With the US housing market slowing to a trickle and UK softwood stocks high, it’s not an easy market for suppliers but they are determined to maintain a good relationship with the UK

Sweden

Bertil Stener, director of the Wood Programme at the Swedish Forest Industries Federation

Sweden is the largest supplier of sawn wood softwood products to the UK, and the UK is the largest export market, by far, for Swedish sawn wood producers. The two countries are thus strong business partners and have been for a long time.

Last year was a successful period for Swedish sawmills. The industry’s business expanded and total annual production reached a new record of 18.6 million m³. Exports of sawn and planed softwood to the UK amounted to 2.85 million m³, or 25% of total Swedish exports.

The last time the industry could show these kinds of figures was in 1973.

The raw material supply situation is relatively favourable in Sweden, as the country hosts the largest available (and growing) roundwood resources in Europe. Swedish sawn wood producers are planning a lot of new investments to expand business and create further value. But as of autumn last year, the market balance for some grades has weakened.

The deterioration of the US market and the all-time high production in the major European producer countries has had an impact and the somewhat turbulent market makes it difficult to predict the development for the coming months. But the Swedish industry is still positive. We continue marketing and product development efforts as before, especially in the UK.

One example of the good co-operation between the UK and Sweden is the successful wood for good campaign. Wood for good has strongly contributed to an increased interest for the building and

living with wood sectors in the UK. The Swedish industry wants to continue its efforts in promotion and also product development, for example doors and windows. This will help increase demand for wood, not only in the UK, but in the whole of Europe.

Germany

Dr Thorsten Mrosek, head of marketing, international at the German Timber Promotion Fund, and Denise Allen, a PhD candidate at the University of British Columbia

With nearly 31%, or over 11 million ha, of its landbase under forest, Germany stewards a total wood supply – softwood and hardwood – of 3.4 billion m³.

With ongoing investment in high-end technology and value-adding, German sawmills are realising their best export results in years and a strong business relationship with the UK – one of the top five export destinations for German wood products – is driving significant market developments.

These investments mean Germany produces a range of technologically advanced wood product, including structural materials and value-added wood products for green construction. Speciality softwood products range from solid structural softwood timber to glulam timber beams and columns for residential and large-scale structures, including bridges.

Last year, UK imports of softwood timber (sawn timber and planed wood) from Germany more than doubled from 337,000m³ in 2006 to 770,000m³. Through ongoing dialogue with both architects and building experts in the UK on the advantages of modern wood products, and co-operation on domestic UK efforts to promote the use of wood by experts and consumers, these mutual business relationships continue to grow and diversify at an exciting rate.

Latvia

Arturs Veispals, director of port company Jaunzeltini Ltd

The market is very difficult at the moment but it is not only in the UK, it is throughout Europe as well – and across all industries, not just timber.

In the Baltics, people are worried about the future because many factors are affecting the competitiveness of Baltic timber. The downturn in the global economy is probably having the greatest impact but there are also other problems which are pushing up the price of Baltic raw material. Harvesting levels have been reduced over the winter as the mild weather has prevented access, while in contrast, western European traders have a lot of windblow material which they are selling cheaply in order to move it quickly.

With the cost of raw material high, and lower demand weakening prices, some Baltic companies are considering taking downtime. Our raw material costs are higher than those in Scandinavia but our labour costs are still cheaper so if we could regulate the raw material cost our price could be comparable.

So where will the Baltic timber industry be in three years’ time? The Baltics will continue to produce timber – the industry is well established, the mills are flexible, they can change their production, and we can produce bigger specifications.

Ten years ago the region was exporting only sawn logs but now it has developed value-added products, and is looking for further niche markets and bulk cargo, such as woodchips and pellets. Timber traders also aim to develop a larger domestic market, and are undertaking a promotion campaign to this effect.

But Baltic producers will continue to supply the UK market. We are close to the UK so our shipping costs should be cheaper than Canada, which will go back to the US once that market picks up.

Canada

Isabelle Des Chênes, vice-president, market relations, at BC Forestry Innovation Investment

British Columbian softwood lumber exports to the UK have risen steadily from 87,268m³ in 2003, including a 10,000m³ jump from 2005, to 111,521m³ in 2006.

This lift carried over into 2007 and, although UK buyers reduced their purchases in the second quarter as wood had arrived faster than they could handle (much of it from German mills), in the first six months British Columbia shipped 80,930m³ to the UK, compared with 55,890m³ in the second half of 2006.

The recent spike has been due to a dramatic increase in SPF sales. However, western red cedar has a solid and growing position in the UK market, accounting for around 30-50% of BC sales.

While uncertainty surrounds global economics and the softwood trade, the opportunity to ship BC SPF lumber to the UK appears to be one of the stronger export opportunities available for overseas exporters. However, there are some negative factors – lumber prices in general are trending down; the housing market is potentially peaking and could contract sharply; whitewood lumber imports from Germany are on the rise, adding to what many are describing as an oversupplied market; and the Canadian dollar continues to strengthen against the pound, as well as the currencies of most competing supply countries.

Despite these negative issues, the UK represents an alternative market to the dismal SPF market in the US.

There is also an opportunity or challenge for BC softwood plywood exporters to the UK to educate the market about the superior performance and quality of BC plywood over lower-priced plywood imported from China, Brazil and eastern Europe. In the first quarter of 2007 BC plywood exports to the UK shot up while the softwood quotas were not filled, but this was followed by a partial reversal in the second quarter. This trend matches the overall pattern of plywood shipments to Europe and has been attributed to BC producers looking for alternative markets to the US (where prices were trading at well below cost). For the second half of 2007, speculation is that volumes will be off from the first half but still well ahead of the 740m³ shipped from BC in the second half of 2006.