Markets for the UK timber industry appear to be rather flat at the moment, with a slackening of demand that started in southern parts of the country and steadily worked its way north.
No-one seems quite sure why, but the expected dip during the summer holidays has not been followed by the equally expected recovery. Of course, the current situation may seem more significant because of the contrast with the strong first half, when all sectors of the industry enjoyed good demand. Nevertheless, there are concerns about whether business will improve between now and Christmas and into the first months of the new year.
At least the windblow in Europe doesn’t seem to have had a negative impact on UK suppliers. There are indications that there is plentiful supply of shorter lengths and a tightening in availability of longer material as a result of the winds snapping many trees, but it’s likely that the first estimates of the volume of windblow were too high.
Certainly the clear-up operations have proceeded more quickly than expected. The large-scale areas of damage have been dealt with, to the extent that UK and other overseas harvesting teams that have been helping in the affected areas have now returned to their own countries – several months earlier than originally planned.
That still leaves a significant volume of unconverted logs lying in the forests (in small lots and even single trees) and concerns are now being raised that this material will be a fertile breeding ground for bark beetle and could lead to the danger of infestation.
There have been additional opportunities for UK suppliers of palletwood following some reported problems with material from the Baltic states, including sizing but also discolouration, the latter possibly related to windblow.
ISPM 15 demand
Demand for ISPM 15 pallets has been steadily increasing as more countries have implemented the standard. The most significant of these is North America, and one worrying development there is a legal challenge being mounted by individual states against Washington’s implementation of the standard.
Of even greater concern is an increase in ‘knocking wood’ campaigning by the plastic pallet industry. Some of this is decidedly ‘selective’ in the information used – for example, referring to the use of the unpleasant chemical methyl bromide for treating wood pallets when in fact the vast majority of UK pallet manufacturers use heat treatment to achieve the ISPM 15 standard.
Claims are also made that there is not enough heat treatment capacity in the UK – and TIMCON is responding robustly to this, stating that significant investment has been made in heat treatment facilities and that the UK industry is in a position to meet demand.
This mirrors the return to knocking campaigns in other markets, not least construction, as competitor industries act to protect their markets against the rising tide of favourable attitudes to timber.
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“There is growing frustration that many companies in all sectors |
Lack of promotion
Once again, this highlights the problem of lack of promotion by the timber industry. Yes, there is potential for significant growth in market share, especially in the construction sector. Demand for certified wood is increasing, which is good news for companies that have invested in this, and public sector procurement is almost certainly the key driving force. But these opportunities can be squandered if the industry does not put forward its case with the same vigour applied by competitor sectors.
ConFor and TIMCON are among the supporters of the wood. for good campaign to promote timber, but the UK’s contribution remains relatively small and most funding comes from overseas. There is growing frustration that many companies in all sectors of the UK industry who benefit from wood. for good’s work – from forest owners to processors – are taking a ‘free ride’ on the back of the few who do finance its activities.
UK mills report good demand for carcassing in the first half, and for some this continued into July and August. Despite the reported slowdown in the third quarter, growers say they are only now beginning to see an indication of this, with some mills advising that their log call-offs for the rest of the year might be less than originally expected.
If that happens growers may start to withdraw from the market, but at present everything that is put up for sale is sold and prices have been, and remain, good. Even if demand does quieten down, the buoyant sales in the first half mean growers are still likely to achieve the sales levels they expected for the year as a whole.
Co-product markets
Mills have not had any problems finding markets for sawdust and chips, and the continued talk of biofuel – boosted by the recent announcement that the go-ahead has been given for the E.ON UK plant in Lockerbie – gives further comfort.
Growers have also been watching the E.ON development, and view this as perhaps the strongest pointer yet to future interest in biofuel – although wind generation still seems to be the main player at the moment. Mean-while, they say UK paper and chipboard customers are not overstocked with raw material, and in any case pulpwood exports have remained strong this year, with a slight slowing now as a result of the windblow.
Panel manufacturers, meanwhile, remain concerned about the possible impact on their business of traditional raw materials being diverted to other uses.
The fencing sector had a good season until the summer, when demand for domestic material slowed down – partly reflecting the general reduction in consumer spending that has also been seen on the high street. However, the agricultural market continued well throughout the summer; and decking has remained buoyant with the industry optimistic for still further growth.
Looking ahead, much will depend on factors outside the control of the industry. Perhaps one of the greatest concerns at present is the rising cost of energy and fuel, which appears to be having a bigger impact on the bottom line than had been expected.
