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Above: Pallet wood and packaging grades have been reliable products in making up cargo volumes
The structural market was the most severely affected during 2022, as prices of strength- graded wood crashed by somewhere between 50 to 55%. The downward spiral was mostly led by some Scandinavian forest products groups integrated with pulp markets, and some German producers off-loading goods that might have gone to the US into an already saturated UK market instead. The turn in the market took many Baltic mills by surprise as it was thought the demise of Russian and Belarusian supply would have the opposite effect and shortages would arise. As well as reduced demand and hard competition, the Baltic producers also had to endure high fibre prices from the state forestry which forced many mills out of the market, particularly in the second half of last year.
Revised softwood import figures for 2021 published by the UNECE at the year-end showed a record high of 7,623,000m3
gave a perceived apparent UK consumption of virtually 11 million m3 . The
mean average for the preceding 10 years was 9,256,900m3
in 2021 as a stand-out figure, 1.7 million m3 above average.
The figure of actual utilisation for 2021 is a matter of conjecture, but with estimates of apparent consumption for 2022 down to 8,920,000m3 m3
, it could eventually prove that there has been an excess of softwood supply in the system through 2021 and 2022 of up to 1.5 million m3
. After some painful stock write-downs and exposing apparent consumption , which
combined with a net domestic production of 3,337,000m3
inventory reductions, attention is now turning to the expected level of demand for 2023. The economic back-drop is troubling traders, as rising inflation, tightening of consumer spending and some weakening in the property market is creating uncertainty. Everyone is adopting an ultra-cautious stance, and some importers are buying on much shorter lead- in periods than normal. This will not suit larger producers who have to keep sawmill production above a minimum level and therefore need to gain a higher market share. Generally they would use price as the main weapon to gain advantage. Smaller, more flexible producers have reduced production, and have been converting good quality fibre into fuel products. They have been forced to do this in order to maintain some revenue while others have tried expanding exports of sawn wood into wider markets. For those seeking alternative buyers, weaker global demand has shown that there are no easy profits to be made. In spite of the current uncertainty, some agents and shippers are reporting more interest for February and March shipments, and there is even talk of some price recovery for February.
, and 2023 forecasts at 9,410,00
Agricultural fencing is expected to see a surge in demand during March and suppliers are expecting shortages to develop, causing prices to rise. There has been a substantial trade in Creosoted posts for several years, but regulations are likely to stop these products circulating in the EU and to also affect their use in the UK as well. Creosote, rightly or wrongly, has been acclaimed in the farming community as a preferred
preservative to water-born pressure chemicals. Prices for pallet wood have been more robust than kiln-dried structural softwood. Some ports have seen a noticeable reduction in imported C24 volumes, while the lower packaging grades have been more consistent in making up cargoes.
Graded roofing battens have also proved more resilient to market decline, and batten imports are becoming an ever more important product for shipping lines when making up shipment volumes. Where I-beams and engineered products have made substantial in-roads into the solid softwood joist market, graded roof battens combined with trussed rafters are consistently used on most new standard house builds. Most recently, the UK trade has recently seen some significant changes. One of the leading home-grown producers, BSW Group, acquired UK pallet and packing company Scott Group, while the Danish-based Stark Group bought Saint-Gobain Building Distribution, which includes Jewson. The Stark Group’s purchase includes some 600 UK sites together with a specialist national distribution network of joinery, hardwood and sheet materials.
These major moves indicate that businesses are acting on long-term strategic plans, focusing on acquisition, integration and divestment to re-position themselves for the future. In spite of the ups and downs of timber markets, the product’s natural and environmental credentials make wood the time-tested material through history and the product of continuous development for generations to come. ■
www.ttjonline.com | January/February 2023 | TTJ
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