Wood Market Update

By March 23, 2021Insight, News, Opinion

When we last updated customers on wood market conditions in October last year, multiple global factors were conspiring to put acute pressure on wood availability and pricing here in the UK, with predictions these challenges were likely to endure into 2021.

That is indeed the case, with timber prices having recently surpassed previous record highs and wood availability now further constrained both here and across the globe.

A global challenge

Once again, international factors coupled with the ongoing impact of the pandemic continue to be the key drivers behind this situation, with huge demand for wood products alongside rising prices and low stock levels being experienced worldwide.

As lockdown measures have been eased, construction markets across the globe have kicked back into gear causing huge demand for raw materials like timber, particularly in the highest consuming markets of US and China. Indeed, in the US, unstoppable demand from a resurgent housebuilding market has pushed wood prices relentlessly higher as demand continues to outstrip supply. February saw the Bloomberg lumber futures index climb to a record high of $1,004.90 per 1,000 board feet.

Further East, China has emerged from the Covid crisis undertaking a huge amount of infrastructure spending which has created sustained demand for all raw materials, including timber. Currently, Chinese softwood log & timber imports are reportedly at the highest point ever, at around 8 million cubic metres per month, with stockholdings at Chinese ports also down significantly across the board.

Added to this, a recent change in building regulations in India to allow far greater use of timber in construction could well see further significant pressure heaped on global wood stocks, given the country’s billion plus population.

The UK perspective

Here in the UK, while demand for wood has continued at a high level into 2021, there has been no ‘quiet season’ in Britain’s building trade and therefore little opportunity for sawmillers and importers to replenish stocks on the ground. COVID-19 is also still causing significant issues, notably in Sweden, the UK’s largest timber-supplying partner, where an increase in cases has resulted in a tightening of operating conditions and delays to product shipments.  

What’s more, the log availability situation in Ireland, another key timber provider into the UK market, continues to be problematic as a result of sluggish processing of wood harvesting applications & application appeals by the Irish authorities, further slowing supply. There are also concerns that when the current Irish construction lockdown ends, a strong recovery could lead to a significant increase in demand for imported wood products, heaping further pressure on product availability here in the UK.

The Brexit dimension

Britain’s exit from the EU has further intensified pressure on timber availability, with surging demand forISPM15-compliant pallets and packaging seen in the weeks immediately before the 31 December deadline and extending into the first two months of this year. Additionally, import logistics around the end of the Brexit transition period and the new arrangements with the Republic of Ireland and Northern Ireland could add further pressures on wood supplies going forward, as the timber sector competes with other sectors in seeking precious road haulage capacity within the UK. Furthermore, as summer approaches, the usual timber mill summer holiday shutdowns in Europe during July and August are already looming, adding to concerns over future supply.

Looking ahead

As global construction markets continue to ramp up their activities, demand for timber from competing sectors such as home improvement and gardening intensifies both here and overseas and global supply chains continue to adjust to the ongoing disruptions and closures caused by the global Covid crisis, there sadly appears to be little prospect of a return to normal trading conditions in the UK timber market on the horizon. 

Just last week, the European Federation of Wooden Pallet & Packaging Manufacturers (FEFPEB) announced that further price increases in the wooden pallet and packaging industry were ‘inevitable’ as the impact of the pandemic continues to be felt by companies across Europe and the rest of the world.

Separately, the Timber Trade Federation has also advised all timber users and buyers to strengthen their purchasing strategies in dialogue with their suppliers, as a lack of stock on the ground and tight supply conditions are set to continue well into 2021.

Our commitment to you 

Despite these persistently challenging market conditions, thanks to our longstanding strategic partnerships with wood providers both in here the UK and beyond, we have been able to ensure consistent continuity of wood packaging product supply for consumers, keeping price increases to a minimum and significantly absorbing increased costs ourselves in the process. Given the ongoing nature of the pressures on wood supply however, we continue to urge customers to consider their forward planning requirements at the earliest possible opportunity to enable us to minimise any future disruption to their supplies.

In the meantime, we continue to work tirelessly to mitigate the impact of these pressures on customers and will continue to update on the latest wood market conditions as further developments occur.

Browse the website to find out more about Nicklin Transit Packaging’s comprehensive range of wood packaging and corrugated cardboard packaging  solutions and associated services such as ISPM15 compliance and packaging design. Alternatively, for bespoke transit packaging requests, send an enquiry today.

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