Summary

  • UK hardwood demand is stable to healthy.
  • American walnut is extremely popular.
  • There has been a decline in market share for tropical hardwoods.
  • Imports of Brazilian hardwood are largely restricted to the decking market.

Supply still reigns as the single most important issue for the UK hardwood trade this year, but importers report a more stable overall picture than was seen in 2006. While a progressive tightening of supplies of most species and products was a key feature of last year, with many importers voicing grave concerns about future business, 2007 has, so far, proved survivable.

It seems that traders are getting more used to dealing with tight supply. Good forward planning has become a crucial business tool, while UK importers have spent less time worrying about species in very short supply and focused more on those which they can get hold of. The result has been a far narrower range of species available in the UK hardwood market than before.

UK demand for hardwoods, on the other hand, is far less of an issue and traders report stable to healthy business as a general rule. This, of course, is particularly relevant for white oak (American and European) and American walnut, which “certainly doesn’t gather dust in the yard”, as CP Timber Ltd director Chris Powell put it. The fashion for white oak is still extremely dominant among the UK’s specifiers, manufacturers and final consumers and this has created dramatic price increases in recent months, which are not always easy to pass on to the customer.

Some UK traders report that it is becoming increasingly difficult to maintain margins in American white oak, as customers are often disbelieving of such significant price hikes. However, for those traders with a more stable customer base, high prices may not be such a bad thing. As for European oak, some traders report that it is the best selling item outside the American species, with more square-edged and certified material available.

“Flavour of the year” is how Frank Boddy, managing director of John Boddy Timber Ltd, described American walnut. While it may not be easy to come by, demand is so intense that those who can get walnut are able to sell it very quickly and at a premium. The supply situation is not helped by increasing demand for walnut logs from the US, where logs are often being diverted away from domestic sawmills and exported to China and elsewhere.

Such high demand for white oak and walnut has meant that other American species are not faring so well in the UK market, with flat demand for ash and low demand for hard maple, which has fallen substantially in price in recent months. On the other hand, demand for tulipwood is reported as consistent and, in some cases, it is being specified as a substitute for framire, which is difficult to come by. Demand for cherry is reported by some to have picked up a little in recent months, although James Latham plc director Chris Sutton reports a levelling off of demand for both this species and maple.

Currency factor

Of course, one major factor helping sales of American hardwoods in the UK market is the dollar to pound exchange rate, which has hovered around the two-to-one mark for some months now. Despite this, however, little seems to be improving in the situation for red oak. While The American Hardwood Export Council continues its single species promotion campaign across Europe and has achieved some measure of success, the UK’s hardwood trade has seen little development in demand for the species. “North American red oak is in plentiful supply, however, it is not a particularly popular choice with the UK market,” said Chris Sutton.

As a result, few are moved to “take a punt and be prepared to lose a lot of money”, as Peter Thorogood, managing director of Thorogood Timber plc, put it.

Some members of the trade agree that there is no real incentive to push red oak to the market, as the margins on this species are far less than for white oak. Others, meanwhile, suggest that now is the ideal time to start trading in this species, as it is so cheap.

The tough supply situation for many tropical hardwoods, coupled with fashion trends and environmental concerns, has led to an overall decline in market share for tropical species in the UK in recent years. The market position for some, however, has remained very buoyant.

“A key area where we have seen significant growth is in demand for certified timber,” said Mr Sutton. “We are also seeing small quantities of FSC iroko and utile being made available to the UK market and have been able to source two secondary species from Africa – movingui and padouk – and these are both FSC.” He added that Lathams is currently looking at Indonesian FSC meranti.

Among the wider industry, demand for African sapele, in particular, has continued to be brisk and prices have risen accordingly. However, some traders report that it may have peaked in recent weeks and they do not expect significant price increases in the near future. This suggests that the supply situation for this species has eased somewhat, despite the continued interest in sapele from Chinese and US buyers and from those switching to Central African hardwoods, in the face of very limited availability of Brazilian and West African mahogany.

While sapele has maintained its position as the favoured redwood for joinery applications, iroko is also reported as selling well on the UK market. The supply situation for this species is far from easy, but importers are just about managing to get what they need to fulfil demand, while prices are beginning to rise. UK demand for framire and sipo is also very good, with many joiners favouring framire as a cheap utility species. However, in both cases, availability is an issue and the level of demand is difficult to satisfy – and, as Chris Sutton observed, “the lack of availability of both sapele and framire has had a knock-on effect for customers, driving prices forward on both of these species”.

Major limitations on availability have caused the flow of hardwood species from Brazil to the UK to fall substantially in recent years and their presence has all but been restricted to decking. Some 1,100 tonnes of Brazilian sawn hardwood were imported in the UK last year, which marked a 31% decrease on 2005. At the same time, imports of Asian hardwoods have also been suffering, with buyers shifting to African species in the face of limited availability and soaring prices. This situation eased somewhat during the first half of this year, with prices peaking and demand now reported as fairly steady. Interestingly, however, buyers seem to be favouring sapele over meranti as the dominant redwood, despite as much as a 30-40% price premium.

Holding up well

By all accounts, the UK market for hardwoods is holding up fairly well in 2007 and most contacts report being able to sell what limited volumes they have been able to secure. There is no doubt that traditional sources of demand, in the joinery and furniture manufacturing sector, are continuously being scaled back in the face of increased imports of finished products. Contraction in this sector is, no doubt, a cause for real concern in the longer term, but there is a certain amount of confidence in future demand, given current housing and general construction activity forecasts. Furthermore, business in the higher end of the furniture and joinery sector is reported as good and UK manufacturers are being encouraged to focus on higher value bespoke products, for which hardwoods are particularly valued.

Certainly there are increasing opportunities for hardwoods in the UK’s construction sector, where timber is emerging as a material of choice for the modern world in the face of the increasing preoccupation with sustainability and energy efficiency. However, the move is slow to take hold and communication and education will be the keys to widening architects’ and planners’ knowledge of hardwoods and creating – and maintaining – a genuine rise in hardwood demand.