The plywood market has once more earned its ‘feast and famine’ tag by turning upwards suddenly. Prices in both the Far East and Brazil have gathered varying degrees of forward momentum which, it is hoped, will be reflected in sales prices in the UK. However, there are mixed reports as to whether this has begun to happen yet.
When the market was at its lowest point, the price of Far East plywood slumped to Indo96 list -35. Some traders are now reporting business being conducted at -24 to -28, with an Indo96 list level of -20 now considered to be a possibility in the near term. ‘That is where the market is headed,’ confirmed one leading plywood player. Another said: ‘The prices are up – and they are looking likely to stay up.’
Prices in the UK have moved ahead by between 5-10%, it was suggested by some. Lead times have extended almost across the board and delivery dates are out as far as August/September or even later in some instances.
The sudden upturn has provoked anxiety among those buyers who have been running on low stocks and have little or nothing booked forward. ‘The situation has prompted a lot of people to come on to the phone to ask us what we have got. As soon as prices start to go up, customers want material quickly because it gives the confidence to buy,’ said one source.
Buyers in Europe as a whole may have to find substantially higher prices if they are to secure plywood from the Far East. Many producers in the region view European customers as more fickle than their counterparts in the Far East, both in terms of their variable demand patterns and more exacting specifications.
Reasons for the sudden upturn in plywood prices include an improvement in local currencies against the US dollar and strong demand from the likes of the US, Korea and Japan. Bad weather – particularly in western Malaysia – has contributed to logging difficulties and therefore to tight supplies. Overall, however, the principal drag on the supply chain has come from a clampdown on illegal logging, with the Indonesian government said to be planning a permanent ban on log exports in order to protect its forest resources.
Brazilian hardwood
The rise in Brazilian hardwood plywood prices – from as low as K14 list -45 to nearer -35, according to recent estimates – has occurred partly because mills have run out of patience with the low prices paid in the UK and elsewhere. One contact also ascribed the improvement to a general upturn in demand – notably from the US – and better organisation among Brazil’s producers such that ‘they are not fighting between themselves so much’.
As for Brazilian elliottii pine plywood, there has been a slender upward movement in prices over recent weeks but this has been undermined to some extent by the weaker dollar.
UK plywood demand is breaking no records but the current market still has ‘pockets of shortages on some thicknesses’, TTJ was told this week. Thinner panels from the Far East and thicker panels from Brazil appear to be the most affected, although it is understood that more vessels have arrived or are due to arrive shortly carrying plywood from the Far East.
The continued strength of Russia’s domestic demand – both in terms of volume and prices – has meant less plywood available for export, with the result that shortages of some items have emerged in the UK. Already with a reputation for being strong sellers, the Russians are showing little inclination to accept any bargain prices from overseas customers. The major downside for Russia’s plywood sector continues to be the lack of available transport.
The Baltics have been enjoying an excellent run of orders in recent weeks. Among those countries to have felt the competitive heat from Baltic and Russian producers are the Finns, who have responded with a long-term move towards increased specialisation within their product portfolios. For the moment, birch plywood order books stand at around three to four weeks, although increasing pressure is anticipated within the supply chain as the mill shutdowns of July and August approach.
Finnish plywood
UK buying patterns have been regular ‘but nothing too exciting’ for Finnish birch plywood, and there appears to have been little significant movement on prices in recent weeks. Overall demand for the same country’s spruce plywood has been sufficient, however, to push lead times far closer to the mill summer closure deadline.
This lack of export activity has also been underpinned by sufficient domestic demand in North America to take up available capacity at prevailing price levels. On the news front, the trend towards timber-carrying charter vessels being brought into smaller UK ports was exemplified by the announcement from International Plywood that it was expecting its largest shipment of hardwood plywood – some 5,000m3 – into Blyth. A company spokesperson confirmed that the vessel had subsequently arrived and that a second shipment was due to arrive at Blyth as early as next month.
In common with plywood, the OSB price has also increased substantially since the start of the year although producers are united in complaining that prices are terrible and that the product is vastly under-valued. Against a backdrop of fairly strong and improving sales, it is claimed that prices on the Continent have risen recently by as much as 25% and by a less substantial, but still significant, proportion in the UK.
The sudden OSB price hike mirrors recent developments in the MDF sector where manufacturers have made it clear that, after a prolonged period of low prices and fierce competition to protect market share, they are prepared to take downtime to maintain product value.
