Industry News

Vietnam ready to ratify FLEGT VPA with the EU

On Friday 18th November 2016 EU Environment Commissioner Karmenu Vella and Vietnamese Agriculture and Rural Development Minister Nguyen Xuan Cuong reached an ‘agreement in principle’ on the start of a FLEGT VPA between the European Union and Hanoi.

The news was reported by the European Timber Trade Federation (ETTF) alongside an EU statement remarking that the ‘substance of the deal’ was agreed and pending ‘technical, consistency and legal checks’ ratification is expected to start next year. 

The Forest Law Enforcement Governance and Trade Voluntary Partnership Agreement (FLEGT VPA) will see the implementation of a comprehensive timber legality assurance system, greater stakeholder engagement in the Vietnamese timber and forestry industry, and establishment of a monitoring and auditing framework. Once these are complete and authorised by EU and Vietnamese authorities, the country will be able to FLEGT licence its exports to the EU, exempting them from further due diligence by operator importers.

The aim of the measure is to combat illegal logging and illegal timber trade out of Vietnam. The focus is not just on timber and wood products based on material from its own forests, but also the major volumes it imports from around 80 countries across the rest of Asia and further afield and then processes and re-exports as finished goods. 

The VPA covers all major timber and wood product groups exported to the EU and Vietnam will also undertake to apply its legality assurance standard and systems to domestic timber and wood product sales and exports to other markets.

Vietnam’s wood-based exports to the EU in 2014 were worth around $705 million dollars, or between a quarter and a fifth of its total. This puts it third after the US and China as the country’s most important timber export market, and its sales there in the first eight months of last year were reported at US$436 million.

"Vietnam and the EU today celebrate a milestone in their cooperation in the global fight to end illegal logging," said Commissioner Vella. "Now we must focus on implementation to ensure that the VPA delivers on its social, environmental and economic goals.”

He added that the VPA would require "credible and robust systems involving all stakeholders and including effective mechanisms to detect violations and ensure law enforcement."

“The EU will continue to support Vietnam's efforts in this regard,” he said, “and we will be monitoring closely how it works to implement the VPA.”

Vietnam is one of 15 countries currently negotiating or implementing FLEGT VPAS. On November 15 Indonesia became the first to complete implementation and start issuing FLEGT licences. Its first licensed shipments are en route and expected in the EU in coming weeks. 


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Wood pellet imports to the UK down 24% year-on-year

As reported by the North American Wood Fiber Review produced by Wood Resources International, wood pellet imports to the UK fell 24% year-over-year in August after record high imports during the first half of 2016.

The United Kingdom is by far the largest importer of wood pellets in the world followed by Denmark, South Korea and Belgium.

In the 2Q/16, the UK imported record volumes of just over two million tons, which was 11% higher than the previous quarter and 21% more than in the 2Q/15. Pellet producers in Southern US continue to be the major suppliers to the UK, accounting for about 50% of the total import volume in the 2Q/16. The other major supplying countries are Canada and Latvia.

Pellet manufacturers in the US South have been a reliable and steadily growing supplier to the UK over the past five years. In 2012, the UK imported less than half a million tons from the US and in 2016, shipments may reach more than eight times as much, according to the North American Wood Fiber Review. 

According to the North American Fiber Review, the surprising Brexit vote earlier this year to leave the EU is unlikely to impact near-term pellet exports from North America to the UK as supply contracts remain in place, and official negotiations regarding the EU exit process are yet to begin. However, in the longer term, the decision to stay outside the European Union could impact policy decisions regarding bioenergy incentives with subsequent market impacts.

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UK Wood products and Forestry sectors grew considerably in 2015, TTF Annual Review reports

According to the Statistical Review 2016 published today by the Timber Trade Federation (TTF), Timber Industry maintains its place among the larger UK manufacturing sectors and is listed in the top 10 fastest growing UK manufacturing sectors.

In details, 2015 saw a 11.4% growth in the value of wood products, compared on the previous year. Similarly, UK forestry and logging was shown to have grown by 20.4%.

"The growth rate in the wood and wood products sector also outperformed many related industries, such as furniture, plastics and the construction of buildings", the TTF Statistical Review reports. "Together, the forestry and wood products sector achieved a combined value of £9.5 billion in turnover."

However, these positive news are balanced by the "small contraction" suffered in 2015 by the timber market after two very strong years of growth. According to the TTF, the decline was mainly due to the general economic slowdown in the UK, Eurozone and across the globe.

"Having followed a general trend of growth from 2008 to 2014, domestic and imported wood consumption decreased in 2015 by 1.8%. This was predominantly due to changes in imported product consumption: Hardwood and MDF consumption decreased, whilst softwood remained stable and plywood and fibreboard consumption grew from 2014", the Review says.

"There were also decreases in UK exports, UK production and the share of UK produced timber consumption vs imported timber."

David Hopkins, TTF Managing Director, commented: “These statistics show the value and importance of the timber supply chain to the UK economy. This is a well-established supply chain, with great growth potential. However, like all other sectors we are dependent on a joined up economic policy approach across the country. The upheaval of Brexit may have caused uncertainty, but is also an opportunity for us to show our worth. If the Government is serious about creating an “industrial strategy” then we must put forward the case for the timber manufacturing sector providing skilled jobs in every constituency across the country. These statistics help us do just that.”

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Timber prices on the rise in UK market, says latest Forestry Commission Stats Report

The Forestry Commission has released its latest National Statistics on Timber Price Indices.

Timber Price Indices are based on sales by the Forestry Commission and Natural Resources Wales and consist of the Coniferous Standing Sales Price Index and the Softwood Sawlog Price Index. 

The key points from the latest release are listed below.

For the Coniferous Standing Sales Price Index:

  • There has been an overall increase in the index over the last 13 years, following an overall decrease in earlier years.
  • The index was 8.3% lower in real terms (7.6% in nominal terms) in the year to September 2016, compared with the previous year.
  • The average price for coniferous standing sales was £17.31 per cubic metre overbark standing in nominal terms in the year to September 2016, a decrease from £18.24 in the year to September 2015.  

For the Softwood Sawlog Price Index:

  • There has been relatively stable in recent years, following a long period of general decline.
  • The index was 13.6% greater in real terms (14.4% in nominal terms) in the 6 months to September 2016, compared with the corresponding period of the previous year.
  • The average price for softwood sawlog sales was £44.19 per cubic metre overbark in nominal terms in the 6 month period to September 2016, an increase from £38.63 in the 6 months to September 2015 and £41.34 in the 6 months to March 2016.

The complete report can be downloaded here.


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