The furniture companies of São Bento do Sul and Rio Negrinho municipalities, Brazil's main exporters, are already facing difficulties meeting international delivery deadlines after the recent flooding in Santa Catarina state. Itajaí Port, where 4% of Brazilian exports are shipped, was closed as a result of the storm. Portal Moveleiro reported that the storm, which hit the state at the end of November, has caused economic problems along the entire supply chain of timber and furniture. Santa Catarina is the leading Brazilian exporter of furniture, with exports worth USD378 million in 2007, or 32.8% of total Brazilian furniture exports, according to the Federation of Industries of Santa Catarina State (FIESC). Entrepreneurs are now subjected to higher costs, complex logistics, renegotiation of delivery dates with international customers, and risk losing customers for breach of contract.
European CIF prices for hardwood plywood are down across the board against a background of weak consumption and uncertainty over prospects for 2009. Prices are highly volatile. Generally falling CIF prices into the EU are also partly indicative of falling freight rates from most regions in response to declining fuel costs and the reduction in the overall level of global trade.
For Brazilian suppliers to the EU, although there has been some pick up in inquiries amongst importers seeking to benefit from the duty free quota, most importers are still holding back on large orders. Widespread speculation that prices might drop further in the New Year is only adding to importers reluctance to place orders now. EU buying of plywood from Brazil is now concentrated on only a few large shippers. Many smaller Brazilian shippers formerly engaged in the trade are no longer active as they lack access to sufficient capital to finance raw material and other costs.