The onset of spring has generally failed to put a smile on the face of the plywood trade, with many operators claiming this week that ‘too much cheap wood is chasing too few orders’. However, many of the traders contacted by TTJ this week were feeling more bruised than normal, complaining of nothing less than ‘cheating’ in some quarters of the plywood supply chain.
It is alleged that product misrepresentation is taking place to an ever-increasing extent and that by no means do product markings always provide a true indication as to what that product is. ‘The structures in the plywood industry have broken down and everyone is scratching around to make a living,’ said one source. ‘Cheating is going on in a big way and it is a very, very serious problem.’
Another argued that, because some people have been misrepresenting their plywood products, certain types of plywood are turning up in applications for which they are not at all suitable. As a result, he said, ‘these suppliers are ruining their own market’.
There was claimed to be a 10 percentage point spread of Indo 96 list prices being quoted in the UK ‘because like is not being compared with like’. It was also suggested that better prices can still be obtained for genuinely good quality BB/CC grade plywood because there were still companies wanting to buy the right material rather than on price alone.
Allegations of widespread product misrepresentation were not supported in every quarter. One leading operator commented: ‘A lot of people are trying to find reasons why their sales are poor rather than blame themselves. We have had three bumper months.’ What is beyond dispute, however, is the extreme competition in the UK plywood sector. One contact believed that the only long-term result of this would be a ‘radical reduction’ in supply chain numbers.
Far Eastern hardwood plywood mills have reported some raw material problems, with the inference being that log prices are too high for many of them. UK demand is generally described as ‘stable’ to ‘flat’, at the same time as most other world markets are falling short of normal demand levels. Prices are such that many mills in the Far East are thought to have lost considerable amounts of money over the past year. Indeed, it is suggested that, with log shortages and production curtailments in some instances, the Far East would have difficulty responding to any sudden increase in demand.
As if to confirm that the hardwood plywood market is generally bereft of good news, Brazilian virola is said to be ‘weakening like mad’, partly because of a lack of domestic orders.
Elliottii debate
Elliottii pine plywood from Brazil is continuing to provoke widely varying reactions within the timber trade. Nexfor has called for an industry debate on the use of this product in structural applications and has written to architects, roofing contractors, local authorities and the Department of the Environment, Transport and the Regions pointing out that elliottii is being used in flat roofing without having any structural certification.
Warnings about misuse of elliottii have also been given by the National Standards Authority of Ireland and the Wood Panel Industries Federation. Brazilian plywood exporters have argued that those competing against elliottii are simply drumming up negative publicity to serve their own ends. A middle view expressed to TTJ this week held that, if buyers were suitably selective, elliottii was a highly usable product giving ‘the best value around’. The problem lay, the contact said, in recognising those long-established mills with an interest in delivering a quality product.
As for the current market, the price of elliottii is described as both ‘ridiculously’ and ‘suicidally’ low at a time when some of the UK’s leading importers appear to be short of material. One source predicted the emergence of shortages – particularly in 18mm – because of earlier nervousness about buying for May. The same contact acknow-ledged that, even if there were shortages, ‘they should resolve themselves quite quickly because it is easy to source from Brazil’.
While elliottii pine plywood has been moving down in price, the past few weeks have seen substantial increases in the prices of southern yellow pine plywood from across the Atlantic. Sturdifloor was put this week at around US$555-565 per thousand bd ft cif while CDX sheathing was in the US$530-540 band. These increases have been prompted by the onset of spring buying in the US market where, despite all the fears of hard-landing recession, house sales actually established a record in March.
According to a UK-based agent, the prospects for any increase in sales of North American plywood to Europe were fading fast given that there was now an estimated 25% price differential with elliottii.
Exports to the EU as a whole totalled just 69,194m³ last year compared with 102,000m³ in 1999 and 309,000m³ in 1998. The UK was easily the leading buyer and actually increased its imports from less than 28,000m³ in 1999 to 37,415m³ last year, although this figure was still well short of the 96,000m³ recorded in 1998. The Netherlands bought only 15,491m³ in 2000 compared with a shade over 28,000m³last year and 65,000m³ in the previous year, while the Germans slashed their imports to 6,173m³ last year from 21,000m³ in 1999 and 68,000m³ in 1998.
Standards awareness
The fact that the UK was the only North American plywood importer within the EU to show any marked upturn in volumes last year is being attributed in some quarters to increasing awareness of the need to specify plywoods conforming to BS 5268 Part 2 in load-bearing applications. Only last month (TTJ April 7/14), the Timber Trade Federation circulated its list of BS 5268-approved plywood suppliers to builders, specifiers and the trade.
For the moment, however, price is continuing to dictate most purchases. One North American plywood contact confirmed this week: ‘Some of those who have been loyal to US plywood have been a bit wayward of late.’ He expected sales to the UK to be lower this year than in 2000, while consumption of southern yellow pine plywood in Continental Europe was described as virtually non-existent.
Finland has been enjoying a rather more lucrative period with its spruce plywood mills, for example, described this week as ‘quite busy’ and operating on lead times of around four weeks. Prices are stable but an increase of several percentage points was thought likely to be pushed through in the coming weeks.
Lead times were said to be similar for Finnish birch plywood, for which the order book was ‘satisfactory’. The UK and major market Germany have been buying consistently in advance of the mill summer shutdown. Prices, meanwhile, are understood to have stabilised after slipping by up to 10% in the early months of the year.
Prices for Baltic plywood recently increased for a second time this year – rising by around 3-4% with effect from April 1. The increase ‘had been accepted by the market’ and the mills were ‘reasonably busy’, according to one source.
Increases have also been pushed through for Russian plywood. The local economy is enjoying a relatively good spell and the country’s panel producers are said to be able to sell domestically at higher prices than are achievable on the export market. It should be pointed out, however, that there is always likely to be a surplus of material available for sale into foreign markets.
Lead times for the Russian mills are understood to be in the region of four to six weeks, extending to nearer two months on some thin panels. General demand is sufficiently healthy for at least one mill to reduce its scheduled holiday period.
On the news front, International Plywood has confirmed that its first consignment of WPB plywood from China was scheduled to arrive at Portbury last week and that all material had been sold.
Severe downward price pressure is continuing to afflict an over-supplied OSB market as ‘domestic’ producers battle against Continental rivals who, they argue, ‘are scrambling desperately to try to move volume’. Once again, domestic manufacturers have reiterated their intention to defend markets which they feel they were instrumental in building in the first place.
OSB capacity
The supply scene in western Europe appears destined to become even more crowded when the new Agglo mill in Belgium reaches full commercial capacity of around 250,000m³ a year. This is happening at a time when Continental European sales of both OSB and elliottii pine plywood are suffering the effects of a construction downturn.
According to one leading player, OSB prices have fallen by around 20% since the start of this year and are not showing any immediate signs of recovery. He added: ‘Like most panel products at the moment, sales volume is not the problem. It is just difficult to get prices moving along.’
All is not doom and gloom, however, in the domestic OSB sector. Sales in the UK are ahead of last year at this point; lower prices have driven the product into new applications and, furthermore, there is a growing awareness and respect for OSB as a product, according to one leading source. He added: ‘I think prices have stabilised at a low level. Now they will go only one way – and that is up.’
Maintaining the good news theme, UK sales of BBA OSB 3 are said to have been njoying ‘particularly strong’ growth, aided by increased awareness of the need to use BS 5268-compliant materials in load-bearing end uses.
Most satisfying, said one producer, was the level of repeat orders being won since this indicated that those with experience of the product were more than happy with its performance.
For its part, Louisiana-Pacific has reported excellent early sales figures for its BBA ‘no added formaldehyde’ OSB product – dubbed Smart Frame – which is being targeted at the the timber frame industry.
