


Above: AHEC Regional Director, Rod Wiles and AHEC Technical Consultant, Neil Summers

inspecting some European oak components at a furniture factory outside Bengaluru.

Left: Neil Summers spoke in detail on American hardwood species, applications and new

technologies, including thermal modification, at the Bengaluru seminar.



2019 U.S. HARDWOOD EXPORT ANALYSIS Middle East & North Africa (MENA)

For the first time in some years, exports of U.S. hardwood lumber to the MENA region dropped in 2019, falling by 2% in volume to 93,001 cubic metres and by 11% in value to USD 70.88 million. However, this decrease can almost entirely be accounted for by a significant fall in shipments to the region’s biggest market for U.S. hardwood lumber - the United Arab Emirates - which dropped by 22% in volume and by 31% in value as compared to the previous year. In volume terms, exports of American red oak lumber reached 46,009 cubic metres in 2019 and accounted for half of all U.S. hardwood lumber shipments to the MENA region.

The UAE and other Gulf markets, with the exception of Saudi Arabia, have been showing signs of an economic slowdown for some time, with slower growth in the construction sector (with the exception of preparations for Expo 2020 Dubai) and there is less confidence in the future of these economies than has been seen of late. Although not publicly stated, there is genuine concern about the future of the UAE’s economy, with Expo 2020 Dubai (due to start in October 2020) being seen as one of the only major economic drivers. However, the immediate and expected knock-on effects of the coronavirus pandemic will, no doubt, throw any current economic forecasting in to disarray.

In contrast to the UAE, Saudi Arabia has shown remarkable economic development in the last two years or so and the construction sector has been booming. In terms of U.S. hardwood exports to the market, significant growth has been seen each year for the past four, driven by demand for the Kingdom’s “giga projects”, such as the Red Sea Project and Qiddiya. These numerous projects around the country include retail, residential, industrial, technology and tourism developments on a gigantic scale. These are all in line with the country’s move towards modernisation and openness and, in particular, opening its doors to wide-scale tourism for the first time. Provided these projects continue to go ahead as planned in spite of the impending global economic slowdown, Saudi Arabia will be the Gulf market to watch in the coming years for U.S. hardwood exporters. This is especially true for red oak, which is by the far the dominant U.S. hardwood species in demand in the Kingdom, accounting for 87% of the total volume of American hardwood lumber shipped there last year.




U.S. Hardwood Lumber Exports to Major MENA Markets, Jan-Dec 2019

One of the few MENA markets that posted a rise in demand for U.S. hardwood lumber in 2019 was Pakistan, which showed an 11% increase in volume to nearly 12,862 cubic metres. Pakistan has long been a market for American ash, which accounted for 73% of the total volume of U.S. hardwood lumber shipped to the market last year, but the upswing seen in 2019 was entirely accounted for by imports of American red oak lumber, which rose by 95% to 1,803 cubic metres as compared to the previous year. Market commentators confirm that this is the beginning of a longer term trend towards red oak as a replacement for ash in the face of reduced availability of the latter.

Perhaps surprisingly, the volume and value of exports of U.S. hardwood lumber to Turkey remained more or less unchanged last year as compared to 2018. Turkey’s economic performance has been very weak of late and its (once massive) construction sector has shrunk to a fraction of its former size. Market penetration of American hardwoods is very poor and yet it remains a significant destination in the region for white oak and ash - the former destined for the export furniture sector and the latter for the companies producing thermally-modified hardwoods. White oak lumber shipments to Turkey in 2019 reached 4,076 cubic metres, while ash reached 3,617 cubic metres - both somewhat down on the volumes shipped to the market in the previous year. However, exports of red oak lumber to Turkey grew by 65% in volume last year to 1,681 cubic metres, with the majority of this volume also destined to the export furniture manufacturing sector. At least before the coronavirus outbreak, market forecasters were predicting increased private consumption and investment this year and in to 2021, which would have led to much better overall economic performance and, perhaps ultimately, the re-emergence of Turkey as a potential growth market for American hardwoods.

2018 2019 % Change

Val. Vol. Val. Vol. Val. Vol.

United Arab Emirates 21,203 24,072 14,722 18,786 -31 -22

Pakistan 8,853 11,629 8,456 12,862 -4 11

Turkey 9,528 11,057 9,418 11,180 -1 1

Saudi Arabia 8,748 10,930 8,876 11,851 1 8

Egypt 4,944 6,702 7,020 10,575 42 58

Israel 6,639 9,397 5,899 7,976 -11 -15

Morocco 5,335 6,546 3,778 4,763 -29 -27

Lebanon 3,200 3,718 2,938 3,491 -8 -6

Jordan 3,469 3,238 2,774 3,429 -20 6

Other MENA 7,406 7,478 6,997 8,088 -6 8

Total MENA 79,325 94,767 70,878 93,001 -11 -2




One MENA market that really stood out last year in terms of demand for U.S. hardwoods was Egypt. Exports of American hardwood lumber rose by 58% in volume and by 42% in value as compared to 2018. Over 85% of the total volume of U.S. hardwood lumber shipped to the market last year was accounted for by red oak, while the majority of the remainder was white oak and some walnut. There is no doubt that the Egyptian furniture and joinery sectors took advantage in 2019 of weaker red oak lumber prices and this would have contributed to the upturn in exports to the market. However, the increase would have also been accounted for by a general upswing in the economy, which performed better than expected last year. Forecasters predict that solid growth in private consumption, investments and exports will also show through 2020 and 2021. However, the sizeable Egyptian wooden furniture sector, which is a significant consumer of American hardwoods, is expected to continue to be affected by lower demand in its main export markets in the Persian Gulf and wider Middle East for the foreseeable future.

In U.S. hardwood veneers, direct shipments to the MENA region in 2019 reached USD 20.23 million, which marked a 20% decrease on the previous year. Egypt remained the biggest market for American hardwood veneers in the region, importing some USD 6.25 million directly from the United States last year, although this represented a drop of 13% on 2018. At the same time, direct exports of U.S. hardwood veneers to Turkey grew by 11% to a value of USD 4.13 million in 2019, as compared to the previous year. Direct shipments to the UAE fell back to a more expected level of USD 3.34 million, after a major increase in 2018 and exports to Israel fell by 18% to USD 2.83 million over the same period.

Australia & New Zealand

Total U.S. hardwood lumber shipments to Australia in 2019 reached 20,028 cubic met res and USD 14 .91 million, falling by 7% in volume and by 5% in value on the previous year. At the same time, exports to New Zealand fell by 8% in volume to 7,418 cubic metres and by 12% in value to USD 5.87 million. While the economy of New Zealand has fluctuated between boom and recession in recent years, 2019 was the fi rs t yea r i n wh ich the Australian economy showed

real signs of teetering on the edge of contraction since the beginning of the 1990s. The housing market bubble is expected to finally burst and, now, the coronavirus pandemic is most likely going to precipitate that eventuality.

Last year, exports of American hardwood lumber to both markets continued to be dominated by white oak, which has become very well-known and highly prized by both the furniture design and interior design community. However, 2019 also marked a turning point for red oak exports to Australia. Seen as a viable




alternative to indigenous Victorian ash in many applications and not as a replacement for white oak, shipments of the species to the market increased by 259% in volume last year to 1,660 cubic metres. This growth trend is expected to continue, as access to Victorian ash (and other native Australian species) is becoming ever more tightly controlled by both State and Federal lawmakers. This situation was compounded by the massive and widespread forest fires seen at the end of 2019 and earlier this year, which have had a devastating affect on the fauna and flora of large parts of the country, including the productive hardwood forests of New South Wales and Victoria.

South Africa

The economy of South Africa has performed poorly for some years now and there is little sign of improvement in the near future, especially now that the country is also having to deal with the c o ro n a v i r u s p a n d e m i c . N o n e t h e l e s s , t h e r e a l purchasing power of South Africa does not reside with the bulk of the population, but with a very small minority of individuals. A 2016 study found that 99% of the country’s wealth was in the hands of just 10% of its population and that just 1% of the population owns at least half South Africa's wealth. This said, consumer spending and private investment has been lower during the last two years than in the years leading up to 2018 and much of this has been influenced by government instability and the resultant loosening of control of the country’s essential infrastructure. Power shortages (locally known as load shedding), for example, have become commonplace and this is having a very negative impact on the overall business climate and, importantly, the manufacturing sector.

Exports of American hardwood lumber to South Africa did not fair particularly well in 2019, with a drop of 12% seen in the total volume of shipments, down to 9,360 cubic metres and a fall of 15% in value, down to USD 7.47 million. White oak remained by far the dominant species and accounted for just over 67% of the total volume of U.S. hardwood lumber shipped to the market last year. Ash lumber exports to South Africa actually increased last year, rising by 4% to 1,529 cubic metres and, according to some market commentators, this was due to it being used as a lower-cost alternative to white oak in certain applications, especially at the time of such an unfavourable USD-ZAR exchange rate.

Direct exports of U.S. hardwood veneers to South Africa fell by 19% last year, as compared to 2018, to a total value of USD 3.29 million.




PR HIGHLIGHTS


Left: Australia | Print & Online

Australian Financial Review - feature on wood furniture and AHEC’s collaboration with Houtlander.

Right: India | Print

Wood News - one page article on American hardwoods and their applicability in India.

Left: UAE | Online

ace online - feature on MultiPly at Madrid Design Festival.

Right: South Africa | Online

Habitat Magazine - feature on AHEC/Houtlander collaboration & pop-up exhibition in Cape Town.

Left: India | Print

Wood News Indiawood Show Daily - one page article on specifying American hardwoods.

Right: Turkey | Online

Yapi.com.tr - feature on MultiPly at Madrid Design Festival.



REGIONAL EVENTS *AHEC event or AHEC participation

All events are subject to possible postponement or cancellation due to the coronavirus pandemic

For further information on any of these events or on AHEC's activities in these markets in general, please contact Rod Wiles: [email protected]


2020

*4-7 June INDEX Mumbai Mumbai, India

*9-11 June Dubai Woodshow Dubai, United Arab Emirates

9-11 June WoodEX for Africa Johannesburg, South Africa

18-20 June Denfair Melbourne, Australia

*24-26 July INDEX Delhi Delhi, India

6-10 August 100% Design South Africa Johannesburg, South Africa

*14 August INDE.Awards Sydney, Australia

15-17 September INDEX Dubai Dubai, United Arab Emirates

*16-22 September Sydney Design Week Sydney, Australia

8-10 October Bangladesh Wood Dhaka, Bangladesh

*October/November (TBC) Saudi Design Week Riyadh, Saudi Arabia

9-14 November Dubai Design Week Dubai, United Arab Emirates

23-26 November Big 5 Dubai, United Arab Emirates

3-6 December Cairo Woodshow Cairo, Egypt

2021

*4-7 March Delhiwood Delhi, India

mailto:[email protected]


mena india oceania market report jan-mar2020 · 2020. 5. 12. · january | february | march 2020...

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