Despite Chinese Competition Demand for Brazil Wood Grows Among Arabs

A plywood manufacturer in Brazil Paraná, in the Brazilian South, one of the leading Brazilian forestry industry manufacturers and exporters, is eyeing the Arab market. Whereas sales of plywood, sawed wood, doors, frames, and chipboard and MDF sheets from Brazil to Middle East and North Africa grew 59.5% between 2006 and 2007, shipments from the state of Paraná rose 68.6% during the period.

Two years ago, the state sold a total of US$ 22.6 million to the region (60% of all Brazilian exports in the segment); last year, it posted revenues of US$ 38.1 million (63.2% of total Brazilian exports).

To Antônio Rubens Camilotti, president at the Brazilian Plywood Industry and Exporters Association (Abimci), high product quality and good relations with the Arabs contribute to the growth of exports, not just from Paraná, but from Brazil as a whole, to the region. In 2006, sales of wood to the Arab market resulted in export revenues of US$ 37.8 million. Last year, the figure increased to US$ 60.3 million.

Camilotti acknowledges that in recent years, Brazil has lost market share among the Arabs. The Chinese, Hindi and Indonesian manufacturers have an edge over the Brazilian: logistics. As they are located closer to the target market, especially to the Middle East, their goods become cheaper.

And Arab builders often hire European architects, which favor wood item manufacturers based nearer the areas of consumption. Another factor is tax losses generated by the depreciation of the dollar against the Brazilian currency, the real, which reduce revenues for exporters.

The Arab consumer market, however, is expanding. The growth of the regional economy and the widespread rise in income prompted by high oil prices, are causing demand to grow.

"Generally speaking, exception made to the United States, markets are still heated up. In Saudi Arabia, for instance, construction of commercial buildings and infrastructure works are driving up the demand," says Luiz Carlos Reis de Toledo Barros, of Brazilian Best Woods (BBW), a company that represents Brazilian wood industry companies abroad.

Furthermore, Camilotti believes that the sizeable Arab colony living in Brazil favors business relations with the other side of the Atlantic. He has been receiving many inquiries from countries in the region, such as Lebanon.

Also, if the Middle East is farther, the North African countries are less distant, which reduces the obstacle posed by the logistic issue. In 2007, Morocco was the leading Arab consumer of plywood, sawed wood, doors, frames, and chipboard and MDF sheets from Brazil: US$ 21 million. Saudi Arabia ranked second, at US$ 11.2 million, and the United Arab Emirates ranked third, at US$ 10.1 million.

Overall forestry industry figures reveal the strength of Paraná in the sector: it exported the equivalent to US$ 1.49 billion in 2007, of which wood alone answered to US$ 1.03 billion. The state is the second largest exporter in the country, second only to the state of São Paulo (SE Brazil). Santa Catarina (S) ranks third. The sector has many branches, involving not only wood and furniture, but also pulp and paper, among other products.

As for pine plywood, figures supplied by the Abimci show that, whereas in 2006 Paraná exported US$ 324.1 million, in 2007 the figure rose to US$ 338.8 million, representing growth of 4.5%.

Sawed pinewood ranked second, with sales of US$ 131.8 million in 2006 and US$ 111.8 million in 2007. In a comparison between the first quarter of 2007 and 2008, pine plywood also leads sales from Paraná, having grown from one year to the other.

From January to March 2007, exports totaled US$ 68 million. In 2008, during the same period, sales stood at US$ 115.5 million, expansion of 70%.

Omar Nasser works for the Fiep (Federation of Industries of the State of Paraná).

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