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of melamine, used in the resin, which is affecting production. “It’s starting to impact on how much can be produced,” TTJ was told. While chipboard manufacturers have focused a lot of attention on value-added decorative boards, this too is now becoming a juggling act as papers are in short supply. Lead times for some decorative papers are now into next year. “At times we can’t produce specific décors or we have to be careful because we will run out of certain papers,” said one producer. “It’s difficult to accept orders ahead because I don’t know whether we will have the paper. It’s frustrating because demand is very good.” These raw material supply issues, and a recent big hike in energy costs, mean manufacturers have continued with product price increases – and there may well be more, depending on raw material costs, a contact said.
The focus on value-added product lines has helped the buoyant kitchen and bathroom sectors but customers relying on P1 and P2 have struggled to secure product. “The furniture industry is under duress,” one contact told TTJ. “They have to pay higher prices or use other products – MDF, OSB or plywood – which then puts pressure on those sheet materials.”
Chipboard supply is also affected by what one contact described as “minor Brexit issues” impacting on imports. “Brexit doesn’t make it easier to import than before, it probably makes it a bit harder, therefore in the current market it’s one more reason not to bother and that has shortened availability of P5 in the UK,” he said. That said, product is still arriving on UK shores and, unsurprisingly, volumes are up on 2020. According to the Timber Trade Federation’s (TTF) latest statistics, in the period from January to May this year imports were 21.2% higher than the same period in 2020. Germany, Belgium and Portugal accounted for the bulk of the increased volumes.
The value of imports has also risen – up 49% in the first five months of 2021, with an average price rise of 29%. The value of standard grades grew by 31%, while MFC and “other particleboard”, which includes decorative laminated board, each rose in value by 60%. The TTF says the value of decorative laminated chipboard increased by 150%, and the volume 120% during January to May this year.
On top of chipboard’s availability issues, the supply chain is also being frustrated by the UK’s well-publicised haulage shortage. The problem is largely the result of people not being able to sit their HGV driving tests because of the Covid pandemic and it’s been exacerbated by drivers being ‘pinged’ to self- isolate. European drivers returning home after Brexit has also reduced the number available.
The Road Haulage Association estimates the UK is short of 100,000 HGV drivers and it will take at least 18 months to train enough drivers to tackle the shortage. In late July some supermarkets were unable to offer certain milk brands because of delivery problems and Tesco offered a £1,000 joining bonus to entice drivers to join the chain. This may have helped Tesco but of course it couldn’t increase the available driver pool. One merchant had waited 10 days for what was meant to be a next-day delivery of building products while another said it was difficult to find drivers for its own fleet. Collecting products from docks and distributing to branches was particularly challenging.
Another contact said he was “just getting by” with securing transport and he expected the situation to worsen in the autumn as post-lockdown life gets busier and the economy grows. There will also shortly be additional demand for lorries to transport Christmas goods. All timber markets have been running red-hot since the first Covid lockdown last year and there are mixed views on how long this situation will be sustained. In a Market Statement published in July, the Confederation of Timber Industries and Swedish Wood forecast that the demand/ supply balance would reach a “major bottleneck in Q3”, but there was change in the foreseeable future. “We believe the current position will change and there is optimism that the current extremes will abate in the not-too-distant future, returning us to a more recognisable demand and supply balance,” the report said. Among TTJ’s contacts there were mixed opinions as to what may happen in the chipboard market over the next few months. Some agreed that the throttle might ease off a timber and panel products market that’s been operating at a blistering pace, but that’s not to say it will drop off a cliff.
“I think we saw peak wood in July,” said a merchant. “It’s not going to crumble, there’s far too much demand for that, but it will fall back a bit.”
With Covid restrictions being relaxed throughout the UK and travel now possible again, many people may decide they’ve invested enough of their disposable income in home improvements and instead would prefer to spend money on their newly reinstated freedom. Added to that are the approaching winter months when there is usually a seasonal dip in demand. If this were to happen, the fear is that some traders, seeing demand come off slightly, will overreact and start dropping prices too quickly. One contact said there were already instances of chipboard being sold below its replacement cost, although he put this down to ignorance of the market price rather than deliberate price-cutting. Others, however, believe the current level of demand will continue. “We don’t see any change on the horizon,” said one contact. “We’re in the middle of the holiday season and demand is way above normal and in autumn there is traditionally even more demand. Chipboard is sold out and there will be no change well into next year.” Another contact predicted that the supply issues surrounding chipboard raw materials would affect finished product availability well into next year.
When everything from raw materials to transport is under pressure and with Covid continuing to affect our lives, it makes forecasting even more difficult than usual. Traders are confident demand for chipboard will remain strong but other factors will have an influence.
One contact summed up it as “dancing through various holes in supply”. “And I don’t see the end of it, whether it’s melamine, decorative paper or transport,” he said. “Nothing is safe at the moment, nothing is secure.” ■
Above: The focus on value-added lines has helped the kitchen and bathroom sectors PHOTO: IDS
www.ttjonline.com | September/October 2021 | TTJ
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