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but that will soon be followed by the rush to ship freight before the slowdown for Chinese New Year in February. “We have a maximum of a three-month window in which freight rates could be reduced but it’s not guaranteed. Genuinely nobody knows what’s going to happen,” an importer said.
Another said it was fortunate UK demand was quite low otherwise there “could be serious increases passed on to customers sooner rather than later”.
Many importers had delayed raising prices but might do so in the autumn. UK demand is very weak, however, and it may not be until the end of Q1 2025 – around half a year away – before things improve. Normally optimistic traders who can find something positive in the most negative situations, are struggling to see anything but the glass half empty. “Trading is very, very difficult at the moment,” one contact told TTJ. Trying to find a hint of a silver lining, an importer said at least exchange rates and log prices remaining fairly stable made the situation more manageable. “If you take shipping out of it, nothing has happened in the last couple of years,” he said. “If you have just one [variable] moving, it’s easier to manage, and freight is a clear-cut position; there’s no secret formula.” And looking for further optimism, he thought the market would improve, it’s just a matter of when.
“It’s just getting the timing right, whether it’s in Q4 this year or the first half of next year,” he said. “We just know we have to get through this year OK. It’s not been a vintage year.” Added to the freight headaches are the difficulties in being completely assured that the product shipped from China is legal or adheres to what was ordered.
One importer who recently travelled to China said nearly every factory he visited was selling birch plywood. China does produce plywood from its own birch plantations but many of the factories producing birch plywood do not identify the source of their raw material.
“Now there are sanctions against Russia selling to the UK and Europe, the Chinese think it’s an open market. They don’t identify whether they’re selling Russian, European or Chinese sourced product,” he said. In some factories he saw birch plywood ready for shipment, featuring marks that were “completely crazy”.
CE and FSC logos suggested the product was destined for Europe but there were no certificate or licence numbers, or description. “The problem is that a lot of manufacturers export via export agents who don’t tell the manufacturers where the plywood is going. They simply give them the order, specification
and crate marking. One supplier who showed us irregular crate markings said they were a copy of the markings he’d been given by the export agent,” the importer said.
At another factory the importer was shown a fraudulent CE Certificate and Certificate of Origin that were presented as genuine documents. “We said we couldn’t trade with them because they’d supplied fraudulent documents, but the problem is a lot of people don’t necessarily check. “We’re now finding it difficult to compete with people who are undercutting us on price because we’re selling genuine Chinese birch plywood and others are selling what we assume is Russian or Belarusian product. It’s becoming a real nightmare,” he said. To avoid issues of fraud and deceit, the vast majority of his business is placed direct with mills in China.
“If a mill doesn’t have an export licence we nominate the export agent they should use – a reputable agent we’ve been working with for a long time.”
A merchant contact also highlighted the ongoing issue of dubious quality hardwood plywood from China, in particular the glue lines.
“The quantities we buy means getting consistency is impossible.
“Merchants are put in an impossible position where material they’re supplied with isn’t always fit for purpose,” he said. “Often the plywood isn’t good enough for the job it’s meant to be doing.”
The current problems faced in the plywood
market may strengthen the trend towards substituting it with OSB. Brazilian elliotis pine plywood – the closest comparison to OSB – has come down a little in price but is still more expensive than OSB. One contact said OSB was “clearly” taking
market share from plywood but, having said that, the market is very quiet. “The OSB market is flat,” said another contact. “There’s plenty of availability and demand is quite weak so there’s not very much going on.”
Prices have also flatlined. Some producers tried to raise prices around the end of Q1 but
others held theirs and so increases weren’t accepted by the market. A merchant contact said he was paying only £1 more for an 18mm sheet than he was in July 2020. It’s a far cry from the Covid frenzy in 2021 when he paid 2.5 times the current price and, given the increase in costs in the intervening years, now there is no margin in the product, especially for manufacturers.
One producer described UK demand as “OK”, with substitution for softwood plywood continuing to help sales. He was puzzled, however, as to why what he saw as stable demand wasn’t reflected in firmer prices.
“The price is far too low; nobody makes any money,” he said. “Everybody thinks OSB has to be cheap but, at the same time, the market is growing.”
He was hopeful that the Labour
government’s target of 1.5 million new homes built over the next five years would boost OSB’s fortunes – and those of the timber industry as a whole.
“That might push the move to timber frame because it’s faster and easier to build. Most housebuilders have their own timber frame factories or have aligned with others so they are preparing for it and that would boost OSB demand,” he said.
Prefabricated timber frame could also help to mitigate the skills shortage that could become apparent when housebuilding activity increases, he said.
And he is not the only one with confidence in OSB’s brighter future. In the US, where higher interest rates have led to fewer housing starts, OSB manufacturers are continuing to invest in buying idled plants, refurbishing fire damaged facilities, and opening new factories. As the latest OSB survey in TTJ’s sister magazine Wood Based Panels International points out, this increase in production could put pressure on prices, at least until less efficient mills are closed, but it also shows confidence in OSB’s long-term prospects. In Europe, Swiss Krono continues to invest to increase output, and in New Zealand, Fletcher Building has ordered a new plant from Dieffenbacher for the production of Fine OSB. ■
Above: There is widespread confidence in OSB’s brighter future
www.ttjonline.com | September/October 2024 | TTJ
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