By Simon Smith
Strong demand in global commodity markets has generated a price upswing in everything from fuel, power, industrial and precious metals through to agriculture. The forest products industry has been no exception, and with demand exceeding supply, prices of solid wood and wood-based manufactured products such as OSB and plywood have been rising steadily since April 2020.Timber Trade Journal, June 2021.
There have never been a market or prices like this. Since the end of February 2021, the issues with timber supply have surpassed anything we have witnessed in the past forty years. To illustrate the speed with which shortages are dictating supply and price, one of WL West’s European suppliers just recently advertised a fixed price for the grand total of the next 48 hours.
Demand for timber is not the only problem: supplying it is another. What’s more, the world’s biggest players in their American and Chinese colours are bringing their best game, be it the best prices or exceptional market accessibility, benefitting able suppliers like Sweden but squeezing timber importers like the UK onto the pavement.
Global demand outstripping supply, combined with a struggling supply chain and a global slump in sawmill activity due to long-term isolation, the conditions created by the pandemic have made economic matters spiral in directions few of us could have predicted, creating the perfect storm.
US Timber Trade Supplies
Before the 2008 recession, the USA cut 30,000,000 m3 of timber every year. As the recession hit, some sawmills went out of business and during 2020, others were mothballed. The result is that less than 10,000,000 m3 has been cut recently, yet demand surged ahead.
Sourcing and importing timber for the United States’ construction products has become very difficult: shortages in Oak, Poplar, Walnut, Ash have made sourcing FSC stocks damn near impossible. With the US’ construction market white-hot with housing projects, prices have gone up and are still climbing, over 50% in some specifications, and there is a lack of inventory stock from north to south.
In the USA, a lot of the hardwood logs that come onto the market from an agricultural duo system: farming in the summer and logging in the winter, especially on eastern seaboard states. During the pandemic, the concentration yard and sawmills were in part closed down and the timber never bought to be processed, leaving huge gaps in stock.
There is even another sting to the tail: China is back buying again, offering above-market prices for containers of timber. Today, it is thought that 1: 5 planks of US hardwoods are going to China.
In passing, the container costs are hard to believe: in early autumn of 2020, a 40′ box cost approximately 1500-1850 USD to get a container to the UK, whereas now costs between 6000-8000 USD. Some of the bigger importers in our trade need timber in such capacity that they are currently placing orders without a fixed price or delivery! Norway and the Netherlands especially are ready to pay what is needed in order to secure supply.
Where clear softwoods are concerned, matters are even worse. For Cedar, Douglas Fir and Southern Yellow Pine especially (the latter up 30% since October last year), there were over 100 mills on the west coast of the US and Canada ten years ago. Today, we hear that potentially over 75% of them have closed. Their usual imports from Canada now no longer an option, the US is now importing softwoods from Europe, particularly from Swedish producers. This supply, however, is considered unlikely to meet demand, so there is little hope of a surplus to be imported to the UK. What’s more, neither US nor Canadian shippers will take `wishlists’ from importers.
Will it get back to normal? So far, all our contacts and agents see no signs of this trend abating, despite the exchange rate having made a slight move in our favour, though this is a mere gloss on top of a major supply issue.
Timber Shortages In Europe
Once again, rising prices are a result of a lack of logs cut this last winter. In France particularly, the ONF (similar to our Forestry Commission) are enduring log shortages and at public auction, the grades are poor while the costs are high, while supply is yet another issue entirely.
These past few months, we have seen price rises over 15-20% in some specifications. QBA, for example, and long boules with good diameters; even at the lowest end of the market the sleeper trade is busy, yet prices have risen in two months by 12-13%.
As for softwoods, the spread of the pandemic and extreme winter hardship has hampered the harvest of many softwoods in Northern Europe and Russia, resulting in supply running late and mills coming to a standstill. Yet demand is still high: imported Latvian softwoods made up 20% of the market last year, and UK ports are full of “posts, landscaping products and pallet wood as opposed to strength-graded materialâ€.
Meanwhile, UK merchants are selling consistently for certain specifications like redwood sawfalling, while straight fifth grade for decking boards is still struggling to keep up with demand. In fact, “prices of the high-quality productions of unsorted and fifth are trading below those of C24 construction timber, purely down to the high demand for the latter.â€
Brexit Impact on The UK’s Timber Supplies
While Brexit fallout has been limited due to high demand surpassing the obstacles of logistics in the selling and transporting of cargoes, it does not come without its own set of complications. Due to Brexit, we now have more costs to pass on. Additional labour to meet standards at customs aside, there is now a requirement for import and export documentation at approximately £150.00 per load, plus new Phytosanitary plant passports. Costs will vary, but the time to fill in the documentation has to be found. On top of this all, diesel and other fuel prices have risen by 15/17% since Jan 2021.
Some fencing mills in the UK will not take on any new customers and this also is true of some softwood merchants, with the price of US Redwood being at an all-time high-ever!
Siberian larch is in chronic short supply and the basic 25 x 150mm June prices are 76% higher than in October last year. This is amazing to witness.
We are trying to buy more UK hardwood to sawmill, air-dry and then kiln-dry here on our site, but what are the choices? Ash, for one, is a superb timber of good value in plenty of supply at the moment. We currently have some good stocks in our timber sheds and are cutting logs as we speak, although these will take 6-12 months to start appearing for sale in bigger volumes.
European Oak is always a speciality for us. We have a wide choice of stocks and grades both air-drying and kiln-dried, and moreover, many logs to mill this coming autumn.
A timber that is plentiful but little in demand is Beech. We have miles of it growing locally, but because it is out of fashion there is little demand for it, though it is a great timber for furniture and internal purposes. In certain end-use applications, Beech can be harder and stronger than Oak.
Homegrown Douglas Fir, which can grade to C18/21 depending on and sizes and specifications, is another good alternative. However, Larch is sadly in poor supply due to disease issues, and home-grown Cedar even more so from over-cropping in the past fifteen years.
Timber Supply in Africa and The Far East
The times have not spared even the most exotic woods of our trade. From Indonesia, Meranti and Balau timber for decking is in short supply, contracts are not coming through on time and there are delays and shortages of logs. What’s more, China is ever-present in these parts, buying vast qualities of hardwoods to fuel their economy.
Sapele prices have also started to move upwards in a definite trend, though not as sharply as others. One alternative used by the joinery trade is Accoya, itself gradually following the Sapele prices.
Fencing & Timber Supplies in The UK
This deserves a special mention. Getting fencing supplies is very hard and the UK is currently flat-out processing timber; there is no more spare capacity. In addition, the HS2 project is taking a huge volume of softwood resources and sadly the trade will not see any of this timber but get a train connection 30 mins faster.
BSW and J.E. Jones, two of the giants in this area, cannot process any more capacity and are not taking on orders for new customers. Prices are continuing to rise weekly in this trade and all building products are experiencing shortages—even Postcrete!
Final Thoughts?
Cost push inflation is rife, so beware about pricing forward, because prices are not done rising. Our predictions are increases in lead times, delays in delivery, imported timber failing to meet demand and gaps in specifications. What’s more, the rising prices of timber will most certainly affect many other areas in the economy, from construction to mortgages and staffing.
Timber is our only natural renewable resource that needs to be managed and grown and cropped. As we are seeing now, if this cycle falls out of wack, the consequences are dire.
But all is not lost. Chief executives, builders and merchants worldwide are working with both customers and suppliers to work out solutions to raw material shortages. According to the Timber Trade Federation, “agreements are being replaced by continuous re-negotiation†as trade is learning to adapt to uncertainty. Please get in touch for more details or further information.
WL West & Sons Ltd is a timber merchant and sawmill business with 150 years of 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.
Our wood products, building materials and certified wood are manufactured and sold with the endorsement of forest certification and the Forest Stewardship Council FSC
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For entirely finished products, timber supplies or woodworking tools, have a look at our Retail Shop (which is temporarily closed for lockdown but will re-open in due course).
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