TIMBER POSITIVE MERCHANT SENTIMENT
AT UK SOFTWOOD CONFERENCE Tight supply situation remains though merchant sector ‘bullish’ about demand
T
he tight balance between supply and demand for softwood in the UK is set to continue throughout 2020, delegates at the Timber Trade Federation’s UK Softwood Conference were told in London on Wednesday 4th March 2020. Yet speakers from the timber and builders merchant sector felt more ‘bullish’ about prospects for 2020, citing pent-up demand.
A packed conference of over 200 delegates representing softwood traders and merchants from across the UK, Europe and Canada heard a range of data-driven forecasts, starting with Professor Noble Francis, economics director of the Construction Products Association, highlighting factors likely to impact demand, including the shortage of skilled wood trades. Going forward he estimated that some 500,000 UK construction workers were due for retirement over the next decade, continuing the deficit in skills so vital to the RMI market supplied by timber and builders’ merchants. In the shorter term, Professor Francis also looked at the potential consequences of a ‘no deal’ Brexit at the end of this year, such as a further depreciation in Sterling of 15-20%. This would adversely impact prices on imported goods, increasing warehousing needs and costs, and resulting in sharp falls in UK GDP, which is known to be closely related to softwood demand, in the first two quarters of 2021.
Builders’ merchants, especially the independent sector, were much more bullish about softwood business prospects for 2020. From the conference’s first-ever merchant panel, Chris Hayward, managing director of the NMBS, commented: “Independents are better-positioned for growth as they are able to hold a greater breadth and depth of stock to service customers quickly and efficiently. We still see the softwood market in 2020 as bullish, and anticipate potential growth in independents’ wood business of around 2.5%. Sustainability issues are also making themselves felt for the first time so merchants need to know from suppliers what they are doing about, for example, plastic wrap on products.” Neil Woods, timber director at Covers Timber & Builders Merchants and Fortis timber category director, also on the panel, commented: “There’s a possibility that 2020’s market may be similar to that of 2018, with a slower start and a busy Q2. The rush to complete works in 2018 may be mirrored in 2020’s spend pattern. There is a lot of pent-up demand: householders still need to get work done on their properties,” he continued. “We have learned a lot since the Brexit referendum. Yes, we are living with ‘unknowns’ in the marketplace, but at the same time we must choose to be optimistic. Pricing is always a factor in the current tight market, but later in the year we hope that
customers will be asking: ‘Do you have it? Can you get it to me by a certain date?’ Then the price question will drop lower down the list,” Covers’ Neil Woods concluded. Presentations were given by Olle Berg, marketing director of Swedish suppliers Setra Group, on the global and European supply situation. ‘Ten minute timber’ slots then followed, given by Keith Ainslie, sales manager at UK producers James Jones Group; by Patrick Towner, sales director of the Metsä Group, on Finland, and by Kevin Hayes, managing director of AKZ Timber UK on the healthy supply situation in Latvia.
After a warm winter in Northern Europe slowing the log supply into sawmills, a combination of global influences meant that supply would remain tight for some time to come, possibly inducing softwood price rises. Factors included the Finnish sawmill strike which had removed a million cubic metres of volume from the supply chain; a possibly- permanent reduction in supply from Canada; rising housing starts and a strong market in the USA; a return to albeit slowed growth in China, the effects of the Spruce Bark Beetle on supply and processing, and continuing good demand in Europe.
“Timber traders and builders’ merchants are facing an accumulation of economic, climate and environmental factors which will challenge the supply of softwoods and softwood-related products such as plywoods into the UK market in 2020,” explains Timber Trade Federation managing director David Hopkins. “This may add to uncertainties in the construction sector for some time to come, with the market remaining in tight balance between available supply and demand.” BMJ
www.buildersmerchantsjournal.net April 2020 37
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