As many of you will have seen recently, the cost of structural timber is rocketing, particularly in the USA. Even the Daily Telegraph has announced, “lumber prices hit record high after lockdown spurs DIY boom”. So, how will this impact on the softwood market here in the UK?
Over the past 40 years the softwood sector in the UK has always been able to hold sufficient stocks to protect customers against the short-term peaks and troughs of the global timber market.
However, that has changed recently. Anyone who has tried to buy studding or joists will know that the Covid-19 crisis, as well as the strength of the DIY and independent merchant sectors, have reduced UK softwood stocks to lower than they have ever been. There is now a strict allocation in place throughout the entire supply chain.
UK, Scandinavian and European sawmills are all working at full capacity, but European markets have been just as strong, and at price levels ahead of those here in the UK. That means there is no spare capacity or available stock to refill the UK supply chain.
Add to this the strength of the US housing market in the run up to the November election and those rocketing lumber prices, and it becomes clear that our softwood supply issues are not likely to improve significantly before the end of year.
With importers, merchants and manufacturers all seeking available softwood stocks, strict allocation will continue to be necessary for the foreseeable future, putting significant pressure on prices. The question is, how far ahead are buyers prepared to commit when demand beyond October remains so unclear?
Brexit has once again raised its head, with many asking if it’s going to create problems in the softwood supply chain. Ironically, the answer is probably not. But the more important question is whether by the end of the year the level of available softwood will be any closer to meeting market demand.
The National Softwood Divisional committee is meeting on 8 September to discuss forecasts for Q4 and 2021. We will update you following these discussions.