SSA FRIDAY UP-DATE 01/14                                       17/01/14Welcome to the 2014 sawmilling year, let’s hope that it is going to be a good one! There are no real reasons for it not to be. We here at SSA hope that you had a safe and restful holiday period and are up and rearing to go once again.We see that the World Bank is forecasting growth in South Africa to be at 2.7% in 2014. This is up on its 2013 forecast of 1.9% but slightly softer than the 3% forecast by the National Treasury in October last year. Whatever the economists say you can be sure that it won’t be exactly on the money, however it does sound more positive than it did last year. So here is to a good year and in discussions with sawmillers in the last few weeks it seems that they share the optimism.News from the market is extremely brief this week as can be expected for the first week of real activity in the year, builders only got off the ground officially on Monday and so timber sales were not expected to be of any significance. Having said this one sawmiller did report that more volume than expected had moved out the yard, but I guess we will have to wait and see how things pick up in the next few weeks. Sales people are warning of an expected slow start in the first quarter as a result of the usual public holidays and of course the pending general election which is expected to slow things a little as well. The good news however is that once we are over these events growth is expected to pick up significantly for the rest of the year.  SITUATIONS VACANTIt seems that it is too early in the year for vacancies just yet, but we encourage all millers to make use of this facility when advertising for staff as this “Friday Up-Date” goes out son 200 plus recipients all of who are in the sawmilling business and we think it is a good way of getting the news out there. So if you are looking for staff why not drop us a line or a mail and we will place an advertisement here for you at no cost.LOCAL AND INTERNATIONAL NEWS2014 could be year SA catches up to African growthThere was good reason to expect that South Africa could, in 2014, catch up with the rest of the African continent in terms of growth, Standard Bank joint CE Sim Tshabalala said on Wednesday. Speaking at Frontier Advisory’s Africa Frontiers Forum, in Sandton, Tshabalala stated that, according to the International Monetary Fund (IMF) Africa’s growth would accelerate during the course of the year to about 6%, adding that similar predictions indicated that South Africa would, during 2014, possibly regain a growth level of 3%. “Standard Bank’s view is that the country may very well perform far better, certainly in the medium term,” he said. Tshabalala added that, according to the banking group’s economists, if the regulatory environment was right, South Africa’s offshore gas endowment could potentially add another 1.4% a year to the country’s growth over the next five years. Further, South African government policy was also beginning to cohere around the National Development Plan (NDP), with Standard Bank expecting greater policy certainty over the coming months, despite it being an election year, he said. “The ANC’s [recently] released election manifesto is a clear sign that there will be more reinforcement of the NDP in the coming State of the Nation and Budget speeches,” Tshabalala added, stating that this should support a more stable regulatory environment that would make it easier to do business in South Africa. “Five per cent growth is not in the realms of the impossible by 2015 if we make substantial progress in the implementation of the NDP,” he added. What's in store for wood markets in 2014? The outlook for global lumber markets hinge on demand forces in the key consuming regions of the world. More specifically, it will be the lumber demand trends in the U.S., China and Western Europe that will shape global markets in 2014 and beyond. Attached is an analysis for the year ahead by International WOOD MARKETS Group. While the supply dynamics are becoming more constrained in some areas, the ability for sawmill capacity to ramp up production is an all too familiar dynamic that continues to over-shadow the global lumber market. However, if global demand can achieve a 4% (or higher) gain in 2014, the outlook should be very good for lumber and sawn wood prices. For the U.S. it is the pace of U.S. housing starts that will set the tone for the lumber (and panel) markets in 2014. After a strong gain in new U.S. housing starts of 28.5% in 2012 (an increase of 175,000 over 2011), 2013 will end up with a more lackluster gain of only 18.5% (+145,000 units) or about 925,000 new housing starts. In 2013, the North American lumber supply chain became more balanced - starting in the second quarter 2013 - as production started to swamp overall demand. By fourth quarter 2013, a much better balance between supply and demand had developed, setting the stage for a good start to 2014. However, without strong gains in new residential housing starts increases of 20% of more (or 175,000 or more units), it is more likely to just be a “good” year overall, but still could feature some supply chain shocks during the year that could create price spikes both up and down. WOOD MARKETS is predicting a steady growth in housing starts in 2014, but less than the 20% that is needed to support a very strong market. North American lumber production is expected to increase by almost 3 billion bf (+5.4%) in 2014 – an increase over 2013’s estimated gain of 2.6 billion bf (+5.0%). China continues to be a key wildcard in global export markets as log and lumber imports continue to increase. This situation has been exasperated by the fall in total Russian log exports since 2007 (from 52 million m3 to 18 million m3) as the Russian industry has suffered from rising domestic logging and transportation costs despite a reduced log export tax that came into effect in September 2012. Erosion of the competitiveness of the Russian forest industry and its lack of cost control of log exports remains a critical issue. To offset declining log exports, Russian sawn lumber production has increased by about 30% during the last ten years, while lumber exports have increased by over 50% (led by the growing presence of Chinese-owned sawmills in Eastern Russia). Russian lumber exports to China alone have grown from about 500,000 m3 in 2002 to about 7 million m3 (4.4 billion bf – nominal count) in 2013. This has resulted in huge changes in China’s imported log and lumber supply and has also created a number of winners and losers as global trade flows have been radically altered. WOOD MARKETS’ latest monthly China Bulletin outlines how China’s new government has plans to open up China’s economy that will include improved market access for foreign investors. The new plans also include steadily increasing urbanization as part of China’s development strategy and that means further direct or related investments in the housing market. Although China’s housing market sizzled for most of 2013, despite the government’s attempts to rein it in, it looks like the market is stabilizing and avoiding a boom/bust scenario - that is good news for exporters of softwood logs and lumber. China continues to influence global log prices as well as prices in many domestic log markets, especially where logs can be easily exported. China’s ability to outbid sawmills for sawlogs along the U.S. west coast (as well as the B.C. Coast and in New Zealand) has been strongly evidenced since 2010. China has a huge and widening fibre supply gap but also has the world’s lowest cost sawmills. Consequently, China can afford to pay some of the highest prices in the world for saw logs (and, at times, for softwood lumber). The analysis shows that with reduced Russian log supplies, China will remain a competitive threat to many domestic sawmills in countries that can export saw logs to China. International WOOD Markets Group, www.woodmarkets.comONE FOR THE END OF THE WEEKBEST JOKE IN IRELAND John O'Reilly hoisted his beer and said, "Here's to spending the rest of me Life, between the legs of me wife !" That won him the top prize at the pub for the best toast of the night ! He went home and told his wife, Mary, "I won the prize for the Best toast of The night." She said, "Aye, did ye now. And what was your toast?" John said, "Here's to spending the rest of me life, sitting in church beside me wife." "Oh, that is very nice indeed, John!" Mary said. The next day, Mary ran into one of John's drinking buddies on the street Corner. The man chuckled leeringly and said, "John won the prize the other night at The pub with a toast about you, Mary." She said, "Aye, he told me, and I was a bit surprised myself. You know, he's only been in there twice in the last four years. "Once I had to pull him by the ears to make him come, and the other time he fell asleep".Cheers talk to you next weekRoy Southey