20 | Sector Market Update: Hardwood
SUMMARY
■ Price rises are set to continue ■ Customers’ order books are healthy ■ Timber is increasingly on allocation ■ The boom in RMI and DIY has been a significant factor
OF HARDWOOD MARKET RELIEF
LITTLE SIGN
Hardwood supply and demand remain seriously out of kilter and the arrival of a breakbulk timber cargo from Asia underlines unprecedented container costs. Mike Jeffree reports
“When Covid struck, we were looking at a full warehouse, next to no orders and very tight cashflow,” said an importer. “Now the warehouse is half empty, we’ve got plenty of money thanks to high prices, but can’t get the wood.”
Above: US four quarter white oak is up 80-100% in price over the year PHOTO: LATHAMS
When people say the only way is up, the implication is generally positive; that things can only get better, or at least no worse. But not in the case of one hardwood importer. They meant they saw no reason why the unprecedented price inflation seen in the market over the last nine months should end any time soon, a view shared across the trade. “The market environment that developed through the pandemic and pushed prices up worldwide is still with us,” they said. “It’s a unique conjunction of booming international demand, plus record transport costs, with restricted global production due to harvesters and mills running short of staff because of Covid-19 infection and implementation of pandemic-safe work practices.”
TTJ | July/August 2021 |
www.ttjonline.com
The better news is that there has been little push back on prices from customers. “From joiners, decking and cladding producers, to builders and garden office- manufacturers, they all report healthy order books. They need the wood, they’re generally not quibbling on price and they’re paying on time,” an importer/distributor said. “Some are given pause by the latest rise and shop around. But they generally come back and pay the price, after finding they can’t get the wood cheaper, if at all, elsewhere.” What has developed into even more of an issue since the last TTJ hardwood report (TTJ March/April), is availability. One market contact described it as a “crisis across the board”, which was driving prices still higher.
Consequently timber is increasingly on allocation. “We’re primarily looking after loyal customers,” said an importer. “And we’re even having to ration timber to them to the extent they’re having to rein back. When a busy customer has to go from two to one shift due to timber supply, it’s pretty sobering.” The consensus is that hardwood demand, after starting to turn around post the first “great lockdown” in April/May/June last year, has been rising ever since. “A significant factor has, of course, been the boom in RMI and DIY, with consumers refurbing and creating home offices, using the money they would otherwise have spent on going out and holidays,” said an importer/ distributor. “The Construction Products Association stated that we Brits spend £65bn on holidays annually, so there’s plenty of surplus cash about.”
Demand is also growing from general joinery and construction. “Joinery customers say sales to hospitality, as well as private consumers, are now also on the up as pandemic restrictions relax,” said an importer. “It seems only shopfitting and exhibition sectors remain depressed.” On hardwood supply, the greatest challenges are still reported in American. According to Judd Johnson, editor of the US Hardwood Market Report, who
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