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is in the process of addressing, and timber does have a price advantage over metal and concrete as well as stronger environmental credentials.
Turning to forestry matters, spruce bark beetle infestations have resulted in cutting restrictions in the Baltic region. The authorities have declared a moratorium until they are satisfied the infestations have passed, and processors were advised the restriction would be lifted by the end of June. In addition to pest infestations affecting logging activities, the hot weather is posing fire risks due to the ultra-dry conditions in forests across the globe. Swedish contacts have reported operations being restricted and in some areas kept to the evening, when it is a cooler, to reduce the fire risk. Forest fires can have a devastating effect on the environment, health and the economy. In Canada there are record-breaking forest fires on such a scale that according to satellite monitoring, the smoke has actually reached parts of Europe. If this occurred in Scandinavia on the same scale then the reduction of raw material would dramatically alter the European softwood market dynamic. According to sources in the pallet wood
sector, exports from Latvia have fallen and UK prices are proving very tough. Nordic production of kilned and HT boards is fairly stable and demand for export packaging is holding up well.
Joinery quality productions are steady and prices are much less volatile than in the past. Some importers have reported increased demand for redwood unsorted and fifth grades for mouldings, planed goods and general joinery contracts. A strong driver for this market is the refurbishment market, where homeowners are trying to add extra value to their existing or newly purchased properties.
As the trade is now halfway through the
year, it is interesting to reflect on some of the statistics that shaped today’s market, and compare estimates to the actual progress of softwood as far as collected data will allow. It is accepted that the most significant change to the softwood market began with a surging demand during the lockdown in 2020. Then in the following year, 2021,
Table 1: UK Softwood Imports m3 2013
2014
imports breached 7.5 million m3
as traders
and producers sought to catch up with outstanding volumes and feed the market. Some companies used the 2020 sales impetus as a model for their 2021 budgets and bought more softwood products than they would usually commit to on the forward market, anticipating a continuing upward trend. This full-on buying stretched the supply chain and inevitably forced up prices, not just in the UK, but also across Europe and the US. Early signs of a cooling in the market started to show around Q3 2021, just as the market became saturated with imports and the inevitable deluge of late shipments caused by mills catching up. At the same time the US market started to fall back sharply, which made the UK look an attractive place to dump some excess European production previously earmarked for American buyers. Offers from Germany and Sweden were being received in the UK below the market level which was current at the time and at a peak. By the time Q3 arrived, the exporters’ quaysides were full of unshipped softwood, and the ports in the UK were crammed with landed cargo. As end-user demand had started to weaken, logistics started to become difficult. Deliveries to the ultimate receivers’ yards were being postponed through lack of physical space, which in turn led to volumes backing up in the supply chain and bottlenecks at the ports. A panic started to set in as the trade could see the physical evidence that softwood supply was well in excess of demand.
Against that background, it is now possible to see the level of volume imported and to equate what actually occurred from the data accumulated.
Each year the United Nations Economic Committee for Europe (UNECE), Committee on Forests and the Forest Industry (COFFI) meets in Q4 with estimates of exports, imports and apparent consumption. The estimates are provided by the member countries, and at November 2022 UK softwood imports for this year were predicted to be 6,250,000m3 For 2022 the estimate was 6,150,000m3
. , but
the actual figure came in below that figure by 473,000m3 5,700,000m3
. taking softwood imports below
In Q1 2023 the actual softwood volume shipped was just below 1,500,000m3 5,000m3
, around
less than the same period in 2022. Last year’s trend revealed that the largest monthly imports landed during April and May at approximately 610,000m3
and 650,000m3
respectively. Then the volumes tailed off through the year, finishing in December at around 360,000m3
. If the same pattern
emerges this year then imports should finally counteract the effects of the 2021 oversupply and keep in balance with this year’s demand, which is expected to be fairly flat. As it took most of last year to bring supply at least under control, importers are still taking an ultra-cautious approach to buying and a continuing market correction is still in force. Products that took off sharply during
the lockdown period were heavily allied to the garden landscaping range, and within that group treated sleeper sizes were said to be over-bought to the point at which some distributors found themselves left with between one to two years’ stock. Looking at the data in Table 1, it can be seen just how hard the UK importers pushed back on purchases during 2022 to correct and compensate for the 1.35 million m3
of
extra imports above the preceding eight- year average. The figures do not reveal the actual demand, but it is fair to assume that there was also a genuine increase in end-user consumption in 2020 and 2021, although it could not have been on the same scale as the imported volume, otherwise stock levels would have noticeably dropped by the start of 2022. To summarise today’s market, demand is patchy but some product ranges are faring better than others. As mentioned in our online softwood e-briefing in June, the shortage of larch has opened up opportunities for western red cedar and modified wood products as replacements. Redwood joinery and packaging wood is experiencing consistent demand, but structural grades and C24 in particular are suffering a sharp downturn.
In the background, the supply chain is thinning in places as some mills have cut back on production to suit the economic climate, while others have been affected by increasing log costs and availability. ■
2015
2016
2017
2018
2019
2020
2021
2022 5,101,000 5,928,000 5,888,000 6,219,000 7,088,000 6,626,000 6,394,000 6,580,000 7,578,000 5,677,000
2013-2022 2013-2020 2013-2023
10 Years 8 Years
11 Years 1 estimated Sources: UNECE COFFI & TDUK
Average 6,307,900 6,228,000, 6,302,636
2023
6,250,000 (Estimate)
www.ttjonline.com | July/August 2023 | TTJ
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