As March began, softwood traders continued to face an uncertain market with demand only showing signs of a marginal increase over the previous 2 months, still lagging behind most peoples’ expectations. The forward market showed a modest improvement, but as always, it was product-specific rather than across all softwood groups, and the main ongoing casualty was still C24.

As the staple product in importers’ and merchants’ yards for many years, graded carcassing has taken up large areas of stocking space. With the number of sizes and lengths needed to service the market, carcassing has tied up a high level of financial investment and cash, yet it remains stuck as a low profit product. Suffering from perhaps the most erratic section of the market, it has brought some businesses to their knees due to stock write downs through a perpetual series of extreme peaks and troughs in both demand and price.

In the current climate, credit insurers are adopting a very cautious approach to the limits granted in the timber merchanting sector. During the past year, a number of well-established merchants have either lost money (and still are losing money) or have failed altogether, and this has affected confidence to the point where insured limits have been withdrawn altogether.

As March progresses, raw material shortages and increased log costs are starting to bite, and regardless of demand, prices are rising and recovering from the very low levels that prevailed in Q4 of last year. Regular increments are now being heralded by producers that will come into play on a monthly basis.

Last autumn, Baltic processors found the market unworkable, as increases in log costs far outweighed the levels of return they could expect from UK buyers. As mentioned in previous reports, many of the producers switched away from building specifications in favour of wood fuel, pallet wood and agricultural fencing. Even today at many ports, it is still evident that the trade in Latvian C24 and batten material has been substituted by rounded posts and general landscaping products.

Now a similar situation has arisen in Sweden in terms of raw material costs and supply. To balance supply and demand, mills in the south have suspended production for varying periods rather than just reducing shifts as they have done in the past. These decisions have been made by the Swedes to avoid loss-making, and by their efforts to control output, they have help trigger increased prices along the supply chain.

March is the first month to witness any meaningful price increases since last summer, but once again, merchants express concerns that prices could go into reverse gear, so it is vital for the industry that shippers try to ensure a level of stability is maintained.

The volume of UK softwood imports for last year rose by approximately 86,000m3 (+1.5%)* according to Timber Development UK (TDUK) and the sterling value moved in parallel, indicating that the average price index was unchanged from 2023. Within the figures it was noted that Sweden’s exports to the UK had eased downwards while Latvia made a gain.


At the year-end, Sweden remained in first position with 47% of the UK market (2,729,000m3), Latvia second with 17%, followed by Finland at 12%, with Germany and the Irish Republic at 8% each.

A brief snapshot of the joinery and quality grades, shows that there has been a gradual reduction in the average diameter of harvested Nordic/Scandinavian redwood logs. This has resulted in a higher portion of centre-cut material reducing the volume of sideboards in both unsorted and fifth grades.

With shortages of whitewood logs in some areas of Sweden, volumes of kiln dried redwood have been switched towards treated carcassing. Redwood enables merchants and importers to achieve both UC3 & 4 treatment performance levels, something which they are unable to do with spruce due to its lower porosity which inhibits the penetration of preservatives.

Looking to the future, off-site timber frame construction, cassette floors and engineered wood structural beams are all growing in demand, while solid wood joist designs are being specified less, particularly for new housing developments.

The housing market is a hot topic, not just in the timber trade, but also across the national media where a consensus among housebuilders highlights the fact that the current push for planning reform seems to be only focused on the major developer.

Apparently, there are around 2,500 registered small to medium-sized builders capable of erecting sites of between 10-20 houses, and they are reporting that they are struggling more than ever to get planning approval. These developers are more likely to use solid wood joists as opposed to multiple house sets designed in I-joists and LVL and are therefore an important outlet for solid softwood joist consumption.

To meet the government’s target of 1.5 million new homes during their term in office, the collective voice of the housebuilding industry is warning that all sizes of building companies must receive active assistance to overcome red tape, and they all need to be involved if the initiative is to stand a chance of succeeding.
  
Source: ttjonline.com