Brazilian timber producers reported 40% cancellation of export orders

   Moscow. Feb 20, 2009. /Lesprom Network/. The global economic crisis has continued to affect timber exports from Brazil. According to the Timber Producers and Exporters Association (ABPMEX), Brazilian timber producers have already reported a 40% cancellation of export orders. If the external demand for products continues to decrease, the expectation is that timber exports will be reduced by 15-20% in 2009, ITTO reported.

Foreign importing companies have cancelled orders with already approved credit letters. This situation has never before occurred in Brazil. Even with approved credit, importers are not making purchases because domestic buyers would not be able to consume them.

According to the ABPMEX, 15% of Brazilian solidwood production is exported, with 60% being sent to the US. In 2008, total timber exports reached $2.7 billion, 17.3% less than in 2007. With the fall of external demand, entrepreneurs have attempted to redirect their products to the domestic market. Some items, however, are made specifically for foreign markets and do not have buyers in the domestic market. This is the case, for instance, of wooden fences manufactured for American houses. Thus, the domestic market cannot absorb all production. Instead, part of the solution will involve reducing production and extension of holiday vacations.

Layoffs in the timber industry may eventually happen, but so far this has not occurred at a significant level. The timber sector has already been facing problems before the economic crisis. In the first half of 2008, the sector already experienced a decline in exports due to the depreciation of the US dollar. When the Brazilian real depreciated against the US dollar because of the economic crisis in the second half of 2008, sales in the domestic market further deteriorated.