Continuity of supply is one of the key problems vexing Ireland’s timber trade.
One contact said redwood purchasing prices had risen 12-13% so far in 2006 and were still going up. He quoted purchasing prices in the €227-235/m3 range.
He said he had received no carcassing for several months, and there was none in the pipeline. “I’ve had to walk away from an awful lot of business because I cannot get the supply.”
Volumes from the Baltics are low, with Baltic mills finding it particularly hard to get hold of Russian logs. And many timber producers are finding more attractive markets. Value-added products such as CLS are being shipped as far as the US, Australia and Japan, where higher prices can be achieved.
There has been talk of the possibility of sourcing from Canada to help boost supply. The economics of this may depend on ordering large enough volumes and obtaining the correct grades.
One merchant told TTJ that price increases were being passed on to end users. He said the decking market had been good in 2006, buoyed by the good weather, but the market was “very competitive” because of so many people offering decking timber. The construction sector has also been busy.
MDF prices have also been rising. One contact estimated prices have risen by 20% in 2006, but producers’ energy cost increases are eating up the majority of the rise.
DIY business
A trend in the merchanting market has been more companies gunning for a slice of the DIY business, while maintaining their trade customers. One operator who has opened up a new DIY outlet said he was now selling candles and other homeware goods.
On the sawmilling front, mills are not generally viewing the imported timber shortage as a big opportunity. This is largely due to them having their own concerns about supplies. “Interesting times”, was how one mill described the Irish sawmilling market at the moment. He thought trying to capitalise on the situation would lose him customer loyalty in the long term. Customers were looking for assurance of supply, he said.
He described Coillte‘s proposed log harvesting projections for 2006-2016, as “worrying”, with a lack of clarity in the figures and “too many caveats”. But despite this, the sector is buoyant and there could be an opportunity to increase market share in the UK.
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“ I’ve had to walk away from an awful lot of business because I cannot get the supply ” |
Another sawmiller said prices were rising more quickly than they could put them up and reported enquiries from the UK. However, with log prices also rising, benefits are not great.
“Everybody is looking for timber that we do not have,” he added. “All the sawmills are in the same boat, there’s not enough wood on the ground. I do not see any short-term solution unless the Canadians come along and drop a couple of million m3.”
A lot of timber is on order with mills but, without the additional supply, mills feel the need to stay loyal to existing customers.
Sawn timber prices
Prices for home-grown sawn timber in November were quoted as €212-214/m3 for C16 grade, compared to about €193 at the start of the year.
The construction sector has again been busy this year, with the housing market continuing to defy expectations with its amazing growth. One new report by AIB Global Treasury suggests completions could reach a record 93,000 this year. Output reached 80,957 in 2005. AIB predicts output will remain at elevated levels in 2007 and 2008, though falling back from peak levels.
House price inflation, which has seen 13 consecutive months of 1% or more increases, is also expected to fall back.
Increasing net inward immigration is helping to drive new housing, with 75,000 people forecasted to enter Ireland in the year to April, 2007. Romania and Bulgaria’s entry into the EU in January heralds further possible growth.
Coillte has strengthened its role as an industrial producer of wood products after receiving clearance for its acquisition of Weyerhaeuser Europe Ltd from Ireland’s Competition Authority. The deal, which includes Weyerhaeuser’s Clonmel MDF plant, gives Coillte ownership of two major panel producers in Ireland – the other being the SmartPly OSB operation.
Coillte’s log harvest projections for the next 10 years have not yet been published but it has confirmed that log supply has peaked from the growth in the late 1990s.
“Sales are going very well, said a spokesperson. “There is very strong demand in Ireland for construction products.”
