20 | Sector Market Update: Plywood & OSB
SUMMARY
■ OSB demand has slowed but the low price is the biggest concern
■ Low prices and higher costs are squeezing margins
■ Offers of what is probably Russian birch plywood are still being made
■ China is producing increasing volumes of eucalyptus plywood
DEMAND SLIDES BUT TRADERS HOPEFUL
Plywood and OSB sales are the victims of the decline in housebuilding. Although traders are expecting a difficult winter they know eventually the market will turn in their favour. Keren Fallwell reports
There is no doubt that the slump in new build housing output is having a dramatic effect on all timber products but OSB and plywood are perhaps faring better than others, and nothing like the “war zone” that softwood is said to be experiencing. “Anything to do with the construction industry is under pressure. Our OSB volumes are slightly down but nowhere near like everything else. It’s a popular product,” an importer told TTJ.
While the new build sector and jobbing builders are quieter, the UK DIY market appears to be maintaining some demand for OSB and several contacts commented that, although OSB volumes are down, they have now stabilised a bit and the real concern is the falling price. “Volumes were down mid last year and stayed on par with that but we’ve had higher costs to run the business and the price has weakened, so margins are under pressure,” said one contact.
OSB prices have fallen from the unnatural peak of £700/m3 to around £200/m3 “£700/m3
during the Covid pandemic today.
was too high but it’s undervalued
Above: According to TDUK statistics, from January to July this year, hardwood plywood imports were
24.8% lower than the same period in 2022
at the moment,” said a producer. On the plus side, end customers might be attracted by the lower price, especially as OSB can be used as a substitute for many other timber products. “We can gain market share so if the market falls, OSB volumes don’t necessarily fall,” he said. “The price is low but I’m happy with that as long as it generates volume.”
More worrying than OSB’s low price is the potential for costs to rise and unsettle the
TTJ | November/December 2023 |
www.ttjonline.com
fragile market. The cost of diesel has been increasing and the crisis in Gaza and Israel could push up oil and energy prices. “We all have to try to keep prices steady, even if costs are rising and margins are being squeezed,” a producer said. “What the market can’t cope with at the moment is a sharp increase in prices; that will just kill demand.” Some fear the current low demand and higher costs could also kill companies. As an indication of just how much housebuilding has slowed, in early October UK Windows & Doors, one of the UK’s largest PVCu joinery suppliers, went into administration, “mainly because of the sheer slump in new build volumes”, said a contact. Fortunately, timber products are more versatile than PVCu joinery and traders know that, despite the current challenges, OSB now has a firm place in the UK.
“Chipboard had its big decade in the 70s; MDF in the 90s; OSB now has its big decade. Whether markets are up or down, demand is still there,” said a contact.
A merchant said a lot of tradespeople from new build sites, where they were used to working with OSB, were now finding work in RMI and could expand OSB’s use further. UK demand for plywood has also slowed, as illustrated by the latest statistics from Timber Development UK (TDUK). From January to July this year, total plywood imports were down 18.8% on the same time last year, with hardwood plywood imports 24.8% lower – and the lowest volume since 2005 – and softwood plywood 3.5% lower.
The decrease in hardwood plywood imports included a fall of 106,000m3
from China,
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