It’s been a challenging six months for the UK hardwood sector. The cautious, shorttermism of the market was compounded by a tough winter. There’s been supply and price pressure, and the anti-illegal wood EU Timber Regulation (EUTR) to contend with. Despite this, however, some traders are talking of adding new lines, recruiting and even investment.

Some put this down to the sector becoming acclimatised to a demanding market, borne out by one importer/processor who has just installed new plant. "We decided these are the conditions we have to contend with; we’re coping and saw no point in delaying investment any longer," he said.

Others also said business seems at least now to be on a more level plane. "It’s tough and customers remain jittery," said an importer. "But we’re not seeing the fluctuations of the recent past. The market seems relatively unstressed."

The key demand-side pressure point in the sector remains sluggish construction.

"Our door customers have been OK, but that’s on the back of repair and maintenance and to some extent furniture," said an importer/distributor. "Joinery has been quieter and that’s because new build remains in the doldrums. We now need to see government action in construction feeding through, but so far it’s public project cutbacks, reflected for us in slower beech sales."

The winter/early spring weather put a further dampener on construction. "We supplied a site where 18 new houses had to be demolished because nothing set," said an importer/processor. "Combined with the fact we couldn’t saw sapele at -18°C, it was a serious headache."

Drier weather from April has produced a bounce back, and one importer even reported a "mini surge".

That hasn’t made business any less hand to mouth, with a home-grown specialist reporting customers working "to order books measured in weeks, rather than months". But there’s a view this should no longer purely be viewed as an indicator of tough market conditions.

"The downturn undoubtedly made us all more short term," said an importer. "But we’re in a more immediate business environment generally – the Amazon, click-and-buy era. So businesses may stick to this model even if they’re seeing improvement."

Timber Trade Federation statistics show UK hardwood imports from January to March down a sizeable 21% on 2012. But importers say their experience points to trade to June being on a par with last year, or at most down around 10%.

"Given the weather and start of the year nerves we’ve had through the downturn, 10% isn’t bad," said one. "We can claw that back in the second half, or live with it if we stay flat." While the UK market is still challenging, there are also indications that it is now seen as a better bet than Continental EU counterparts.

"Only our larger UK customers are fixing big forward contracts but, compared to elsewhere, it’s stable, even robust, with France and Germany especially competitive," said an international supplier.

Further evidence of the UK market’s relative health is the fact it is now the most valuable in Europe for US hardwoods suppliers, with 2012 imports up 9% to US$58m.

Another pointer, say traders, are approaches from Continental suppliers, primarily of oak and beech.

"We’ve had calls from French, Italian and German mills," said an importer. "Some are fishing, but others are clearly researching the spec we need."

From most other sources the talk is of tightening supply, with Africa a particular problem and sapele the scarcest species. "You have to take what you can get in a lot of species, but sapele in particular," said an international trader. "We’re hardly finding any dimension, so we are just buying randoms." The situation is attributed to mills still not having restored production post-recession and recovering Chinese demand for African logs and lumber.

Another growing factor in African KD supply seems to be rising levels of further processing and component production. "Mills are devoting more KD capacity to laminating and finger-jointing lines and less to sawn timber," said an importer. "KD lumber is now on six to nine months’ delivery and we’re placing orders knowing they’ll be late." Meanwhile, pressure on American hardwood supplies is coming from the domestic consumption.

"US construction improvement is creating demand across the species," said an importer/ distributor. "And even a percentage point or so uptick in domestic demand is big volumes." Others report US demand leading to tighter South American availability, notably from Brazil – "the US’s backyard hardwood source".

The consequence of these supply issues is, naturally, firming prices. The consensus for African is an across the board increase of 7-10% in the last six months, with sapele and iroko "leading the charge".

US hardwoods are reported to have averaged the same rise, although one importer put tulipwood ahead 14%. "Red oak’s been firm too," he said. "We sell mainly 1in defect-free wide boards to coffin makers, but in the US that’s prime joinery timber so it’s becoming very sought after."

Western red cedar "going through the roof" is also attributed to the US construction upturn.

Euro price pressure

European hardwood prices, meantime, have been more stable, but more recently the pound drifting down from €1.20-plus to €1.17 has created some upward pressure here too.

On the positive side, importers and distributors say they have been able to pass on a proportion of price rises, although not so easily with sapele thanks to "suicidal offers from those desperate for cash flow".

Despite cost and scarcity, sapele remains the UK’s African hardwood of choice. One trader reported some substitution with meranti, cosipo, kaya or tiama, but not to any great extent. "It takes a lot to make UK customers lose their historic affection for sapele," she said.

Several importers, however, did see evidence of customers more readily accepting alternatives for other species in short supply, including Brazilian guariuba for iroko.

"It’s not only cheaper, it’s available FSC and you can get it 1x6in which is now very rare in iroko," said a supplier.

Several companies also reported customers moving from framire to movingui.

In terms of US species, besides white oak’s dominance, traders mentioned cherry still "bubbling along the bottom" and red oak doing little outside the funeral trade, but maple strengthening and walnut and ash remaining good performers.

From Europe, the key species remain oak and beech, with several importers reporting good demand in the latter for colour no defect.

Engineered timbers

Interest in engineered hardwood is also said to be growing, including laminated eucalyptus, US and European oak strips, and African laminated scantlings, with several companies introducing new ranges. Some also reported increasing involvement in modified timber.

It was predicted such products might be boosted by the EUTR, as its due diligence illegality risk assessment requirements thinned out conventional hardwood sources available to EU buyers. And the ITTO recently said it feared tropical suppliers were especially vulnerable to being dropped.

But, while acknowledging the burden of EUTR bureaucracy for themselves and suppliers, importers say to date it’s hard to discern a major business impact.

Certainly the forecast widespread ditching of Ivory Coast framire/idigbo does not seem to have happened. The ITTO has reported framire stocks imported prior to the introduction of the EUTR sitting at UK ports due to uncertainty over their legal status under the Regulation. An importer also said they’d axed two Ivory Coast suppliers which couldn’t satisfy EUTR illegality risk assessment. However, the company has kept one and another trader said it was "sticking with a long-term supplier we’ve worked with closely on legality due diligence". Companies contend, too, that they’re seeing modified and engineered timbers as range additions rather than EUTRdriven substitutes.

Certified demand

Forecasts that the regulation might reduce demand for certified timber, with the market becoming satisfied with legality assurance, do not seem to have materialised either. "And it’s unlikely to now that FSC and PEFC have aligned their legality requirements to the Regulation," said an importer.

As for predictions for the UK hardwood market generally, most importers say they’re expecting more of the same, with recently reported improvements in construction taking time to feed through.

"It’s still short term, but it’s now become quite steady, even boring," said an importer. "And given the last few years, we’ll settle for boring."

Grown in Britain – but only so big

Home-grown hardwood suppliers see potential for market development, and welcome the Grown in Britain initiative. But they advise against the sector getting "over-excited" at the prospects of UK forests satisfying more than a limited proportion of the country’s hardwood needs for the foreseeable future.

"We’re seeing growing interest in local sourcing from end users and specifiers, like architects and designers, particularly for oak, ash, and to a lesser extent chestnut and ash," said one merchant and sawmiller. "It ties in with carbon footprint concerns and minimising freight miles." At the same time, he said, Grown in Britain should not inspire "megalomaniac" visions for the sector’s prospects.

"It’s a great initiative that we’ve got involved in and that’s got a lot of influential people to see the positive potential of UK forests and the value of timber production, both in creating jobs and providing economic incentive to underpin sustainable management," he said. "But we don’t want to lose sight of the fact that, for the time being, our best course is to continue to supply local need from local forests."

Another processor agreed.

"For one thing, we no longer have the processing capacity in the UK to handle a major increase in home-grown hardwood," he said. "It would take time to rebuild."