What's Going On in the Market? Timber Trade Commentary
What does recovery look like for the timber trade? Escalating demand, rising prices and difficulty sourcing supplies are all consequences those of us in the timber trade will remember from the year of Covid-19 but, if that is the situation on the ground, what do the larger patterns look like seen from, as it were, a bird's eye?
As keen members of the Timber Trade Federation, we keep a weather eye on market trends and movements. As one of the directors of W L West & Sons, here is my summary of what is coming out of our trade body.
The US Timber Market
US timber production has been in decline from 1999, causing dozens of sawmills to close due to in-country usage reducing and other materials being used. Currently, demand on US hardwoods for export and own use is showing increases, but supply from the sawmills appears to be struggling to meet this demand. US sawmills have been encountering problems with investment for improvements. The result is that prices are increasing as demand outstrips supply.
We often get asked about either FSC or PEFC certification for US timber. Generally, the take-up of the certification schemes is low, which results from the fact that much of the US hardwood forests are owned by small landowners who fell timber every 15-20 years and do not see any value in the expense of implementing these systems. It is very unlikely that this is going to change.
UK/European Timber Markets
Hardwoods: Prices of European Oak have been on the rise for a while now, and this isn't going to change any time soon. Whilst there has been reduction in production caused by Covid-19, generally mills are working normally. We do seem to be obsessed with using Oak, and we do need to remind the markets that there are other species available that may be more cost effective.
European Softwoods: Demand for softwoods during 2019 increased by 17% as a result of companies increasing stock holdings to try to counteract the results of Brexit. Deadlines changed and, in early 2020, this trend reversed and decreased by 24%.Towards the end of 2020, with the effects of Covid-19 also having an effect, demand for softwoods reversed again, and increased by 47%. This was felt to be highly influenced by the demand in the Repair Maintenances and Improvement (RMI) market, with people saving money as a result of lockdown, but spending more on home improvements. There is a global increase in demand for softwoods with very little increase in production. It is generally accepted that demand will outstrip supply and prices will continue to rise.
UK Softwood Production: Covid-19 has had a major impact on the UK softwood sawmills, most of which closed during April 2020. As they came back online, with the requirement to implement C19 procedures, this slowed the return to normal production levels. Supply of sawlogs to the UK softwood mills is strong going forward but demand is again outstripping supply. This problem is unlikely to go away, as the UK softwood industry is at capacity with little or no growth likely to happen. This is clearly resulting in price increases, with no sign of stabilisation in the near future.
Conclusion
The overriding theme here boils down to two things. One is that there are great signs that our industry is recovering and demand for our products is growing. The second, however, is that we will be seeing current timber prices continue to increase in our industry, and we should bear this in mind when quoting for jobs that may take some time to come to fruition.
Dave West
WL West Timber is a family-owned sawmill & timber merchant in West Sussex with over 155 years’ industry experience. We provide a wide range of air-dried oak and kiln-dried oak timber products and supplies. We also build and install custom projects for our customers.
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