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4
2010
timber news
Khaled Hashem, Mohammed Ziad Hashem and Eyad Hashem from Saudi Arabian solid wood products company Basheer Hashem Sons Co. The company has been a customer of UniRets-Scantim for many years. Photo: Mats Wigardt
Outlook bright for Saudi timber imports Strong growth the target for new MD Global trade reliant on shipping Dynamic growth in Chinese construction market New sales company in China SCA Skogs forest environmental work given clean bill of health Too high production in relation to consumption = worried customers Bark and birch sap in award-winning bread
TimberNews SCA Forest Products AB
SE-851 88 Sundsvall, tel +46 60 19 30 00 www.scatimber.com
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or many years, SCA Timber has suc ceeded in developing tailormade product and business solutions for the solid wood industry, and product and dis tribution solutions for the builders mer chant sector. When you work with a raw material that has such widely varying characteris tics as a timber, there are limits to how far product specialisation can go. Not all products can be customised, and some just disappear altogether after the decision is taken to make other products, because we want to use this valuable resource of ours in the best way possible. In addition, the market and demand for solid wood products for what is an almost endless number of applications is enor mous, and is a sphere where traditional quality sorting is the only specialisation necessary.
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Anders Marklund.
Timber News is published four times a year Editor-in-chief Bjrn Lyngfelt Production Fryklunds Repro & printing Tryckeribolaget Subscribe to Timber News, please contact ingrid.lofqvist@sca.com Feel free to quote us, but please name us as your source.
SCA TIMBER is one of Europes leading manufacturers of wood-based products, with an annual production of 2.1 million cubic metres. The product range is supplemented with service and distribution solutions for customers in the wood industry and builders merchant sector. SCA Timber is part of SCAs Forest Products business area, which produces publication papers for newspapers,magazines and catalogues, pulp and forest-based biofuels. SCA Forest Products also manages SCAs extensive forest holdings, supplies SCAs Swedish industries with wood raw materials and offers cost-efcient transport solutions to SCAs units.
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building site on the outskirts of the Saudi capital Riyadh is cur rently being transformed into the King Abdullah Financial District. A veritable army of cranes adorn the blue skyline, trucks kick up dust and thousands of building workers sweat under the hot sun. Its a massive building project in which architects from around the world are playing their part to get the desert to bloom. In this dry and stony landscape, some 40 or so new skyscrapers are being built that will eventually house banks, insurance companies and resi dences. Alongside these, parks, roads, shops, schools and hotels are also being built.
To meet the need for new in frastructure in the country, large quanti ties of building materials are required, including sawn timber, which is used for applications such as casting moulds, scaffolding, carpentry and furniture. This demand has significantly increased timber import volumes, which are now set to exceed 1 million cubic metres, from countries such as Chile, New Zealand, Romania and Canada, not to mention Sweden, which alone exports 300,000 m3 of timber per year to Saudi Arabia.
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It is also important to establish long lasting relationships, gain knowledge about Arabic business culture and be able to deliver high quality products.
VIDA Wood, has been active in North Africa and the Middle East for many years. Through Beirutbased sales orga nisation UniRetsScantim, the annual volume of timber sold to Saudi Arabia by Uni4 has increased from 5,000 m3 in 1992, to in excess of 100,000 m3 today. We undoubtedly have the strong est customers on the Saudi market, says CarlHenrik Sandstrm, Senior Consultant at Uni4. For the past year, weve been the single biggest supplier of pine timber to Saudi Arabia. Pierrot Dirani, MD of UniRets Scantim, believes that the strong organisation and the large volumes of sawn timber that the four owners of Uni4 represent is a key reason for the increasingly regular shipments of timber going into the port of Jeddah. Customers want to feel secure, he explains. Its also important to develop longlasting relationships, have knowledge of Arabic business prac tices and deliver high quality prod ucts, sums up Dirani.
Over a cup of sweet tea or carda momspiced coffee, and snacking on dates, we meet up with a number of
site managers and procurement agents. Pierrot Dirani is engaging in an intense discussion about prices, lengths and qualities. Occasionally, voices are raised and arguments ensue, with people waving their arms and documents to make their point, only for, in the best cases, everyone to agree and finish by saying Inshallah if it is Gods will. Everyone paints the same picture the Saudi timber market has been good for a long time, with lots of major construction projects swallow ing up huge volumes of material. However, there is also agreement that the back end of 2010 will be tough, with wellstocked timber yards and increased price pressures as a result. The first six months of the year were good, but then the summer holidays coincided with Ramadan, explains sales manager Khaldoun Haddara of Mokbel Al Khalaf. And
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now its time for the Hadj, the annual pilgrimage to Mecca, when everything grinds to a halt. But, he adds quickly, we arent worried. The falloff will only be tem porary. Everyone believes that the market will return to normal next year.
institute of higher education in the country specifically for women, with places for 26,000 students. Riyadh also plays host to the head offices of the major timber importers. Most of these are part of a larger cor porate group that has many different areas of operation. A substantial number of these companies are owned by the big, powerful and wealthy families that hold significant sway in Saudi Arabia. Basheer Hashem Sons Co also has its offices in the city. In 1954, it became the first timber importer oper ating in the Saudi Arabia. Pierrot Dirani has collaborated with the com pany for the past 32 years. When our father started the busi ness, customers had to queue for hours simply to buy a board, says Mohammed Ziad Hashem.
insufficient. Dirani and our guests switch over to speaking Arabic. Finally, a general feeling of relaxation kicks in and a sumptuous lunch is often offered as a way of concluding the meeting. It only takes one word to be mis understood for the whole thing to come crashing down like a house of cards, says Dirani. Its like a tennis match, where both parties must have access to a racket in order to be able to play each other. But out in the small carpentry workshops on the outskirts of Riyadh, where a large proportion of the timber imported from Sweden is transformed into furniture, windows, doors and door frames destined to satisfy the needs of a growing population, it is price and quality that are the deciding factors when choosing which raw materials to buy. And the fact that it is sawn in lengths that minimise wastage, sum marises Dirani.
Text and photographs: Mats Wigardt
Head of State: Kung Abdullah bin Abdul Aziz Al Saud Constitution: Absolute monarchy Economy: Saudi Arabia is the biggest economy in the Middle East and is the only Arabic country that is a member of the G-20. The country is Swedens most important trading partner in the Middle East, with exports totalling around SEK 10 billion. IKEA, H&M, Volvo Trucks and Tetra Pak all have a presence. Other: To conclude successful timber deals you must have
a long-term approach, provide regular deliveries and demonstrate a consistent level of quality. Patience is a virtue the approach here is very much that everything will be alright in the end, Inshallah, if it is Gods will. In 2009, SCA Timber sold around 11,000 m3 sawn timber to Saudi Arabia. In total, SCA sold 192,000 m3 to countries in North Africa and the Middle East during 2009. The biggest single market in the region was Egypt, which took delivery of almost 100,000 m3.
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ith efficient logistics solutions, good product knowledge, well-backed owners and insight into the needs of the market, in the space of 20 years, Uni4 Marketing has managed to achieve an exceptionally strong position as a supplier of sawn solid wood products to several countries in North Africa and the Middle East. In recent years, volume growth has also been very strong. Between 2007 and 2010, sold volumes increased from just over 200,000 m3 to around 550,000 m3. The vision for three years time is to have increased the companys market share and to have a supplied volume that is closer to 800,000 m3.
tors that will enable continued growth: increased pine felling in southern Sweden, Sdras expansion of its Vr sawmill and operations starting at Holmens new saw mill in Braviken. In addition, he adds, we hope to increase the proportion of external suppliers we use. Add to this the fact that the population in countries such as Egypt, Algeria, Saudi Arabia and Tunisia are all very young. In Egypt alone, a new child is born every 20 seconds. This means that there is a massive need for new housing, something which has seen imports of solid wood products double in just a short space of time. This, combined with the stagnation of the European solid wood products market, undeniably gives Uni4 Marketing a reason for optimism for the future.
Around 85 percent of Swedens trade with the world is shipped by boat, including sawn products from SCA sawmills, which are sent to ports throughout globe. According to Magnus Svensson, CEO of SCA-owned Transforest, after the economic fluctuations of the first decade of the 21st century, we are now beginning to see a cautious rise in shipping prices.
nternational shipping has experienced significant growth, particularly during the last decade. Since 1980, year on year growth in the sector has averaged at around 3.1 percent. Further industrialisation, increased rates of globalisation and an ever-increasing demand for consumables have contributed to more and larger ships being built, allow ing greater volumes of goods to be trans ported on the worlds around 50,000 reg istered merchant vessels. Through the last decade, until Q2 2008, we saw a growth in the merchant fleet that has no historical parallel, says Sven sson.
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or new MD
Marklund seems to have picked up on SCAs tradition of having several more activities on the go with priority customers than our competitors do, and that SCAs sales staff are more decisive than their col leagues at other companies. Its created a good sense of self-confi dence within the sales team, he believes. But now SCA is history for Marklund. Or, to put it more accurately, his contact with SCA, which is one of the owners of Uni4 Marketing, will be more indirect in future.
the team at Uni4 Marketing. This will involve paying visits to shareholders various saw mills, but he will also try to get to know cus tomers in their respective countries. We need more customers in Algeria who can buy pine grown in southern
Sweden, he says. And with Vida in the family, we now have access to significantly larger volumes of spruce.
Mats Wigardt
The finished products are then shipped back to North America and Europe. The huge demand for sea freight has resulted in a lack of capacity, which in turn has caused dramatic price hikes and massive profits for everyone with access to spare tonnage.
now being loaded in containers. The advantage with containers is that they are international, standardised and easy to load, says Svensson. And they pro tect the products they carry. In addition, container transports are effi cient, relatively inexpensive and can be loaded and sealed at the factory. In October 2010, around 10 percent of the worlds mer chant shipping was made up of container vessels, and this is expected to increase over the next few years.
shipping between Sundsvall and Rotterdam. In the opposite direction, the price for a container holding 20 tonnes of goods in October 2009 was comparable to a oneway economy class airline ticket on the same route. The shipping cost for a TV set from Asia to Europe was around SEK 70.
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ussel Taylor is one of the worlds fore most analysts in the timber and saw mill industry, and since 1993 has been President of the International Wood Mar kets Group consultancy, based in Vancou ver, Canada. He recently visited SCA to report on the situation in the wood market, for example in China.
The International Wood Markets Group, which operates worldwide, provides its clients with advanced market analysis. Taylor himself has many years of experi ence in areas connected with market strat egy, processing of and product development for wood products. His message, that the market potential for wood products in China is expanding rapidly with every year that passes, is hardly likely to come as any surprise. For example, the country is the biggest con struction market in the world, with ten
Having successfully established itself in the countries in North Africa and the Middle East, Swedish forest industry is now casting its eyes in the direction of the Chinese market. But Taylor advises Swedish suppliers not to try and compete mainly on price but on quality, especially as large volumes of cheap timber are being shipped from Canada to
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The point will be for example to convince the Chinese that timber houses are more resistant to earthquakes as other types of building and that they offer many other green and cost advantages
Russel Taylor, MD for International Wood Markets Group
China as a result of the ravages of the mountain pine beetle epidemic in British Columbia. To date, Swedish exports of wood prod ucts to China have been fairly negligible,
at less than one percent of total exports of wood products. But now it is important to take advantage of any opportunities that are offered. A joint venture has been operating for
a few years between the Swedish forest industry and its counterparts in several European countries. The venture, known as EWI, the European Wood Initiative, is intended to promote the advantages of wood as a construction material and to develop usable construction standards. The point will be for example to con vince the Chinese that timber houses are more resistant to earthquakes as other types of building and that they offer many other green and cost advantages, says Taylor. If that aim is achieved, a huge market lies waiting. In addition, adds Taylor, they are already using imported sawn-wood to replace older sloping roofs as now allowed in the building codes for the city of Shang hai. This is a new opportunity to provide many roof trusses, and when this expands to other major cities, this market segment alone will could swallow up tremendous volumes of imported structural timber. Mats Wigardt
he solid wood products market in China is becoming more and more interesting. The Chinese furniture industry is swallowing up huge amounts of raw material, opening the door to signifi cant opportunities for the European wood industry to secure outlets for their products in China. In all the years Ive worked in China, weve noticed that when we place more focus on sales, we also make better deals, explains Mathias Fridholm, who has been the SCA presence in China for several years. Until recently, Fridholm and the staff in the Hong Kong office have largely acted as coordinators for the SCA sawmills that sell timber directly to customers in southern
All administration and service for SCAs customers will now go through the com pany in Hong Kong. The result of all this is expected to be better, more efficient pro cedures and a better information flow to customers, given by staff who know Chi nese regulations, speak Chinese and work the same hours as customers. We hope that this will provide our cus tomers with a better service and simplify communication, says Fridholm, who will be CEO of newly formed SCA Timber China & S.E. Asia Ltd. In the long run, it
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Ten years ago, Rob Simpson created SCA Timber Supplys customer training programme.
The SCA logo has been given a new appendage c/o life. It is short for care of life and sums up SCAs core values in a nutshell sustainable operations, a close partner for customers, a good workplace for employees and a company that focuses on products used in everyday life.
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Renewed economic turmoil experienced in the summer in both the US and the UK, as well as in the PIIGS coun tries, unfortunately resulted in activity in the construc tion sector contracting once again, and hopes for a recov ery have been put back to 2011. However, construction volumes in the major markets of North Africa and the Middle East continued to be good, as did those in many of the major markets in Asia. The renovation sector continues to develop better than its new-build counterpart. The domestic market, which is
europe Monthly imports of sooftwood lumber Main importing countries
UK Italy Germany Netherlands France Denmark Spain
2004-01
2005-01
2006-01
2007-01 2008-01
2009-01
2010-01 2011-01
Last observation 1012
1 000 m3 2 500 2 250 2 000 1 750
Woodstat 10-11-24
Price 160 155 145 135 130 125 120 115 105 100 95 90
2004-01
2005-01
2006-01
2007-01
2008-01
2009-01
2010-01 2011-01
Last observation 1012
0 -0,3 1 000 m3 2 500 2 250 2 000 1 750 1 500 1 250 1 000 750 500 250
-0,4
-0,5
-0,6
-0,7
-0,8
-0,9
-10 Price 160 155 145 135 130 125 120 115 105 100 95 90
Woodstat 10-11-24
1 000 m3 650 600 550 500 450 400 350 300 300 250 2003-01
2004-01
2009-01
2010-01 2011-01
Last observation 1012
Woodstat 10-11-26
0 -0,3
-0,4
-0,5
-0,6
-0,7
-0,8
-0,9
-10
A proportion of sawmill exports have been moved from Europe towards developing markets in Africa and Asia. (Source: Woodstat)
Total sawmill stocks in Scandinavia and indexed price trends (as of 30 Sept.) (Source: SCA)
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Ingrid lund turns bark into our that she uses when she bakes.
Photo: Skogs-Hilda