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timber now and its around £100/m3
up
on this time last year,” said another, speaking in March.
A February year-on-year comparison revealed that one major primary processor was down 8.8% on volume sold (it had a lot of stock on the ground in February 2020) but up 26% on revenue. Its figures for March 2020 showed that untreated KD C16 was fetching around £160/m3 £209/m3
, down from
in March 2019, due in part to the general election and Brexit issues. “In March this year it’s gone up 66% to
£266/m3
,” said the sawmiller, adding that he anticipated that would rise to £275 in April, representing an uplift between March 2020 and April 2021 of 71%.
The average price for another prime commodity – treated featheredge – was £220/m3
in March 2019, £191/m3 in April. in March
2020 and, at the time of interview, was set to hit £305/m3
The cause of the increase, said the contact, was the pull of demand and the push of log prices and he didn’t see it stopping. “I think by the end of 2021, home-grown KD C16 will be £330/m3
that merchants who are selling C24 are talking about £400/m3
. I’m already hearing . I’m also hearing that
roofing battens are being sold at £400/m3 it’s unheard of.”
–
The rise in sawn prices is welcome, obviously, and for some it was an inevitability. “As a commodity, timber was way too cheap, especially when you look at all the costs involved,” said a major sawmiller. “Three years ago people thought £250 for C16 was never going to happen but I said it would be here soon. The market dropped in 2018/19 but now it’s going to where it was always going to be. I don’t think prices will suddenly go down again – I think they are here to stay.”
“This could be the beginning of the new norm,” agreed another contact. “Maybe timber prices are going to be 300, 350, rather than 150, 180, 200.”
A pallet specialist said sawn prices would continue to follow those in the UK and that he was having to compete for material. “Last year we were paying €160/m3 pushing €260/m3 higher,” he said.
and now we’re and we’re expecting it to go
And, he added, the pallet sector is having to compete with the fencing sector for supply. “The fencing sector normally falls off from September to March but it’s been strong all the time and now we’re hitting another [fencing] peak. There is a huge run on fencing material in the UK and Ireland at the moment, to the detriment of pallet timber. This is what has been the challenge – to make sure we have got enough timber to cover both sectors.”
Demand has been exceptional, with one contact saying that he was “everyone’s friend but everyone’s enemy” because so many requests for increased supply had to be turned away.
“Demand has been unbelievable,” said another major sawmiller. “The demand is outstripping where we were last year but our message is that we have always had that long-term commitment to the UK. We export an average of 70% [of our production] and we haven’t deviated from that.
“What is important is that in a strong
market we will look after our loyal customers.” “We’re working normal hours and cutting the same amount of timber as last year,” said a contact from a mid-sized sawmill. “The difference is that everyone we’re dealing with wants 50% more. Lead times are going out the window.”
A major mill that includes construction, fencing and pallet timber in its mix said that
its exports to GB would remain strong but that volumes would remain “normal”. What had changed was the mix, with one of the shifts for construction wood destined for consumption in Ireland being “turned into all things fencing”.
“It was the right thing to do, both in terms of demand and profitability,” said the sawmiller.
On the subject of Ireland’s domestic market, demand from the country’s own construction sector has been in the doldrums because building sites were stuck in a protracted lockdown and didn’t begin to re-open until mid-April. A sharp spike in Covid cases after Christmas had led to the restrictions. “Ireland has faced the longest period of workplace lockdown anywhere in Europe and it’s the only country where construction hasn’t opened since Christmas – this is a big issue,” said a contact, speaking at the end of March. “We were surprised that construction was shut down bearing in mind the phenomenal housing crisis in Ireland.” “There is huge pent up demand in Ireland,” agreed another. “Only 15,000 houses have been built these last two years and that needs to get up to at least 30-40,000 per year.” The other trial Ireland has faced is Brexit but it’s fair to say that this has gone more smoothly than had been feared. “It’s a manageable inconvenience,” said one major sawmiller.
Above: The mills are still committed to supplying their UK customers
This, however, is almost entirely down to preparations by Irish suppliers. One TTJ contact said it had its final plan in place in November, tested it in December and that day one of 2021 had been problem-free. “We’ve remained as operators and that has meant we’ve been able to control everything in-house and take the burden of paperwork and customs declarations off our customers. There have been no upsets to deliveries.” “The UK market is very busy and Brexit means extra paperwork as customs entries have to be carried out in advance,” said one fencing and pallet specialist. “Unfortunately, this prevents last minute changes to load make-ups and reduces flexibility.” “We’re still moving material into Great Britain and Northern Ireland,” said another contact. “I believe there is a bigger issue getting material from GB into NI.” He did note, however, that “a lack of urgency and a shortfall in administrative capacity has led to delays in obtaining phytosanitary certificates for shipments of logs and sawn timber with bark”. Another contact remarked on the “lack of clarity on phytosanitary certificates from all parties”. However, one pallet manufacturing contact said he’d “ramped up dramatically” on kiln capacity to ensure his company had sufficient ISPM 15 capability. “A lot of our product is exported so we had to be ready to roll.” ■
www.ttjonline.com | May/June 2021 | TTJ
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