There is growing evidence around the UK that the shortages predicted earlier in the year are materialising. Late shipments are common from the Baltic states and Russia and, combined with lower stock levels at the quayside and in importers’ yards, they have contributed to steadily increasing gaps in all specifications.

As one agent described the situation, ‘turnover could easily be doubled if adequate supplies could be located. Getting supply and demand to match at the same time never seems to happen’.

Forward demand for both redwood and whitewood specifications is strengthening. Although there has been some recovery in the redwood joinery market, prices for whitewood carcassing and fencing have proportion-ately advanced further, with certain items such as feather edge boards pushing ahead by as much as £8/m3.

The Baltic states are generally still struggling to catch up from the effects of whitewood log shortages which forced many of the sawmills to cut production. With log prices still running at higher levels, Baltic shippers are resolved to hold out for higher prices from the UK and, according to several agents, considerable ground has already been made.

Demand for CLS has been growing, and prices have been influenced by the global market situation, in particular by the higher levels paid in the US and increased demand in many parts of Europe.

Some Baltic exporters have continued to improve their trade links with North America where they see a growing opportunity to sell more volume and obtain better returns.

With the tariffs affecting supplies across the border from Canada, US buyers are expected to lean further towards European sources for their whitewood as the duties begin to bite and Canadian lumber costs begin to rise. All these factors are influencing the way in which shippers view the price levels currently paid by the UK.

According to several agents, the UK and Ireland are seen as some of the cheapest markets in Europe, and this is likely to encourage shippers to offer less volume to British buyers as specifications are sold to other markets. For example, whitewood in Holland and France is very firm while Nordic redwood fifths and sixths are reaching higher prices in North Africa.

Shippers’ mood

A similar attitude to the Baltic shippers exists within Sweden and Finland where a number of agents have described the shippers’ mood towards the UK market as ‘extremely bullish’. Although prices for kiln-dried, strength graded whitewood have returned to levels of around SKr1,750/m3 fom, there are still some sawmills which are not interested in producing for export at this level. They prefer to sell their production into the domestic market as sawfalling grades, giving them a similar return without the additional cost of strength grading.

The redwood market has been changing, with a greater emphasis on forward sales, and several sources have confirmed that demand has been growing for medium-term contracts, with less accent on prompt sales. Shippers have suggested that the move towards forward business is a signal that there is a growing confidence in the UK market; buyers are becoming less reticent to make commitments as opposed to buying just in time. In what they now see as a rising market, exporters are reluctant to agree contracts beyond three months unless the price is at a higher level. Some redwood shippers have set their sights on a further £5/m3 for the fourth quarter, but this might turn out to be over-optimistic if demand begins to weaken.

The wider sideboards for planing are in short supply, particularly 25×225 in both fifth grade and unsorted which is leading to more deep cutting from thicker sections.

Chilean pine

Turning to South America, there has been an overall reduction in the supply of Chilean pine as cheaper pallet wood, such as aspen from Europe and the Baltics, has pushed the Chileans out of the market. Chilean mouldings have not been overly successful as UK buyers prefer the features of slower grown Upper Gulf redwood. However, a substantial volume is shipped to the US for use in the DIY sector, sold knot-free and finger-jointed.

There is still one shipper selling kiln-dried carcassing to the UK, machine strength graded and packaged to length. The other mills have withdrawn from this market because of poor returns on price and the high volume of rejects produced on the grading line to meet UK standards.

There is an influx of further investment into Chile, the latest being an announcement by Louisiana-Pacific that it is switching assets worth US$600m from the US to expand its panel production in Chile and other parts of South America. Copihue is seeking to increase investments by US$10m over the next two years in order to boost its sales and production.

All sources have confirmed the continuing strength of the UK decking market this year with most expecting volume to exceed that of 2001. One contact said that demand for all garden-type structures was stronger than anticipated and the shed manufacturers were busier than ever. A lead-in period of 12 weeks is not uncommon in the current climate, but demand for sheds has become more concentrated in a shorter space of time, with virtually nothing happening over autumn and winter.

This is a sentiment shared by suppliers to the building industry where seasonal trends are becoming more accentuated. One major roofing contractor stated that the company could budget for only 36 weeks’ work out of 52 as the increasing tendency for milder wet weather was having a noticeable effect on working practices.