Shortages have continued to proliferate in the timber trade – and plywood has not escaped this wider trend. For example, industry sources have pointed to a decided lack of hardwood and softwood plywood from Brazil as well as to ever-lengthening lead times on various types of northern European material. In addition, UK stocks of Chinese poplar plywood are described as relatively thin.
Recent weeks have seen little evidence of price weakness anywhere in the plywood sector, despite the fact that UK order levels have been no better than steady. One expert noted: “Demand is not fantastic at street level but there is a lot of inter-importer trading going on.”
Rising freight costs
One of the key drivers in the Brazilian plywood market has been freight costs, with shipping lines said to have raised their rates from the south of the country to Europe by as much as US$500 per container. This increase has duly added around US$10 per m3 to prices of hardwood and softwood plywood which were already some US$25-30 per m3 higher than the levels prevailing in the middle of the first quarter. Experts noted that 7% duty would shortly be added – probably towards the end of May – and that market conditions suggested “further price increases to come”.
Brazil’s mills have been experiencing reasonably good demand for both softwood and hardwood plywood although supply has become somewhat difficult owing to the capacity and labour cutbacks implemented by mills during leaner times, as well as to logging difficulties created by wet weather. UK stocks of elliottii pine and Brazilian hardwood ply are said to be reasonably short.
Lack of supply from Brazil is among the reasons why lead times have been stretching out in northern Europe. In Finland, for example, birch plywood mills are said to be “sold out for the rest of the year” and generally operating on an allocation basis. According to one UK representative, orders placed in early May were unlikely to find a delivery date before September. In response, prices are continuing their upward march, with one manufacturer spokesperson confirming this week that increases of 10-20% – depending on product – were to be implemented from July.
Finland’s spruce plywood mills are targeting a somewhat less hefty price increase of, typically, 4-5% for the second half of 2007. Nevertheless, producers are “extremely busy” and delivery dates are extending into August.
On the back of raw material supply issues and strong demand both at home and for export, the lead times on offer from Russia’s plywood mills are generally out at between three and six weeks, while prices have sustained double-digit percentage increases since the start of 2007. One expert observed: “The mills have torn up their price lists and have gone back to asking ‘how much will you pay?’.” Firm prices are also emerging from Latvia where mills are being forced to contend with raw material and shipment issues, as well as rising labour costs.
Hardwood plywood
This week UK demand for Malaysian plywood was described as “steady but not spectacular” and stocks are at decent levels. And Chinese hardwood ply is understood to have seen flatter prices of late following an increase of around 5% after Chinese New Year. But contacts also reported continuing problems with shipment delays in China, with one saying that cargo due to be shipped in January/February had only just left.
Looking at UK hardwood plywood market share, according to independent analyst timbertrends, China and Malaysia cemented their domination of the scene in 2006. Imports from the former rose 65.7% from 194,000m3 in 2005 to 322,000m3, while the latter’s exports to the UK jumped 31.7% from 144,000m3 to 189,000m3.
Despite a rise in the second half of 2006, UK imports of Brazilian hardwood plywood fell 1,000m3 to 143,600m3 while purchases from Indonesia fell 53% to 36,000m3.
Overall, UK hardwood plywood imports from the four countries mentioned above climbed from around 560,000m3 in 2005 to 690,000m3 – an increase of more than 23%.
Chinese imports gathered momentum at the start of 2007 when incoming volumes amounted to 49,700m3 in January compared to 47,000m3 in December 2006. The pace of imports slowed in February but, after the first two months, Chinese plywood shipments were running 300% ahead of the corresponding period last year at 73,200m3.
Indonesian imports fall
And with Malaysian imports rising 92% to 42,200m3 in January-February this year, the two countries accounted for more than 70% of all hardwood plywood entering the UK. Brazilian hardwood plywood arrivals dipped from 17,200m3 to 15,400m3 over the same periods, while Indonesian imports fell from 7,000m3 to just 3,600m3 – despite a slight increase in volumes during February.
The statistics do not make comfortable reading for Indonesian plywood representatives, one of whom called for the EU to “take action to stem the flood of Chinese plywood coming into the UK” because it was “damaging to the market in many ways”; and also to review GSP status which currently placed Indonesian material at a disadvantage to the Malaysian competition.
“I can’t understand the EU’s thinking,” he told TTJ this week. “GSP was designed to assist developing countries to grow and I can’t see any justification for Malaysia having a lower level than Indonesia. This is helping to price Indonesian material out of the market.”
Certification issues
Another Indonesian plywood specialist expressed deep concern at the legality, sustainability and technical properties of a significant proportion of plywood entering the UK market.
“Certification is a mess because some operators can get round the requirements,” he said. “It is very sad because a lot of people out there have invested in certification.”
In particular, Chinese plywood continues to attract diametrically opposed comments. From the negative perspective, contacts bemoan ongoing “misrepresentation” of product by the mills, thereby making life “very frustrating” for those offering competing supplies. Particular attention has been drawn to glue bonds and formaldehyde emissions.
On the positive side, sources point to Chinese plywood’s success in breaking into new markets; for example, one interested party noted that trial orders had been placed by the UK caravan sector for lining and furniture applications traditionally covered by Indonesian ply.
