28 | Country Market Update: Ireland
◄ delayed. It hit its annual target offering of 1.65 million m3
necessarily draw down all of it, it will be there to take “whenever they want”. The target for 2023 is the same – 1.65 million m3
, so although customers won’t – although the actual number is
likely to be in excess of that because there is some unsold volume from this year and from 2021 that can also be offered.
“From an offer perspective we are pretty much back to normal and 2023 will be the first year [since Covid] when we are actually able to plan our programme,” said the spokesperson. “We know what we have for next year, albeit we might be hampered by the road side of it, but for the first time in a long time we will be able to streamline how we offer material.”
As mentioned, not all the timber offered at auction was sold – in fact a number of TTJ’s contacts said they didn’t think anything had been sold at the last two or three auctions. This they put down to the high cost of the logs in relation to the price they could get for sawn timber, and to reduced demand. Coillte said its log prices have fallen by around 25% on this time last year but acknowledged that its customers have experienced a more rapid drop than that for their sawn prices. “End market prices are falling weekly and obviously costs are going in the opposite direction, which is squeezing their margins, so they are suffering,” said the spokesperson. “We price a month in arrears, so we are about a month behind where their prices are right now and I would expect that we would have some more significant drops before year end. We are certainly looking at a very grim year next year all around unless something changes in the market.”
The hope is that the oversupply in the UK will “wash itself out” in the first and/or second quarter and that demand might pick back up, but “there are so many global factors at play that it is really hard to predict”. The one positive on sawn prices – and you have to look very hard for it – is that they are “quite high in relative terms compared to what they were pre-Covid” and, in fact, if costs had stayed down the industry would be “managing fine”. And, on the subject of rising costs, the latest hit to the sector has been insurance, with premiums having “tripled, in most cases” – although an explanation for the hike has not been forthcoming from the insurers.
One contact said there was a view in the industry that the sawn prices had gone too high during the pandemic period and that most yearned for them to settle down at a sustainable level. “When there is extreme price inflation the fall can be more severe,” he said. “People panic and hold off buying because nobody wants to build stocks that will devalue in the yard.”
“Prices are down across the board and I don’t see them rising,” said a major sawmiller. “I see them being pretty stable until the spring and 2023 will probably have its pricing challenges.”
Construction timber prices are back £100/m3
for Scandinavian C24, which would put it at the same level as home-grown C16.” Carcassing prices have “taken an unmerciful hammering”, agreed another contact, adding that fencing has come down substantially from the heady heights of £360- 370/m3
, driven – as mentioned earlier – by imports from Scandinavia. “The Scandinavians are certainly the aggressors at the moment,” said a major sawmiller. “I have seen prices as low as £235/m3
to below £300/m3 ,” he said. .
“At its height, some guys were selling featheredge at £380/m3 £280/m3
and now it’s
One product that is doing remarkably well, however, is wood for energy, for which there is “a whole heap of demand”.
The impact of sanctions on Russia, which is a huge provider of wood pellets, exporting 85% of its production, has resulted in “amazing demand” and high prices. “The sanctions have created a shortage and that in itself would be enough to drive the market upwards but, on top of that, alternative fuels being so expensive has made the conversion to the likes of wood pellets more attractive,” said one producer. “Anyone who has dual ability has moved over to wood pellets, which has created more demand and there is now a significant shortage of pellets. “It has its own challenges because we’re up against production capacity restraints so we just don’t have enough to service all the customers. I’ve never known the market as strong as it is now.”
He added that, even if the war in Ukraine ended, he couldn’t see a path back to the mainstream global markets for Russia. “They won’t be forgiven and allowed to carry on as normal,” he said. “That’s not the way it’s going to work.”
Having another string to the timber processing bow is particularly welcome, of course, but for those sawmills who don’t have the capability of producing wood pellets at that volume – if at all – it’s another reason to point the finger at the giant forest product groups in Scandinavia and Europe that include wood biofuels in their portfolios. “The energy market is playing a big part in European prices at the moment,” said a contact. “The pellet prices are three or four times what they were 12 months ago and that gives the producers capital and money in the bank. Sawn timber is a by-product to energy at the moment, which is a worry because a lot of home-grown mills don’t have the capability to build up a buffer and supplement the log prices.”
Another contact added that very small roundwood is under a lot of pressure because “people want to buy it to burn in their homes – and then there is the fact that there is probably not much general harvesting going on. That is going to be interesting over the next few months.”
While there are obvious challenges from every side, the sector is its usual resilient self. “I do believe it will come out the other side of it,” said a commentator. “It will be poor for a while and, yes, it is pretty bleak, but it will turn around and we’ll survive until that happens.”
“My advice would be to batten down the hatches but don’t be afraid,” said another. “It’s not going to be a boom time but, equally, we’re a long, long way from 2008.” ■
Above: Demand for wood biofuels has soared TTJ | November/December 2022 |
www.ttjonline.com
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