Since this year began, two major factors have dominated the UK softwood trade, namely shortages and price. In a dramatic reversal of fortunes, instead of being the “poor relation” in the building products line up, softwood has gone through a price and status re-evaluation to a level that the industry has always hoped it would reach.
After a low in 2019, there was a steady price recovery through the first half of 2020 as demand rocketed during the first lockdown. As supply started to lag behind, the rate of increase became steeper.
In today’s market, import prices of carcassing have more than doubled in a year, gaining around 149% in Euros or 139% in Sterling (allowing for currency differentials). This increase is measured against the same time last year for July shipments.
There are currently large gaps in merchants’ stocks, with BS5534 roofing batten in particularly short supply, but volumes of all construction grades have fallen short of demand and the shortages continue to fuel price increases.
Having adjusted to the problems associated with supply limitations, the next issue the trade is having to face is logistics. The clamour to ship as much wood as available into the UK during the first half of the year, has increased port activity to stretching point which has led to a number of quaysides suspending vessel arrivals to allow landed stock to clear. This situation has been met with further difficulties as it has coincided with a shortage of road haulage capacity, an issue which is also reflected in many parts of mainland Europe.
As prices of strength-graded softwood shot upwards they left the higher grades of joinery redwood behind. Now, with July approaching, reports are circulating that unsorted and fifth Nordic redwood production will rise past the construction grades to re-establish the historic pricing differential between joinery and carcassing.
The cost of softwood has not only increased at a fast pace, but it has done so in much higher increments than the industry has witnessed in recent times. If market projections are to be believed, further growth is predicted over the next five years in global markets, notably China, which will keep price levels on a firm footing. However, current feedback from the US indicates that prices there may have peaked for the moment, and lumber futures have started trending downwards.
In summary, irrespective of price corrections that might surface during the second half of the year, it would appear that softwood has finally achieved the respect it deserves as a sought-after, low-carbon and renewable resource. But like all good things, it is taking longer to arrive.
TTJ’s full Softwood Market Report will be published in the July/August edition of TTJ.