20 | Sector Market Update: Plywood & OSB
SUMMARY
■Container rates have risen to US$8,500-10,000
■UK demand for plywood and OSB is weak
■Sales may not pick up until Q1 next year
■OSB prices are at similar levels to July 2020
TRADERS HOLDING OUT FOR BETTER TIMES AHEAD
A hike in container rates and weak demand for plywood, and OSB, are creating little cheer for UK traders. Keren Fallwell reports
UK plywood traders are not having the easiest of times and many will be pleased to see the back of 2024 and the prospect of better times ahead.
Early in the second quarter this year sales were improving on late last year, the supply chain was getting used to the longer shipping times to avoid the Red Sea and the container price had more than halved from US$6,000 to under $3,000.
The relief was short lived, however. Container rates have now rocketed to
US$8,500-10,000, depending on the destination, adding around US$125 per m3
to
the cost of plywood in just a few months. The cost hike is again because of the continued re-routing and also the effect of shipping lines taking vessels out of service in response to lower demand. Shipments are also delayed: one plywood importer told TTJ he had orders arriving two months late. He was clearly frustrated by the situation and said the sudden price increase was inexplicable.
“Not long ago the rate was US$2,500 a container. Now we’re talking about a US$6,000 increase and I’m pretty sure it doesn’t cost US$6,000 to divert a ship from the Red Sea to the UK,” he said. There has been no change in FoB rates, however, over the same period.
An importer said the container rates, which largely affect shipments from China, Malaysia and Indonesia, made it almost impossible to import plywood at that price.
In comparison, break bulk is “just about affordable” – around the equivalent of US$7,500 a container – but this is generally only an option for those with regular and long-term contracts, so availability for others is limited.
One importer said towards the end of the second quarter some customers asked him to put shipments on hold because of the freight costs – either in the hope the rate would fall soon, or the fear that if they took the shipment they would be left with expensive stock if the rate had fallen.
“Everyone is paying the same container rate so they’re on a level playing field. There’s no advantage in waiting for the cost to come down, especially if it means you have no stock to sell,” said the importer.
Above: UK demand for plywood is weak and may not strengthen until Q1, 2025 TTJ | September/October 2024 |
www.ttjonline.com
It would reach the point where they had to start buying again, he said, at which point it could be “like the opening of a dam”. There is some hope that container rates might fall slightly over the next few months
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