Brazil offers national forests for auction

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By the end of 2010, over 2.7 million hectares of national forests in Brazil will be offered for auction, according to the estimate of the Brazilian Forest Service (SFB in Portuguese), the agency responsible for the auction process. Thus, the timber supply from legal and sustainable sources is estimated to reach a total of 840,000 m³.

The Annual Plan for Forest Concession (PAOF) 2010, which defines the concession areas for sustainable harvesting was signed in Brasilia by the Minister of Environment, reported MMA/ASCOM. The measure will contribute to revenue generation of nearly BRL430 million to both the government and the industry - in addition to 12,000 direct and indirect jobs. Until now, some 90,000 hectares in the country had been auctioned within a single Conservation Unit, the Jamari Flona (National Forest) in the Northern state of Rondônia. According to SFB, the concessions will expand the sustainable forest area for harvesting and provide an opportunity to the timber sector to purchase legal products.

To the Ministry of the Environment (MMA), the creation of sustainable economic activities is an important alternative to combating deforestation, since the supervision of forest management and penalties for inappropriate harvesting are not sufficient to control the destruction of the forests.

This year, nearly 1 million hectares will be offered for bidding in three auctions. One has already opened, the Saracá-Taquera Flona, which covers 140,000 hectares. Later this year, auctions of the Amana and Crepori National Forests, in the state of Pará, will be announced. Among the possible buyers of the concessions are companies that consume wood raw materials, forest service providers, machinery companies, equipment and forest suppliers and communities living around the concession areas.

Minas Gerais’ stands to gain from federal programme
Even with the slowdown of furniture sales in the first half of 2009, the Minas Gerais’ furniture sector foresees a promising year, reported O Tempo. Compared to 2008, a 7% growth in revenue amounting to BRL190 million is expected in 2009. Additionally, with the completion of the first house under the federal programme ‘My House, My Life’ in 2010, the prospect for increased sales in such homes is 30%, according to the Ubá Inter-Municipality Union of Furniture Industry (INTERSIND).

The Union represents 400 furniture companies in the regional cluster. It expects domestic sales to expand next year and have a positive impact on revenues from investments in the real estate market. In the first half of 2009, furniture exports fell 50% compared to the same period of 2008. With the slump in exports, especially due to the global economic crisis, the industry is increasingly targeting the domestic market. The ‘My House, My Life’ programme is expected to boost sales, as those who buy new homes also need new furniture.

According to the Minas Gerais Furniture Merchants and Representatives Association, furniture sales in the first two months of 2009 were low as result of consumers’ limited interest in purchasing home furniture. To avoid the worst, companies worked to maintain minimum sales. As the crisis appears to be coming to an end, companies need to continue their work, considering that the domestic market is expanding and offering an opportunity to grow.

Exports of Brazilian solidwood products tumble amid global financial crisis
Brazilian exports of solidwood products have been declining since 2007, and the situation has become even more serious for the sector since the beginning of the financial crisis. According to Agência Brasil / O Liberal, the crisis has affected exports from traditional solidwood producing regions in Brazil. According to the Paraná Wood Industry Union, in the first six months of 2009, solidwood exports from the country fell 43% by volume compared to 2008. In Paraná, the fall in sales in the last 20 months was 54%, which included lumber, pine and tropical plywood, door and solidwood product sales from other segments. The state employs about 600,000 workers in the timber industry comprising 1,200 companies affiliated to the Union. As companies have made adjustments following the financial crisis, nearly 6% of the workers have been laid off in the first half of the year.

In the Northern state of Pará, exports of solidwood products in the first half of 2009 plummeted 52.9% by value compared to the same period of 2008, according to the Pará Timber Exporters Association (AIMEX). Although exports by volume rose 1.7% from May to June 2009, the devaluation of the Brazilian real against the US dollar hurt producers, with revenues dropping 2.3% over the period, resulting in a loss of nearly USD 660,000.

The main factors contributing to the poor performance of the industry are high tax burdens; low demand from external markets; fierce competition with other tropical countries such as Malaysia and Indonesia; high interest rates for small and medium producers; and the fluctuation of exchange rates. The recovery of timber exports, according to AIMEX, is expected to occur from October 2009. The expectation is that the crisis will start to slowdown and the civil construction industry abroad will strengthen, consequently improving prospects for exports of Brazilian solidwood products.

High costs deter forest product certification
Although it has become a condition for some companies to access external markets, certification of wood and nonwood products is still resisted by some small and medium sized companies, reported Folha de São Paulo. As observed by the Forest Stewardship Council in Brazil, companies’ reasons for not certifying include the high cost of certification and the process of compliance with environmental and labor standards.

At times, the costs for adjusting forest management areas and chain of custody are higher than the cost of certification itself. Nevertheless, the Brazilian companies that do invest in certification confirm having benefited from greater opportunities to exports.

In addition, the INMETRO (The National Institute of Metrology, Normalization and Industrial Quality) also certifies forest companies that operate in a sustainable way. The CERFLOR (Brazilian Program of Forest Certification) was established in 2002 by INMETRO under which more than 1 million hectares of natural and planted forests nationwide have been certified.

brazil Brazil Log Prices (domestic)
Brazilian logs, mill yard, domestic US$ per m3
Ipê 131
Jatoba 93 
Guariuba 62
Mescla (white virola) 68

Brazil Sawnwood Prices
Sawnwood, Belem/Paranagua Ports, FOB US$ per m3
Jatoba Green (dressed) 781
Cambara KD 456
Asian Market (green)        Guariuba 259
Angelim pedra
590
Mandioqueira
227
Pine (AD) 189
Brazil sawnwood, domestic (Green)
US$ per m3
Northern Mills (ex-mill)     Ipe
613
Jatoba
471
Southern Mills (ex-mill)     Eucalyptus (AD)
170
Pine (KD) 1st grade
220

Brazil Veneer Prices
Veneer, FOB (Belem/Paranagua Ports) US$ per m3
White  Virola  Face  2.5  mm 290
Pine Veneer (C/D)
205
Rotary cut Veneer, domestic
US$ per m3
(ex-mill Northern Mill)
     Face    Core
White Virola
     229       192

Brazil Plywood Prices
Plywood, FOB
US$ per m3
White  Virola  (US Market)
5.2 mm OV2 (MR)
455
15 mm BB/CC (MR)
393
White Virola (Caribbean Market)
 
4mm BB/CC (MR)
 498
12mm BB/CC
399
Pine Plywood EU market, FOB
US$ per m3
9mm C/CC (WBP)
265
15mm C/CC (WBP)
242
18mm C/CC (WBP)
237
Plywood, domestic (ex-mill Southern mill)
US$ per m3
Grade MR (B/BB)  White Virola 4mm
786
 White Virola 15mm
575
Domestic prices include taxes and may be sbject to discounts.

Other Brazil Panel Prices
Belem/Paranagua Ports, FOB US$ per m3
Blackboard Pine  18mm  5 ply (B/C) 309
Domestic Prices, Ex-mill, Southern Region

Blackboard White Virola faced 15mm
503
Particleboard 15mm
322

Brazil Added Value Products
FOB Belem/Paranagua Ports US$ per m3
Edge Glued  Pine Panel
Korean market (1st grade)
631
US Market
482
Decking Boards     Cambara
591
Ipê
1533



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