20 | Sector Market Update: Hardwood
SUMMARY
■ Hardwood demand has rocketed ■ One importer’s normal monthly trade in December doubled
■ US white oak now costs 40% more than a year ago
■ Some importers have had trouble with the switch from the EUTR to the UKTR
SUPPLY STRAINS TO MEET SOARING SALES
The hardwood trade is bullish about demand, but sourcing enough timber is another question. Mike Jeffree reports
While some experienced a seasonal dip in December, the general consensus among UK hardwood suppliers was that demand through the last months of 2020 into the first of 2021 was good to exceptional.
“It’s been full on,” said one importer distributor. “If we couldn’t make money in this environment, we never could!” The brake on businesses doing still better has been supply. The problem was highlighted in the last hardwood report, but it’s reported to have worsened and prices have risen accordingly. “A range of factors have coincided, from Covid-19, of course, to poor weather delaying harvest from some sources and soaring Asian freight rates. Throw in rising demand globally and it’s the perfect storm,” said an importer. “With North American, in particular, we haven’t experienced a supply situation like it.” Another importer agreed. “If we could get the wood, we could sell it. Trouble is we can’t get sufficient wood.”
After slumping to 30-40% of normal levels when the pandemic struck from March into May, hardwood suppliers say sales quickly moved on to an upward trajectory. Most say they haven’t deflected since. “Demand took off like a rocket, doubling, tripling, quadrupling,” said one international trader.
Above: European oak prices are up 5% this year and expected to increase further
TTJ | March/April 2021 |
www.ttjonline.com
An importer experienced the same “wood fibre frenzy”. “We’d usually expect to do 60-70% of normal monthly trade in December. Instead we did 120%. We hit the ground running in January and February’s looking OK too.” The much-publicised surge in the home and garden improvements sectors is seen as one
factor behind the buoyant market. “Consumers stuck at home in lockdown and on furlough are converting their properties to a living-working space or taking the opportunity for some refurb,” said an importer. “While some may be wary about spending due to post-Brexit job uncertainty, others also have surplus money to invest from not going out or taking holidays – and UK annual holiday expenditure is around £60bn.” Another reported “booming business in anything to do with construction and gardens”.
The general joinery sector is also busy. “Shopfitting, understandably, is flat, but other joinery customers say they’re flat out,” said an importer distributor. “As a result we’ve got the lowest bad debt we can recall, customers aren’t shopping around as much and we’re getting a better margin.” An international operator reported similar levels of construction and home improvement activity elsewhere in Europe. “We saw first signs of growth in Holland and Belgium, next France and Germany then the UK,” they said.
The fact that hardwood demand is growing internationally is one reason for tightening supply. “The key buyers, in particular, are back in the market big time,” said an importer. “China has come back from Covid exceptionally fast and US construction is running white hot, with an increase of 200,000 housing starts in 2020.” Adding to constraints on availability of North American in particular is that supply lines have been unable to get back to pre- pandemic output levels.
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