UK tropical timber and wood product imports this year had their strongest first five months since before the 2008 financial crisis. Increasingly strong economic headwinds, however, look set to make coming months more of a challenge.

The first five months’ value of UK tropical timber imports averaged around US$500m over the last decade. In 2022 they hit US$711m, a 34% increase on 2021.

Price inflation contributed to this growth, compounded by weakening sterling from April, however, import volumes also rose, up 10% on the first five months of last year.

UK imports of all tropical wood products in the first five months in the HS44 customs codes category (joinery, plywood, sawnwood, mouldings and ‘other’ timber goods) were worth US$337m, up 49% on 2021. Volume rose 14% to 150,000 tonnes.

Imports of tropical joinery were up 43% to US$140m, plywood 26% to US$85m, sawnwood 88% to US$57m and mouldings and decking 65% to US$16m.

Tropical joinery imports have been building momentum since mid-2020, with imports from Indonesia (primarily doors) being a key factor in growth. In the first five months of 2022 these rose a further 37% to US$77m, with volume up 11% to 24,500 tonnes.

By contrast joinery imports from Malaysia (mainly laminated goods for kitchens and windows) were down 26% in value to US$18m and 37% in volume to 5,800 tonnes, while imports from Vietnam fell 39% to US$4m and 33% in volume to 1,100 tonnes.

From very low levels in 2021, imports of Chinese joinery products (again mostly doors) reached 7,200 tonnes in the first five months of this year, valued at US$19m. This growth, however, could be attributed to revision of product customs codes in the EU Combined Nomenclature system, which are still mirrored by the UK. This allows identification of a wider range of tropical species used for doors and windows, so Chinese products previously categorised simply as ‘non-coniferous’ are likely now being classed tropical.

Some commentators felt the war in Ukraine and embargoes on Russian plywood could open up opportunities for tropical producers, notably Indonesian, in the European market. The EU FLEGT Independent Market Monitor stated that “Russia’s invasion of Ukraine is particularly impacting on the plywood sector and EU importers report a huge rush for Indonesian products, with mills encouraged to ramp up production for the market, including of thicker film-faced boards, which the EU mostly sourced from Russia. If Indonesia can increase supply, its share of this market should increase significantly”.

UK imports from Indonesia did indeed rise in the first five months of 2022, up 21% to 30,300m3. However, this was offset by a 9% fall in imports from Malaysia to 29,100m3 and a 27% drop in imports from China to 27,600m3. Imports of tropical plywood from the EU were also lower, down to 5,200 tonnes from over 10,000 tonnes in the first five months of 2020 and 2021. Suggestions are that added complexities of trading with the EU post-Brexit were implicated in this decline.

Overall, UK imports of tropical plywood in the first five months were down 18% to 106,000m3.

At the same time, Chinese temperate hardwood-faced plywood imports increased, indicating that in the UK they were the chief beneficiaries of UK blocks on timber imports from Russia. Concerns were subsequently raised that some Chinese products may incorporate Russian hardwood and were effectively being used to bypass sanctions.

UK imports of tropical hardwood mouldings and decking were up 67% in the first five months of 2022. Demand for these products has been particularly high in the UK since the start of the pandemic, while supply has been increasingly tight, and, with sanctions on Russia hitting availability of non-tropical decking, is expected to become tighter still. Imports from Indonesia were up 86% in the first five months to 2,000 tonnes, from Malaysia up 40% to 1,400 tonnes and Brazil 93% to 1,300 tonnes.

Tropical timber has been losing share of UK sawnwood imports for the last two years, primarily to European, and chiefly French and Italian. However, in the first five months of 2022 tropical sawnwood imports hit 47,500m3, a 49% increase on 2021. There were also shifts in market share between supplier countries, a continuation of trends which set in during the pandemic, with some producers faring better than others in managing logistics and raw material supply issues.

The UK imported 15,700m3 of tropical sawnwood from Cameroon in the first five months of 2022, a year-on-year rise of 14%, while imports from Malaysia, which had reduced significantly in recent years, were up 65% to 10,000m3. Also from a very low level, imports from Ivory Coast were up 170% to 2,500m3, while those from the Republic of Congo remained below pre-pandemic levels, but were up 430% on 2021 at 2,100m3.

Imports of Brazilian tropical sawnwood rose 3% to 1,900m3.

Imports of tropical sawnwood from the EU had also lost ground post-Brexit, but this year recovered, up from 4,800m3 in the first five months of 2021 to 10,800m3.

Price inflation accounted for most of the rise in value of UK tropical wood furniture imports in the period. It reached US$374m, an increase of 28% on 2021. Volume-wise, imports were up just 3% to 78,000 tonnes. Imports from the UK’s biggest supplier, Vietnam, were up 28% to US$82m, Malaysia 6% to US$67m, India 47% to US$45m, Indonesia 53% to US$39m, Singapore 2% to US$27m, and Thailand 25% to US$9m.

Positivity in the UK timber market generally in the first half of 2022, including tropical, is now reported to be diminishing, with a range of factors adversely impacting confidence. Timber Development UK lists these as inflation pushing toward 10%, with drivers including the Ukraine war-induced jump in energy costs, and declining confidence in construction, with the Construction Products Association revising its 2022 output growth forecast from 4.3% to 2.5% and predicting growth of just 1.6% in 2023. Other drags on the economy include sinking consumer confidence, with the cost of living crisis seeing the GfK confidence barometer dropping to its lowest level since 1974.

The government’s recent mini-budget, or fiscal event, further rattled markets of course, and taking all the negative indicators into account, the Bank of England, revised its third quarter UK GDP forecast from 0.4% growth to 0.1% contraction and said it believed the economy was already in recession.

According to comments from UK hardwood traders, the sector enjoyed a strong first five to six months in 2022, with some reporting a continued pick up in tropical. After a summer dip, business strengthened again in September and October, but not apparently reaching levels enjoyed earlier in the year. While a fall in container costs has made Asian timber more affordable, African suppliers are being hit particularly hard by global energy price inflation. The UK economic situation is now reported to be resulting in more piecemeal ordering by hardwood customers, with less forward buying, and is expected to slow trade generally into Q1 2023, beyond which businesses were reluctant or unable to forecast. The watchwords, said one, were “cautious realism”.