Spring and early summer saw increased demand for most sawn wood products and, despite the expected dip during the holidays, the year to date has been much better than the same period last year for the UK forest products industry.
Most sectors have seen modest price increases, although these have been offset at least in part by further reductions in prices for sawmill co-products and small roundwood.
The possibility of such material being used to produce energy still exists but is fraught with technical difficulties. Leaving those aside for a moment, another obstacle seems to be the DTI. In the recently published statutory consultation document, New and Renewable Energy – Prospects for the 21st Century, the emphasis is firmly on ‘energy crops’ grown specifically for energy use.
This comes as a disappointment to the forest products industry, whose representatives, along with those from the electricity generating sector, have made it clear in meetings with the DTI that the focus on energy crops is misplaced.
Government definition
Although the volume of such crops currently available is not enough – the consultation document admits that minimal planting has taken place so far – the DTI has decided not to expand its definition to include managed woodland or co-products. Instead, it proposes extending the timescale within which co-firing of power plants is allowed, citing industry concern that the previous deadline of 2011 was too tight to allow development of a market in energy crops.
In his introduction to the document, minister for energy Stephen Timms says this proposal “should provide growers with a more secure long-term market and more time to exploit improvements in cultivation”.
For growers who invested considerable sums in short rotation coppice (mainly densely planted willow shrubs) to supply the failed Arbre Energy plant, a fair amount of work may need to be done to restore their confidence. Arbre was designed to produce electricity from the gasification of wood chips. Current trials by electricity generating companies are based on co-firing with a mix of biomass (including wood) and coal.
This is where the technical difficulties arise. The generating companies need dry sawdust but among the co-products produced by mills, sawdust is not the problem – there are ready markets from particleboard manufacturers and the farming industry. Woodchips and small roundwood are the problem. Question: how do you produce dry sawdust from wet small roundwood? And can you do it economically and without using more energy than you generate from the resulting sawdust?
Unlike woodchips, sawdust is not purposefully manufactured; it’s just what happens when you cut wood. What the generating companies want is a machine into which wet small roundwood and woodchips can be fed, with dry sawdust coming out the other end. Until then, there’s a big ‘if’ hanging over prospects for co-firing with wood.
The Forestry Commission is to replace the former Supply & Demand sub-committee of the Forestry Commission Advisory Panel (FCAP) with an expert group on industry statistics. It is understood that a research group will also be established to replace the former FCAP Technical sub-committee.
Both groups will operate on a GB-wide basis – answering previous concerns that separation of the Forestry Commission into three entities following devolution could lead to each setting up advisory committees and risk the loss of a nationwide overview.
Good demand
The UK Forest Products Association (UKFPA) will continue to provide the meetings with market reports, the most recent of which confirms good demand for construction grade softwood, with some price increases achieved. Fencing and garden products have had “a very good season”, although with some easing over the holiday period.
The pallet sector remains extremely difficult, with fierce price competition from overseas suppliers – although there have been reports of increases for some products.
Demand for heat-treated packaging material for export purposes remains low, but UKFPA says news that the US and Canada are to implement the requirements of ISPM 15 from January 2 next year is expected to stimulate demand.
There is no change in the hardwood sector, with good quality UK timber selling well but imported temperate species still taking a large share of the market. There is a shortage of good quality large oak logs being offered to mills at present. Exports of cherry and sycamore are buoyant, but the Portuguese market for sweet chestnut has hardened.
Although demand for woodchips and sawdust from the panel sector remains good, prices have fallen again. The bark market is still competitive – prices have halved in the past 10 years or so.
There is good demand for particleboard, especially flooring grade, and OSB, although prices remain under pressure. Competition from overseas MDF producers is strong due to oversupply and some manufacturers have cut prices in an attempt to gain market share.
The paper sector has good news, with strong demand for fluting and cartonboard. The one UK mill producing fluting from UK grown hardwood has enlarged its raw material supply area and is producing record volumes of product.
Overall, the UK forest products industry seems to be in a more positive mood – with the exception of the always-difficult pallet sector and the continued concern about markets for small roundwood and sawmill co-products.
