Latvian shipments are still running late as the chaos caused by packed ice in the Gulf of Riga continues to hamper the movement of cargo vessels. Although the Latvian port of Ventspils is workable, the largest volume of cargo still lies frozen at Riga.

Tallinn remains ice bound, but Parnu is now improving while Klaipeda is fully navigable and imports from Lithuania have only been affected by production difficulties.

The effects of the severe cold weather on supply are predicted to last well into April and even May while backlogs from the Baltics, the Nordic and Russian ports are cleared from the quaysides. These problems come at a time when UK inventories are at low levels and much needed items such as decking specifications are thin on the ground.

Alternative supplies

With spring on the way, the delayed shipments of fencing materials will be missed by importers. If demand proves to be as strong as last year, then alternative supplies will need to be found. British sawmills have already reported an increased demand for boards, posts and rails as the effects of reduced imports have started to bite, but whether the home-grown mills will be able to produce enough volume to satisfy demand remains to be seen. During March and April last year, the lead-in periods for fencing products such as feather edge boards trailed well behind the pace of demand, but there are no indications yet as to the strength of this year’s market.

The softwood price increases achieved by Baltic shippers towards the end of last year have continued to firm, and there are predictions that they will increase another £4-5/m3 over the next two to three months, particularly for dry graded stock. There are no moves from the Scandinavians to undercut the market, and the Swedes are still remaining bullish on price which is made additionally firm by a weakening pound. Unseasoned prices have increased, but only marginally by comparison. Some agents have reported that replacement contracts have been signed at prices based on a repeat of last year’s levels, but in general prices have moved up by about £5/m3.

The lack of softwood shipments in the first quarter of 2003 has resulted in a drastically reduced income for many agents because, with commissions not usually payable until the goods have sailed, shippers have been unable to invoice the backlog of goods stuck at the ports.

Additional charges

&#8220British sawmills have already reported an increased demand for boards, posts and rails as the effects of reduced imports have started to bite, but whether the home-grown mills will be able to produce enough volume to satisfy demand remains to be seen”

The cargoes that are under way have attracted supplementary charges of around £2/m3 for the use of ice class vessels/ice breakers, and further costs are coming into play as the shipping lines are invoking a bunker surcharge on fuel due to the political uncertainties in the Middle East. One shipping agent reported that marine fuel costs had risen from US$200-400 per tonne, which roughly translates into an additional £2.50/m3 on the fom price of timber.

Log supplies in Latvia remain tight, and several mills have increased the proportion of redwood in their production to compensate for a shortfall in spruce. From levels of between 5-10%, redwood levels are now running closer to 50% with less of a reduction in price for inclusion in a specification. Very few parcels are now sold as whitewood only as spruce logs are becoming harder to acquire and they are attracting ever increasing premiums at the auctions.

Turning to Russia

The higher costs of sawlogs are creating increasing financial pressure on the medium-sized mills, and fibre shortages are forcing them to seek logs from Russia.

A contact recently returned from Latvia said that many mills were only running on two to three days’ log supply, and others considered to be in better positions were down to only a five to six day buffer.

Russian whitewood, which normally provides importers with an alternative to Baltic production, has also been affected by the freezing conditions. Supplies of unseasoned whitewood from Archangel have been severely restricted, and landed volumes in the UK are reported to be well below normal levels.

Although the softwood market price has been rising, Scandinavian shippers have not been induced into increasing volumes of carcassing to the UK market and, for the first time for many years, there is a general acceptance amongst traders that shortages are becoming a serious issue.

As the thaw begins and cargoes start arriving, the strength in demand will prove the litmus test as to whether merchants will increase prices to the end users. So far very little news of the changes in the market have reached the desks of construction buyers. If these current price increases are absorbed by the timber companies, the trade will move directly from the big freeze to an even bigger squeeze.