22 | Sector Market Update: Hardwood
SUMMARY
■Gradual adjustment to lower growth levels is expected
■RMI customers still report good order books
■Construction lost momentum in late summer/early autumn
■African timber prices are up 25% on the year
■A 40ft container from Malaysia or Indonesia cost US$15,000-20,000 by Q2
PROFITING UNDER PRESSURE
Some heat may be coming out of the hardwood market, but importers say we’re still a million miles from returning to pre-pandemic price levels. Mike Jeffree reports
It’s been nine months plus of extremes and superlatives in the UK and wider European sawn hardwood sector.
Importers say the trading environment has
been like nothing they’ve experienced during decades in the business. Demand has climbed across key markets. Freight rates have reached unprecedented levels. Supply has become exceptionally tight and lead times have stretched from sources globally. Prices have consequently hit the heights, while margins are described as good to extremely so. “It’s been a challenging time in terms of obtaining supply, operating a managed volume sales system so we can service as many customers as possible and keeping
up with shipping costs hitting stratospheric levels,” said one importer. “But if you didn’t make money in the hardwood trade over the last year, there’s something wrong with your business model!”
In September/October traders detected the energy going out of the sector to a degree. However, the consensus is that the overall market, at most, is set for a gradual adjustment to lower levels of growth and consolidation rather than any marked reversal.
After slumping in Qs 1 and 2 2020 during the first pandemic lockdowns, hardwood consumption is reported to have started to recover towards the end of May early June.
The next 12 months saw a pretty continuous upward curve, with the first half of this year proving particularly frenetic . A key demand driver until recently has been the boom in home improvement, refurbishment and DIY markets triggered by consumers deciding to spend money saved from not taking holidays and leisure activities due to pandemic travel and social distancing restrictions on houses and gardens, plus converting their properties into living/work spaces .
This is one market where some hardwood businesses report activity slowing in the last few months, as Covid restrictions eased and more people took holidays and spent more on other leisure activities, leaving them less disposable income.
“But business hasn’t dried up overnight,” said an importer/distributor. “RMI customers still report pretty good order books.” Some importers saw the wider construction sector also losing momentum late summer/ early autumn this year.
“Builders are facing rising prices and shortages across all raw materials and some land banks are deferring development projects, presumably to wait for supply to improve,” said one. Again, however, in general construction joinery traders say it’s a case of growth slowing rather than demand falling back and window, door and staircase makers are reported still very busy.
Above: African lead times have extended and prices are rising PHOTO: BROOKS TIMBER TTJ | November/December 2021 |
www.ttjonline.com
Despite the raw materials situation, the Construction Products Association in July
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